Manufacturers and Importers May Be Surprised By The New TSCA Fees Rule
March 23, 2020
On March 25, 2020, the U.S. Environmental Protection Agency announced its plan to consider a proposed rule that may exempt many manufacturers and importers from its new Toxic Substances Control Act (TSCA) Fees Rule. See update here.
The U.S. Environmental Protection Agency’s Toxic Substances Control Act (TSCA) Fees Rule will sweep in many companies that may be unaware that they must comply. The Fees Rule requires manufacturers or importers of one or more of 20 high-priority substances, or articles containing these substances, to self-identify and pay fees for TSCA risk evaluations being conducted by EPA. EPA recently extended the original deadline to self-identify to May 27, 2020; the original deadline was March 27. The Fees Rule captures many more companies than other TSCA rules because the exemptions that apply in other contexts do not apply under the Fees Rule.
TSCA addresses the production, importation, use, and disposal of specific chemicals. Under TSCA, EPA has the authority to require reporting, record-keeping, testing, and restrictions relating to chemical substances and/or mixtures. As part of the 2016 updates to TSCA, known as the Frank R. Lautenberg Chemical Safety for the 21st Century Act, EPA requires payment of fees from manufacturers (including importers) of a high-priority chemical substance undergoing a TSCA risk evaluation, and manufacturers (including importers) of a chemical that is the subject of a TSCA section 4 test rule.
EPA identified the first 20 high-priority substances, which includes many commonly used substances. There are five phthalates, three halogenated flame retardants, seven chlorinated solvents, and five other substances on the list. You can access the list of the 20 high-priority substances here. Many, though not all, of the high-priority substances are also listed on the Proposition 65 list in California, so reviewing compliance with Proposition 65 is also advisable.
Who is subject to the up-coming obligation to self-identify as a manufacturer of a high-priority substance?
As required by TSCA, EPA published a preliminary list of manufacturers for each of the 20 high-priority substances on January 27, 2020. However, the preliminary lists are of limited assistance and should not be relied on to determine if your company is subject to the Fees Rule. The preliminary lists may be both over and under-inclusive as they are based upon information reported to EPA in the previous six years under the Chemical Data Reporting rule and the Toxics Release Inventory. Instead of relying on the preliminary lists, a company must do an internal review of its products to determine if it manufactures or imports one or more of the 20 high priority substances or an article containing one of these substances. The review must include the five year period before the publication date of the preliminary lists, or January 27, 2015 through January 27, 2020 (relevant time period). Note, that if a company ceases manufacture/import of the high-priority substance or article prior to March 21, 2019, and it does not plan to manufacture/import that substance/article for the next 5 years, it can certify that to EPA and not be subject to fees for that substance/article.
Under the Fees Rule, “manufacture” is broadly defined to include domestic synthesis or production of one of the high-priority substances as well as importation of those substances. Further, certain exemptions that apply in other contexts under TSCA do not apply in the context of the Fees Rule. This means that if you manufacture or import any of the 20 high-priority substances during the relevant time period as a byproduct, impurity or as part of an article, you are subject to the Fees Rule requirements.
EPA’s definition of an article is also sweeping and will encompass products, parts or finished components that contain any of the 20 high-priority substances. EPA regulations define an “article” as manufactured items formed to a certain shape or design during manufacture which has end use application dependent on the shape or design during end use and which has no change of chemical composition during end use or only those changes of composition which have no commercial purpose separate from that of the article, and that result from a chemical reaction that occurs upon end use of other chemical substances, mixtures, or articles (except that fluids and particles are not articles regardless of shape or design).
Examples of articles include:
- transformers (including transformer fluid)
- cigarette lighters (including lighter fluid)
- automobiles (including crankcase oil)
- finished pipes or construction materials
Examples of things that are not considered articles include bulk metal raw material, paints or inks in fluid form.
What if my company is covered by the Fees Rule?
If your company is covered by the Fees Rule, you must self-identify as a manufacture/importer subject to the fee obligation using EPA’s Central Data Exchange, the agency’s electronic reporting site, by May 27, 2020. If you fail to self-identify, and, therefore, fail to pay a fee, you could be subject to penalties up to $40,576 per fee not paid. Note that companies subject to the fees can form a consortium and allocate fees amongst their members.
If you have questions regarding how the TSCA Fees Rule impacts your business, please contact us.