Proposed Rule Concerning CBI Claims under TSCA Addresses EPA Review of Confidentiality Claims and Related Revisions to Other TSCA Rules
As reported in our May 17, 2022, memorandum, on May 12, 2022, the U.S. Environmental Protection Agency (EPA) proposed new and amended requirements concerning the assertion and treatment of confidential business information (CBI) claims for information reported to or otherwise obtained by EPA under the Toxic Substances Control Act (TSCA). 87 Fed. Reg. 29078. The Frank R. Lautenberg Chemical Safety for the 21st Century Act (Lautenberg Act) amendments to TSCA in 2016 included many new provisions concerning the assertion, EPA review, and treatment of confidentiality claims. EPA proposes procedures for submitting such claims in TSCA submissions and addresses issues such as substantiation requirements, exemptions, electronic reporting enhancements (including expanding electronic reporting requirements), maintenance or withdrawal of confidentiality claims, and provisions in current rules that are inconsistent with amended TSCA. The proposed rule also addresses EPA procedures for reviewing and communicating with TSCA submitters about confidentiality claims, and includes provisions requiring the submission of Organization for Economic Cooperation and Development (OECD) templates, if available, to accompany health and safety studies, and information from health and safety studies. Comments are due on or before July 11, 2022.
This memorandum continues to address EPA’s review of confidentiality claims and related or corresponding revisions to other TSCA rules. Our May 17, 2022, memorandum summarizes and offers commentary on the provisions concerning the purpose and applicability of the proposed new Part 703 and the requirements for asserting a confidentiality claim.
EPA Review of Confidentiality Claims
Under TSCA Section 14(g)(1)(C), EPA must review all confidentiality claims for chemical identity (except those exempt under TSCA Section 14(c)(2)(G)) and a “representative subset” comprising at least 25 percent of all other claims, with the exception (as provided in TSCA Section 14(g)(1)(A)) of information exempted from substantiation under TSCA Section 14(c)(2). Proposed Section 703.7 would codify EPA’s current practice of reviewing all claims (except those exempt from substantiation requirements under TSCA Section 14(c)(2)) in every fourth submission received via the Central Data Exchange (CDX) that contains CBI claims besides those pertaining to chemical identity. EPA states that consistent with current practice, submissions with CBI claims not submitted through CDX would be excluded from the representative subset. EPA also proposes that amendments to submissions would not be counted as new submissions for purposes of selecting the representative subset.
EPA proposes that two additional types of submissions not be included in the representative subset as they are not representative of TSCA submissions as a whole: (1) bona fide inquiries under 40 C.F.R. Sections 720.25, and 721.11; and (2) TSCA Section 5 prenotice communications. EPA states that these document types are not representative of TSCA submissions as a whole. These submission types help submitters ascertain whether a TSCA submission is required in a particular situation and/or what type or format should be used to make a particular submission.
EPA Review of Claims
EPA proposes to revise its procedures for reviewing confidentiality claims. EPA states that it reviews confidentiality claims in accordance with the requirements in TSCA Section 14 and has relied to date on the review procedures set out in 40 C.F.R. Part 2 for all TSCA CBI reviews. EPA notes that the review procedures described in 40 C.F.R. Part 2, which were promulgated prior to the Lautenberg Act, do not fully accommodate or account for the requirements in TSCA Section 14, however, particularly the demands of the TSCA Section 14(g)(1) mandatory review program. Rather than extensively update the EPA review procedures for TSCA CBI in 40 C.F.R. Part 2 to reflect the Lautenberg Act amendments to TSCA Section 14, EPA proposes to consolidate most of them in the proposed new Part 703, consistent with the broader effort to centralize regulations on TSCA CBI.
The proposed rule would revise the procedures and substantive review criteria to clarify that whether a substance may be readily reverse engineered is among the factors EPA considers as part of the criterion on whether the CBI-claimed information is legitimately and reasonably obtainable without the business’s consent. EPA requests comment on how to incorporate the reverse engineering component into the substantive review criteria in proposed Section 703.7(f), either as a stand-alone review criterion or as part of the existing criterion.
The requirement in 40 C.F.R. Section 2.306(e)(1) that EPA’s Office of General Counsel (OGC) make most final confidentiality determinations would no longer be required by regulation under the proposed new Part 703; rather, final determinations may be made by OGC or other EPA offices (e.g., the EPA Office of Pollution Prevention and Toxics), as designated by the General Counsel. EPA states that regardless of which EPA office issues a given final determination, EPA expects to continue to publish final CBI determinations on its website.
Proposed Section 703.7(g) would add a means to request reconsideration by OGC of determinations denying confidential treatment. Reconsideration would be available during the 30-day notice and appeal period prior to disclosure of the information. EPA states that it intends this mechanism to permit parties to identify any EPA errors in the determination prior to the point that the information is disclosed, and without immediately electing to pursue judicial review of the decision. If a request for reconsideration is timely received, EPA would suspend the 30-day notice period described in proposed Section 703.7(e) while OGC reconsiders EPA’s determination. OGC would review the submission de novo and would consider only the submission record as it existed for the final determination.
The proposed rule also elaborates on the timing and scope of review in proposed Section 703.7(c). For the purposes of TSCA Section 14(g), the proposed rule specifies that the 90-day review period begins on the day EPA accepts a new TSCA submission that includes confidentiality claims and that amendments to non-chemical identity information in the submission will be considered in the confidentiality review for that submission up to 60 days after the original submission date. TSCA submissions under TSCA Section 5 must clear a brief “pre-screen” review for basic completeness to ensure consistency with requirements in 40 C.F.R. Part 720, that EPA states is usually complete within a few days of submission; following that review, the submission is considered “accepted.” EPA would review new confidentiality claims concerning chemical identity within 90 days of EPA accepting the submission or amendment including the new chemical identity claim. EPA states that it will use the date that the submission is considered “accepted” to calculate the ten-year sunset period for purposes of TSCA Section 14(e).
Substantial Competitive Harm
According to EPA, Congress amended TSCA Section 14 in 2016 to, among other requirements, mandate any person asserting a CBI claim under TSCA to include a certified statement that the person has “a reasonable basis to conclude that disclosure of the information is likely to cause substantial harm to the competitive position of the person.” For each claim, EPA’s review will determine whether the business has made a satisfactory showing that it has a reasonable basis to conclude that disclosure of the information is likely to cause substantial harm to the competitive position of the business.
EPA states that the proposed rule clarifies that EPA requires the certification statement on substantial competitive harm and considers substantial competitive harm as part of its substantive review criteria for TSCA CBI claims.
Information from Health and Safety Studies
According to EPA, the proposed rule elaborates on the limitations on confidentiality protections for health and safety information described in TSCA Section 14(b). TSCA Section 14(b)(2), which denies confidentiality protection to health and safety studies and information from health and safety studies, excludes from its coverage certain categories of information in health and safety studies, such as formulas. In addition, existing regulations allow withholding of specified information beyond that provided in TSCA Section 14(b)(2). EPA states that the applicable regulations are not uniform in this respect, however, nor has EPA previously enunciated the statutory basis for these provisions. EPA proposes to systematize these provisions, generally allowing CBI claims for very limited categories of information contained within a health and safety study.
EPA proposes a definition of “health and safety study” (for purposes of this proposed rule) in proposed Section 703.3 that specifies types of information that are not within the scope of TSCA Section 3(8):
- Name of the submitting company;
- Name of the laboratory;
- Internal product codes;
- Names of laboratory personnel;
- Names and other private information included in study data or reports;
- Cost or other financial data; and
- Product development, advertising, or marketing plans.
Related or Corresponding Revisions to Other TSCA Rules
In addition to proposing a new confidentiality claim section of the TSCA rules, the proposed rule would revise confidentiality provisions in existing rules. In some cases, the proposed revisions would replace existing provisions with a cross reference to the proposed new Part 703. In others, more specific and extensive revision is proposed.
Proposed Revisions to 40 C.F.R. Parts 702, 704, 707, 716, 717, 723, and 790
EPA proposes to revise the following provisions to reference the general CBI provisions in the proposed new Part 703:
- 40 C.F.R. Section 702.37(d), the confidentiality provisions for manufacturer requests for risk evaluations;
- 40 C.F.R. Section 704.7, the confidentiality provision for TSCA Section 8(a) rules;
- 40 C.F.R. Section 707.75(d), the confidentiality provision of rules concerning TSCA Section 12(b) notices of export;
- 40 C.F.R. Section 716.55, the confidentiality provisions for TSCA Section 8(d) reporting rules;
- 40 C.F.R. Section 717.19, the confidentiality provision for TSCA Section 8(c) recordkeeping and reporting rules;
- 40 C.F.R. Sections 723.50(l) and 723.250 (f), the confidentiality provision for certain exemption requests under TSCA Section 5 (low volume exemption and low releases and low exposures exemption); and
- 40 C.F.R. Part 790, the confidentiality provision of rules concerning TSCA Section 4 test rules, orders, and agreements.
Further Clarification Proposed for 40 C.F.R. Part 707
EPA proposes to revise the contents of TSCA Section 12(b) notices of export, 40 C.F.R. Section 707.67(a), by adding a sentence to provide that in most cases, a confidential specific chemical identity need not be included in the notice (the primary exception would be in the case where the substance to be reported under TSCA Section 12(b) is claimed as confidential but does not have a TSCA accession number). Instead, the TSCA Section 12(b) notice of export may identify the substance by the generic name and accession number that appeared in the TSCA Section 4, 5, 6, or 7 action that triggered the TSCA Section 12(b) reporting requirement. EPA states that it anticipates that with this change, TSCA Section 12(b) submitters would submit fewer confidentiality claims for specific chemical identity, “which in almost all cases is unnecessary to report under the existing TSCA section 12(b) rules.”
Proposed Revision in 40 C.F.R. Sections 717.17 and 723.250 to Reflect Electronic Reporting
EPA proposes to modify 40 C.F.R. Sections 717.17 and 723.250(f) to reflect the proposed new electronic reporting requirement discussed in Unit II.C.5.
Proposed Revisions to Confidentiality Provisions in the PMN Rules
EPA proposes to simplify and replace many of the confidentiality provisions in 40 C.F.R. Part 720, Subpart E with a cross reference to the general confidentiality provisions in proposed new Part 703. The general provisions on confidentiality in premanufacture notifications (PMN), 40 C.F.R. Section 720.80, are proposed to be replaced with this cross reference. EPA proposes to delete requirements in 40 C.F.R. Sections 720.85 and 720.90, with portions moved to 40 C.F.R. Part 720, Subpart F, the provisions concerning notices of commencement (NOC).
Proposed new Part 703 would cover the existing provisions concerning chemical identity claims in PMNs and in health and safety studies. In addition, TSCA Section 14(c)(2)(G) creates an exemption from the substantiation requirement for confidentiality claims for chemical identity when identity information is submitted before a substance is offered for commercial distribution. EPA states that the CBI claim review provisions of TSCA Section 14(g) exclude these exempt claims from routine EPA review requirements, diminishing the need to elaborate on requirements for asserting and maintaining such claims in the PMN rules.
In current 40 C.F.R. Section 720.90, claims that were made in health and safety studies in the PMN are revisited at the NOC stage. Apparently, EPA believes this is a poor fit with new TSCA Section 14(g) requirements that confidentiality claims be reviewed within 90 days of receipt, or in accordance with the discretionary or mandatory provisions of TSCA Section 14(f). With the proposed deletion of 40 C.F.R. Section 720.90, the review of confidentiality claims in NOC submissions would be limited to the information included in the NOC submission — principally chemical identity and submitting company information. EPA states that it may revisit claims made in the PMN submission or later in accordance with either mandatory or discretionary review provisions in TSCA Section 14(f).
PMN NOC Provisions
EPA states that the proposed rule “leaves much of [40 C.F.R. Part 720, Subpart F], intact, but reorganizes some provisions that concern specific chemical identity claims in or following submission of an NOC.” These provisions are presently in Subpart E and would move to Subpart F. Additionally, the proposed revisions would update and clarify NOC reporting instructions in 40 C.F.R. Section 720.102(c)(2), concerning the assertion and substantiation of confidentiality claims throughout the NOC reporting form. The existing rule reflects only the substantiation requirements that predated the Lautenberg Act amendments, which were limited to specific chemical identity confidentiality claims, and do not reflect the newer generic name and certification requirements in TSCA Section 14(c).
The proposed rule would add a new paragraph (e) in 40 C.F.R. Section 720.102, the substance of which is currently in 40 C.F.R. Section 720.85(b)(3), concerning requirements that apply when asserting a confidentiality claim for chemical identity in the period after commencing commercial manufacture. Additionally, there is a cross-reference to the requirements of proposed new Part 703, which, among other things, would replace the list of substantiation questions currently in 40 C.F.R. Section 720.85 (which under existing rules, apply only to chemical identity claims in NOCs).
The proposed revisions to 40 C.F.R. Section 720.102 include a new paragraph (f) concerning generic names. EPA intends these provisions to be consistent with the generic name provisions in proposed new Part 703, but include some additional provisions specific to the submission and review of generic names for the purposes of listing on the TSCA Inventory, including additional procedures intended to aid the prompt negotiation by the submitter and EPA of more difficult generic names (which are themselves based in part on procedures presently in 40 C.F.R. Section 720.85), and a provision that NOCs will be temporarily held in situations where the submitter has not provided an acceptable generic name despite the negotiation. If the submission is not corrected, EPA would proceed with review of the CBI claim for chemical identity and would likely deny the claim.
EPA proposes to replace much of the confidentiality provisions currently in 40 C.F.R. Part 725, Subpart C, with a new, simplified Subpart C, which largely relies on a cross-reference to the proposed new general confidentiality provisions to be placed in proposed new Part 703. The proposed rule would remove current provisions that are inconsistent with the Lautenberg Act amendments, such as existing requirements to provide upfront substantiation of organism identity confidentiality claims prior to the commencement of commercial manufacture. The proposed rule also proposes some adjustments to the general confidentiality provisions in proposed new Part 703 when they are applied to genetically modified microorganisms and other products of biotechnology covered by 40 C.F.R. Part 725. These include some adjustments to the substantiation questions to reflect some practical differences between these products and other types of TSCA chemical substances.
The proposed rule also includes proposed revisions to 40 C.F.R. Section 725.190, concerning NOCs, that EPA states are similar to the proposed revisions to the parallel conventional chemical NOC provisions in 40 C.F.R. Section 720.102, including some elaboration on what must be included in a generic name. EPA proposes to update 40 C.F.R. Section 725.190 to align with generic name provisions in proposed new Part 703, but with some additional provisions specific to the review of generic names for the purposes of listing on the TSCA Inventory. These include additional procedures intended to aid the prompt negotiation of more difficult generic names, and a provision that NOCs will be held in situations where the submitter has not provided an acceptable generic name despite the negotiation (and that such deficiencies, if not promptly corrected, may result in denial of the claim).
Changes in Proposed Regulations
EPA proposes a significant number of new and revised CBI provisions to be included in proposed new Part 703 and proposes to revise confidentiality provisions in other existing regulatory provisions to cross-reference the proposed new Part 703. EPA states that it recognizes that during the pendency of the rulemaking process, it is developing other rulemakings that may address confidentiality provisions. For example, as reported in our May 6, 2022, memorandum, EPA is developing a proposed rule regarding asbestos reporting under TSCA Section 8(a). Until EPA issues a final CBI rule, however, additional regulations proposed or promulgated need to refer to the existing CBI regulations, rather than to the new and revised CBI provisions addressed in this rulemaking.
As noted in our memorandum of May 17, the proposed rule addresses a number of issues related to TSCA CBI under the Lautenberg Act and will have significant implications for submitters and their ability and obligations to make and sustain CBI claims across all types of submissions. Stakeholders should consider carefully what EPA is proposing and comment accordingly.
Among the most significant current policies that EPA seeks to embed in the regulations is the ability of study owners to protect the value of study reports without reducing the ability for others to review and understand the study results. Several B&C and Acta clients have been redacting certain sensitive information in study reports that could mean the sanitized report is not sufficiently complete to be acceptable by another regulatory authority. We do so in a way that allows full visibility into the study results, including the raw data and study conclusions. This strategy allows public scrutiny of the study while minimizing the likelihood of a competitor of downloading the study report from EPA’s website and using that study to support submission to another authority without compensating the study owner. This is a strategy that we have been employing for some time and, in our view, is an entirely appropriate use of the CBI provisions. We suggest that stakeholders provide comment to support EPA’s proposal so that study owners can protect the value of their studies to the maximum extent practicable.
There are several key questions on which readers may wish to comment, among those are new policies and procedures that are discussed in more detail below.
There are other issues upon which readers may wish to comment, including the set of substantiation questions and whether those questions meet EPA’s obligations without being overly burdensome to submitters.
EPA is seeking largely to phase out the use of the CBI substantiation templates by incorporating the function into the specific data flows in CDX so each data element and attachment in a CDX submission that is claimed as CBI will require substantiation (if not one of the exempt categories of CBI). Readers may wish to comment that EPA should design its data flows to allow the same substantiation statement to apply to multiple data elements of the same type. Doing so will be more efficient for submitters (duplicative statements will not have to be entered multiple times) and more efficient for EPA during CBI review (multiple identical statements do not require separate review). This will undoubtedly require additional effort during the development of the data flows in CDX, but will pay off in efficiency for users on both ends (submitters and EPA).
EPA requests comments on which party (the CBI claimant or EPA) should be responsible for updating redacted documents when some, but not all, of the information in those documents is disclosed (e.g., because the chemical identity is no longer CBI). In our view, it is appropriate for the submitter to shoulder this burden. While it is additional burden on the submitter, it also ensures that the submitter has the opportunity to review the updated redacted document and ensure that other information that is still confidential is protected properly. This will also incentivize submitters to minimize CBI claims in attachments. For example, submitters can refer to the substance as the “new chemical substance (NCS)” rather than referring to a name that must be claimed as CBI. If the identity of the substance is disclosed, a document that refers to the NCS need not be updated.
Among the more challenging logistic issues is when EPA should undertake review of submissions — 90 days from the initial submission date or some later date after which submission amendments are less likely. Stakeholders should comment on whether EPA’s obligation to review 25 percent of submissions requires that EPA review the final state of those submissions. Perhaps it is sufficient legally for EPA to review submissions as-is at the time the submission process begins. In our view, amending submissions is not unusual, often because EPA requests or requires additional information during its review. It is unfair to penalize submitters by delaying the review clock once the submission is effectively complete while EPA reviews CBI claims. It is also unfair to penalize EPA for reviewing a submission promptly only to have the submission amended later — amendments to a submission should not trigger re-review by EPA. To avoid incentivizing submitters from avoiding CBI review by amending cases, amendments could be among the submission types that count towards EPA’s requirement to review 25 percent of submissions.
We comment here and in our May 17 memorandum on just some of the many proposals and encourage readers to review carefully and thoroughly EPA’s proposal. Many of EPA’s proposals merit support, but some of the issues highlighted here are complex and EPA needs to hear from submitters who will have to comply with the final regulations. We strongly encourage companies to comment, either individually or through associations. CBI protections are a cornerstone of TSCA and stakeholders must comment to ensure that EPA has the correct balance between transparency and CBI protection.