EPA Announces Proposed Procedures for Review of CBI Claims for the Identity of Chemicals on the TSCA Inventory

On April 10, 2019, the U.S. Environmental Protection Agency (EPA) released a proposed rule regarding its plan to review certain confidential business information (CBI) claims to protect the specific chemical identities of substances on the confidential portion of the Toxic Substances Control Act (TSCA) Inventory.  The CBI claims that would be reviewed under this plan are those that were asserted on Notice of Activity (NOA) Form A’s filed in accordance with the requirements in the Active-Inactive rule.  Once the proposed rule is published in the Federal Register, a 60-day comment period will begin.

BACKGROUND

TSCA Section 8(b)(4)(C) requires EPA to promulgate a rule establishing a plan to review all CBI claims to protect the specific chemical identities of chemical substances on the confidential portion of the TSCA Inventory that were asserted in an NOA Form A.  This rule must be promulgated not later than one year after the publication of the first TSCA Inventory containing all “active” substance designations.  TSCA also requires EPA to implement the CBI review plan so as to complete all CBI claim reviews not later than five years after such TSCA Inventory publication, with the possibility of a two-year extension.  EPA states that since it released the updated TSCA Inventory on February 19, 2019, the deadline for issuing a final rule is February 19, 2020, and the deadline for completing all the CBI claim reviews is February 19, 2024.  If EPA invokes the two-year extension under TSCA, the deadline for completing all the CBI claim reviews would then become February 19, 2026.  As reported in our February 21, 2019, memorandum, “EPA Releases Updated TSCA Inventory,” of the 40,655 chemicals in commerce, more than 80 percent (32,898) have identities that are not CBI and fewer than 20 percent (7,757) have identities that were claimed as CBI.
 
EPA notes that other types of CBI claims are outside the scope of the review plan under TSCA Section 8(b)(4)(C) through (E), and hence are outside the scope of the proposed rule.  Those claims are governed by other statutory and regulatory provisions.  Substantiation and review of CBI claims for other data elements in an NOA Form A are governed by TSCA Section 14(g) and 40 C.F.R. Section 710.37(b) and (c)(1).  EPA states that substantiation and review of CBI claims for specific chemical identity in an NOA Form B — “a forward-looking reporting form required when reintroducing an ‘inactive’ chemical substance into U.S. commerce for a nonexempt commercial purpose” — are governed by TSCA Section 8(b)(5) and 40 C.F.R. Section 710.37(a)(2).

PROPOSED RULE
 
Confidentiality Claims for Specific Chemical Identities that Would Be Substantiated under the Rule
 
CBI Claims Subject to Substantiation

Subject to the exemptions described below, the substantiation requirement in the proposed rule would apply to all CBI claims for specific chemical identities that manufacturers (which as defined in the proposed rule includes importers) or processors requested to maintain in NOA Form A’s filed in accordance with the Active-Inactive rule.

Exemptions from Substantiation Requirement

Pursuant to TSCA Section 8(b)(4)(D), EPA proposes exemptions from the requirement to submit new substantiation in certain cases where the CBI claims have already been substantiated in a recent submission to EPA.  The proposed exemptions would be available to manufacturers or processors who provided substantiations for specific chemical identity CBI claims either:  (1) pursuant to the voluntary substantiation process associated with the Active-Inactive rule; or (2) in another submission made to EPA less than five years before the substantiation deadline that will be set in the final rule.
 
For those manufacturers or processors who filed voluntary substantiations with their NOA Form A’s pursuant to the process set forth in the Active-Inactive rule, no further action would be required.  Those persons would automatically be deemed exempt from the substantiation requirement under the proposed rule.
 
EPA proposes to require manufacturers and processors who wish to establish eligibility for an exemption based upon any other recently-submitted substantiation to report and identify for EPA the following about that recently-submitted substantiation:  submission date; submission type; and case number, transaction ID, or equivalent identifier that uniquely identifies the previous submission that includes the substantiation upon which the manufacturer or processor is relying.  EPA states that previously submitted substantiations might include, for example, those submitted pursuant to a regulatory up-front substantiation requirement (such as 40 C.F.R. Section 711.30(b)(1) or 40 C.F.R. Section 720.85(b)(3)(iv)), the statutory substantiation requirement at TSCA Section 14(c)(3), or the comment process described in 40 C.F.R. Section 2.204(e).

When Substantiation Would Be Required

EPA proposes to require that all substantiations be filed not later than 90 days after the effective date of the final rule.  EPA proposes the same filing deadline for submissions identifying a previously submitted substantiation for purposes of establishing eligibility for an exemption.  If a substantiation or notice of prior CBI substantiation was not filed within the 90-day filing period in accordance with all requirements of the proposed rule or voluntarily filed in accordance with all requirements of 40 C.F.R. Section 710.37(a)(1), EPA proposes to consider the confidentiality claim to be deficient and would treat the specific chemical identity as not subject to a confidentiality claim, such that EPA may make the information public without further notice.
 
EPA states that this treatment of unsubstantiated confidentiality claims as deficient would be consistent with how EPA has handled unsubstantiated confidentiality claims in other regulations, e.g., 40 C.F.R. Section 710.37(a)(2) and (b) (Active-Inactive rule) and 40 C.F.R. Section 711.30(e) (Chemical Data Reporting (CDR) rule).  EPA nevertheless requests comment on the validity of making this information public without further notice, particularly where a claimant may have previously submitted a substantiation to EPA less than five years before the substantiation deadline that will be set in the final rule, but failed to report and identify that previously-submitted substantiation to EPA within the 90-day filing period.

How CBI Claims Would Be Substantiated

EPA proposes to require that non-exempt manufacturers and processors substantiate any CBI claim for a specific chemical identity that they requested to maintain in an NOA Form A by submitting answers to the questions below, by providing the certification statement described below, and by requiring that the submission be signed and dated by an authorized official.

Substantiation Questions

• Do you believe that the information is exempt from substantiation pursuant to TSCA Section 14(c)(2)?  If you answered yes, you must individually identify the specific information claimed as confidential and specify the applicable exemption(s).
• Will disclosure of the information likely result in substantial harm to your business’s competitive position?  If you answered yes, describe with specificity the substantial harmful effects that would likely result to your competitive position if the information is made available to the public.
• To the extent your business has disclosed the information to others (both internally and externally), what precautions has your business taken?  Identify the measures or internal controls your business has taken to protect the information claimed as confidential:  non-disclosure agreement required prior to access; access is limited to individuals with a need-to-know; information is physically secured; other internal control measure(s).  If yes, explain.
• Does the information appear in any public documents, including (but not limited to) safety data sheets, advertising or promotional material, professional or trade publication, or any other media or publications available to the general public?  If you answered yes, explain why the information should be treated as confidential.
• Is the claim of confidentiality intended to last less than ten years?  If so, indicate the number of years (between one to ten years) or the specific date/occurrence after which the claim is withdrawn.
• Has EPA, another federal agency, or court made any confidentiality determination regarding information associated with this chemical substance?  If you answered yes, explain the outcome of that determination and provide a copy of the previous confidentiality determination or any other information that will assist in identifying the prior determination.
• Is the confidential chemical substance publicly known to have ever been offered for commercial distribution in the U.S.?  If you answered yes, explain why the information should be treated as confidential.

​Certification Statement

An authorized official of a manufacturer or processor substantiating a request to maintain an existing claim of confidentiality for specific chemical identity would be required to certify that the submission complies with the requirements of the rule by signing and dating the following certification statement:
 

I certify that all claims for confidentiality made or sought to be maintained with this submission are true and correct, and all information submitted herein to substantiate such claims is true and correct.  Any knowing and willful misrepresentation is subject to criminal penalty pursuant to 18 U.S.C. 1001.  I further certify that it is true and correct that:

• My company has taken reasonable measures to protect the confidentiality of the information;
• I have determined that the information is not required to be disclosed or otherwise made available to the public under any other Federal law;
• I have a reasonable basis to conclude that disclosure of the information is likely to cause substantial harm to the competitive position of my company; and
• I have a reasonable basis to believe that the information is not readily discoverable through reverse engineering.

How Information Would Be Submitted to EPA

The proposed rule would require persons submitting substantiations or information on previously submitted substantiations to follow the electronic reporting procedures set forth in the Active-Inactive rule at 40 C.F.R. Section 710.39.  Any person submitting a substantiation under this proposed rule could claim any part or all of the substantiation as CBI.  Submitters would be required to use EPA’s electronic reporting portal, Central Data Exchange (CDX), and EPA’s web-based reporting tool, Chemical Information Submission System (CISS).  Because all submitters under this proposed rule would have previously filed NOA Form A’s under the Active-Inactive rule using these electronic reporting procedures, EPA states that it expects that all submitters are already registered with CDX and familiar with the electronic reporting procedures.  EPA proposes mandatory electronic reporting because it is expected to allow for more efficient data transmittal, support improved data quality, minimize respondent burden, and reduce EPA administrative costs associated with information submission and recordkeeping.

How EPA Would Review Claims of Confidentiality for Specific Chemical Identities

Consistent with how EPA handles the review of other TSCA confidentiality claims, EPA states that it would carefully consider the facts provided in the substantiations, any pertinent previously issued confidentiality determinations, and other reasonably available information that it finds appropriate to determine the information’s entitlement to confidential treatment.  EPA would apply the substantive criteria for confidentiality determinations set forth in 40 C.F.R. Sections 2.208 and 2.306(g), which provide in relevant part that information is entitled to confidential treatment for the benefit of a particular business if:  (a) the business has asserted a confidentiality claim that has not expired by its terms, nor been waived nor withdrawn; (b) the business has satisfactorily shown that it has taken reasonable measures to protect the confidentiality of the information, and that it intends to continue to take such measures; (c) the information is not, and has not been, reasonably obtainable without the business’s consent by other persons (other than governmental bodies) by use of legitimate means (other than discovery based on a showing of need in a judicial or quasi-judicial proceeding); (d) no statute specifically requires disclosure of the information; and (e) the business has satisfactorily shown that disclosure of the information is likely to cause substantial harm to the business’s competitive position.

In instances where there are multiple NOA Form A’s asserting the confidentiality of the same chemical identity, EPA states that it may choose to review these NOA Form A’s together “as a matter of efficiency.”

In instances where EPA denies a CBI claim, EPA would notify the submitter, in writing, of EPA’s intent to disclose the specific chemical identity and of EPA’s reasons for denying the claim.  The notice would be furnished by certified mail (return receipt requested), by personal delivery, or by other means that allows verification of the fact and date of receipt.  EPA would not disclose the specific chemical identity until the date that is 30 days after the date on which the submitter receives the denial notice.  Submitters can challenge EPA’s denial of a CBI claim by commencing an action to prevent disclosure in an appropriate federal district court.  In instances where a CBI claim is approved, EPA would so inform the submitter, and the chemical substance would be identified in subsequent publications of the TSCA Inventory by a unique identifier assigned under TSCA Section 14(g)(4), in addition to the accession number, generic name, and, if applicable, premanufacture notice case number.

Annual Review Goals and Results, Extension

EPA proposes to use its website to publish its annual goal for reviews completed under this review plan at the beginning of each calendar year, starting with its goals for 2020, which EPA anticipates would be posted in February 2020.  EPA also proposes to track the number of CBI reviews completed under this review plan each year and is proposing to use its website to publish that number at the beginning of the following year, starting with the number of reviews completed in 2020, which EPA anticipates would be posted in February 2021.
 
EPA intends to implement the CBI review plan described in this proposed rule to complete reviews of all CBI claims for specific chemical identities not later than five years after the publication of the first TSCA Inventory containing all “active” substance designations based on NOA Form A’s, as required under TSCA Section 8(b)(4)(E)(i).  Since the initial list of active substances was published on February 19, 2019, EPA intends to complete all reviews by February 19, 2024.  EPA states that it intends the annual review goals to take into consideration this target completion date, the number of claims needing review, and available resources.  According to the proposed rule, before the effective date of the final rule, EPA may begin reviewing and deciding claims that were voluntarily substantiated under the Active-Inactive rule (subject to the outcome of pending litigation involving that rule), or that appear to be clearly not entitled to protection from disclosure based upon other information available to EPA.  TSCA Section 14(i)(2) expressly permits EPA to review, require (re)substantiation of, and decide TSCA CBI claims before the effective date of such rules applicable to those claims as EPA may promulgate after June 22, 2016.  EPA states that it believes that TSCA Section 14(i)(2) clearly authorizes it to begin its reviews under TSCA Section 8(b)(4) prior to publication of this final rule, and that “doing so is appropriate in light of the Congressionally-mandated timeline for the completion of reviews.”
 
TSCA Section 8(b)(4)(E)(ii)(I) provides that after an adequate public justification, EPA may extend the five-year deadline for completion of reviews for not more than two additional years.  EPA states that while it does not currently anticipate a need for an extension, “possible justifications for an extension might include, among other things, competing TSCA obligations which prevent the Agency from completing the reviews within five years, intervening events that divert the Agency’s resources from completing the required reviews, or litigation involving the claim substantiation and review process that may delay EPA’s commencement of CBI claim reviews.”  Should an extension become necessary, EPA proposes to announce the extension and its justification to the public via a notice in the Federal Register.

Duration of Protection from Disclosure

TSCA Section 8(b)(4)(D)(ii)(III) provides that specific chemical identities for which EPA has approved a CBI claim under TSCA Section 8(b)(4)(D) must be protected from disclosure for a period of ten years, unless, prior to the expiration of that period, the claimant notifies EPA that they are withdrawing the confidentiality claim, in which case EPA cannot protect the information from disclosure; or EPA otherwise becomes aware that the information does not qualify for protection from disclosure, in which case it must take the actions described in TSCA Section 14(g)(2) (i.e., to notify the claimant of EPA’s intent to disclose the information).  EPA states that TSCA Section 8(b)(4)(D)(ii)(III) does not explicitly state when the ten-year period of protection begins, but TSCA Section 8(b)(4)(D)(ii) provides as a general matter that EPA’s actions under the review plan must be “in accordance with section 14.”  Under TSCA Section 14(e)(1)(B)(i), as amended on June 22, 2016, the duration of protection from disclosure lasts “for a period of 10 years from the date on which the person asserts the claim with respect to the information submitted to the Administrator.”
 
Notably, all specific chemical identity CBI claims subject to review under TSCA Section 8(b)(4) and this proposed rule had already been asserted by one or more persons prior to June 22, 2016, resulting in the placement of the chemical substance on the confidential portion of the TSCA Inventory.  Pursuant to TSCA Section 8(b)(4)(B)(ii) and the Active-Inactive rule, manufacturers and processors submitting NOA Form A’s were only permitted to indicate that they seek to maintain an existing claim for protection against disclosure of the specific chemical identity of the chemical substance.  TSCA Section 8(b)(4)(C) describes these requests to maintain existing claims as “claims . . .  asserted pursuant to [TSCA section 8(b)(4)(B)],” and TSCA Section 8(b)(4)(D)(i) refers to “manufacturers or processors asserting claims under [TSCA section 8(b)(4)(B)].”  Thus, EPA states that it believes Congress intended that the filing date of the request seeking to maintain the CBI claim (i.e., the filing date of the NOA Form A) may function as the date of claim assertion for purposes of determining the period of protection from disclosure.  In cases where the same specific chemical identity was subject to a CBI claim in another submission filed on or after June 22, 2016, however, “EPA believes it would be incongruous to effectively re-start the 10-year period of protection from disclosure based upon the subsequent submission of a request (i.e., an NOA Form A) seeking to maintain that claim.”  Accordingly, EPA proposes to interpret the date of assertion for purposes of calculating the duration of protection under TSCA Section 8(b)(4)(D)(ii)(III) as the date of submission of the first filing in which the specific chemical identity was claimed as CBI after June 22, 2016.  This interpretation would impact the calculation of the period of protection from disclosure where there are multiple submitters of the NOA Form A that are asserting confidentiality claims on the same specific chemical identity, as well as where one or more submitters of information to EPA outside the context of the NOA Form A has asserted a specific chemical identity confidentiality claim after June 22, 2016.  Companies will be notified of the date from which the ten-year period of protection will be calculated.
 
For example, if on July 1, 2016, a company addressing a CDR rule reporting requirement filed a report for a subject chemical substance and asserted a CBI claim for the specific chemical identity, and if EPA subsequently approved the company’s confidentiality claim, then EPA states that the ten-year time period of protection from disclosure would begin on July 1, 2016.  If that company subsequently filed an NOA Form A on January 1, 2018, and sought to maintain the confidentiality claim for that specific chemical identity, and if EPA subsequently approved that claim, the ten-year period of protection from disclosure would continue to run from July 1, 2016, and would not restart on the date of the NOA filing.  If a second company then filed an NOA Form A on February 1, 2018, seeking to maintain a CBI claim for that same specific chemical identity, and the second company’s claim were approved, the ten-year period of protection from disclosure would still run from July 1, 2016.  In cases where an NOA Form A was the first submission to assert the CBI claim for a specific chemical identity after June 22, 2016, the ten-year period of protection for an approved claim would begin on the date of that NOA filing.

The Record Retention Requirements

EPA proposes to require that persons subject to the final rule retain records that document any information reported to EPA.  The proposed rule would require such records to be retained for a period of five years beginning on the last day of the submission period, which is consistent with the statutory mandate in TSCA Section 8(b)(9)(B).

COMMENTARY

We congratulate EPA on the timely issuance of the proposed rule that should enable it to promulgate the final rule within the one-year statutory deadline.  We appreciate the clarity and concision of the discussion in the proposed rule text and believe it has set out most of the issues on which stakeholders can be expected to comment. 
 
In our view, EPA has appropriately interpreted the statutory text at Section 8(b)(4)((B)(ii) as broadly applying to any existing claim for protection from disclosure of confidential chemical identity.  As EPA states in the proposed rule, all specific chemical identity CBI claims that would be subject to the proposed rule “had already been asserted by one or more persons prior to June 22, 2016, resulting in the placement of the chemical substance on the confidential portion of the TSCA Inventory.”  EPA is thus viewing any such claim to confer confidential chemical identity status for the chemical’s Inventory listing.  Under this interpretation, any manufacturer or processor can seek to maintain and appropriately substantiate such a CBI claim even if they did not make the original claim for confidential chemical identity. 
 
One aspect that may benefit from consideration during the comment period and clarification in the final rule concerns withdrawals of confidentiality claims in situations where there are multiple claims for protection from disclosure.  The proposed regulatory text at 40 C.F.R. Section 710.55(b) discusses the situation wherein, prior to the expiration of the ten-year period of protection from disclosure, “the claimant notifies EPA that the person is withdrawing the confidentiality claim, in which case EPA will not protect the information from disclosure” (emphasis added).  This language strikes us as more categorical than necessary and may not adequately consider situations that involve multiple manufacturer or processor claims for confidential chemical identity.
 
Another aspect that may draw comment concerns EPA’s proposed approach under which it will start the ten-year clock for protection from disclosure from the date on which the claim was first asserted by any submitter after June 22, 2016.  While we appreciate the simplicity and administrative efficiency of the proposed approach, stakeholders may argue that the approach is inconsistent with Section 14(e)(B)(i) that describes the duration for protection from disclosure to be “a period of 10 years from the date on which the person asserts the claim” (emphasis added).