• TSCA Enforcement to Focus on Section 5, Economic Benefit Recovery
  • November 2, 2011 | Authors: Thomas C. Berger; Gregory A. Clark; John B. Dubeck
  • Law Firm: Keller and Heckman LLP - Washington Office
  • On September 19, 2011, Rosemarie Kelley, EPA's Director of Waste and Chemical Enforcement, presented EPA's chemical and pesticide enforcement priorities to the Pesticides, Chemical Regulation & Right-to-Know (PCRRTK) Committee of the American Bar Association. Ms. Kelley emphasized that among the various sections of the Toxic Substances Control Act (TSCA), EPA is focusing on ensuring compliance with section 5 premanufacture notification (PMN) requirements. With respect to pesticides, EPA is focusing on pesticide imports and supplemental distribution products. Overall, manufacturers of chemical substances and pesticides should be prepared for more aggressive enforcement from EPA headquarters and regional offices.

    According to Ms. Kelley, EPA is ramping up enforcement of section 5, particularly with respect to substances that EPA has identified as being of concern to human health or the environment. One example provided by Ms. Kelley is short-chain chlorinated paraffins (SCCP). EPA has been issuing subpoenas and inspecting companies believed to be manufacturing chemical fractions of SCCPs not explicitly listed on the TSCA Chemical Substance Inventory (TSCA Inventory). Ms. Kelley also identified nanotechnology — carbon nanotubes in particular — as a target of EPA enforcement efforts. EPA views new allotropes of carbon as "new chemical substances" requiring notification under section 5 of TSCA. EPA has been issuing TSCA section 5(e) orders and significant new use rules (SNURs) for nanoscale materials, and recently conducted more than 20 focused inspections of section 5 PMN and R&D exemption compliance.

    TSCA violations involving products that do not pose particular concerns also will face a less favorable enforcement environment because EPA will be focusing on increased capture of economic benefits. At Keller and Heckman LLP's Chemical Control Law Seminar last year, Ms. Kelley indicated that EPA was considering recovery of a violator's "illegal profits." While under EPA's "Audit Policy" (65 Fed. Reg. 19,618 (April 11, 2000)) EPA explicitly retains the right to recover economic benefit, historically EPA has merely sought to recover the time value of money related to delayed and/or avoided regulatory costs. At her presentation to the PCRRTK Committee, Ms. Kelley indicated that a revised TSCA Enforcement Response Policy (ERP) — presumably including guidelines for recovery of "illegal profits"— will be released before the end of fiscal year 2012. Even if one assumes that this development will have no effect on the rate at which companies will choose to conduct voluntary TSCA compliance audits (and uncover previously unsuspected violations), it could well lead to fewer violations being self-disclosed. Also mitigating against self-disclosure is EPA's recent withholding of authorization to release quarantined stocks even after premarket notifications have cleared EPA review. The Audit Policy has allowed many companies to resolve newly discovered TSCA compliance issues with a minimum of disruption (beyond suspending new production and distribution until an appropriate clearance has been established) and by temporarily quarantining existing stocks. EPA's new policies may well cause manufacturers to simply cease violative activity discovered as a result of a voluntary audit and simply gamble that EPA will not independently discover the TSCA violation before the applicable statute of limitations (5 years) has expired. Rather than temporarily quarantining existing stocks, they would have to be destroyed.

    In addition to the above issues, Ms. Kelley noted that identifying companies that fail to submit substantial risk information as required by TSCA section 8(e) and reviewing U.S. Customs data to determine if chemicals not listed on the TSCA Inventory have been imported are also on EPA's list for priority enforcement.