February 8, 2012
If anyone is thinking big penalties under the Toxic Substances Control Act (TSCA) are a thing of the past, think again. On February 7, 2012, the U.S. Environmental Protection Agency (EPA) announced that Dover Chemical Corporation has agreed to pay a $1.4 million civil penalty for the unauthorized manufacture of chemical substances at facilities in Dover, Ohio, and Hammond, Indiana. The settlement resolves alleged violations of TSCA premanufacture notice (PMN) obligations for the production of various chlorinated paraffins. According to EPA, Dover Chemical produces the "vast majority" of chlorinated products sold in the U.S. As part of the settlement, Dover Chemical has ceased manufacturing short-chain chlorinated paraffins (SCCP), which have persistent, bioaccumulative, and toxic (PBT) characteristics. More information is available online.
According to the proposed settlement agreement, which was lodged in the U.S. District Court for the Northern District of Ohio, EPA's December 15, 2009, notice of violation alleged that Dover Chemical manufactured "new" chemical substances while failing to comply with TSCA's PMN requirements. This enforcement action is significant for two reasons not immediately clear from the pleadings.
First, EPA brought the action based on its assertion that certain chlorinated paraffins manufactured by Dover Chemical are "new" and, because they are not specifically listed on the TSCA Inventory, Dover Chemical was in violation of TSCA for their manufacture and distribution in commerce. EPA asserted this position even though there are several chlorinated paraffins that are listed on the TSCA Inventory with broad descriptions that arguably include short, medium, and long chains. EPA plainly took the position that these broad listings are not sufficiently specific for TSCA Section 5 purposes and thus asserted TSCA Inventory violations against Dover Chemical resulting in the large TSCA penalty.
Companies should pay close attention to how the chemical substances they manufacture and/or import are identified. This enforcement action is derivative of fairly recent and subtle shifts in EPA's thinking regarding its interpretation of the TSCA Inventory, certain naming conventions, and the level of particularity EPA expects in TSCA Inventory listing determinations. Other examples include EPA's interest in "clarifying" the chemical identification of certain statutory mixtures for purposes of the TSCA Inventory and EPA's "final clarification" describing certain "activated phosphors" that are not specifically listed on the TSCA Inventory and thus are "new" chemical substances for which PMNs would be required. These actions indicate that EPA is looking closely at how chemical substances are identified for Inventory purposes and is enforcing its view that chemical manufacturers (including importers) must ensure that commercial chemical substances are identified as precisely as possible for TSCA Inventory listing purposes. Bergeson & Campbell, P.C.'s recent article discussing, in part, TSCA Inventory issues regarding Section 8(b)(2) statutory mixtures and activated phosphors is available online.
This case is significant for a second reason, this one having to do with the way in which the alleged violations were discovered. Reportedly, EPA is using various EPA databases to determine how companies identify and report chemical substances. EPA can, for example, compare information submitted under TSCA's Inventory Update Reporting (IUR) rule (and soon its Chemical Data Reporting (CDR) rule), Emergency Planning and Community Right-to-Know Act's (EPCRA) Section 313 Toxics Release Inventory (TRI) Form R submissions, and other reports submitted pursuant to other EPA programs and determine if chemical substances are being reported inconsistently.
Companies are urged to review carefully how chemical substances are identified under each of their reporting obligations and ensure that chemical substances are identified similarly and consistently across EPA programs.
While Dover Chemical denies all alleged violations, it agreed to pay $1.4 million, as well as the following compliance requirements:
Defendant shall not manufacture or distribute in commerce any chemical substance composed of a SCCP or combination of SCCPs, unless and until the particular SCCP or combination of SCCPs has been added to the TSCA Inventory or exempted from the TSCA Inventory requirements pursuant to TSCA and its implementing regulations; and
- Defendant shall not manufacture or distribute in commerce any chemical substance composed of a medium-chain chlorinated paraffin (MCCP), long-chain chlorinated paraffin (LCCP), or a combination of MCCPs or LCCPs, for which a new PMN is not submitted within 30 days of the effective date of the consent decree, unless and until the MCCP, LCCP, or particular combination of MCCPs or LCCPs, has been added to the TSCA Inventory or exempted from the TSCA Inventory requirements pursuant to TSCA and its implementing regulations.
The proposed settlement agreement is subject to a 30-day public comment period and approval by the federal court. It is available online.