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May 11, 2016

TSCA:  B&C Analyzes CDR Enforcement Actions from 2007 to 2014

Bergeson & Campbell, P.C.

In preparation for the opening of the reporting period for the U.S. Environmental Protection Agency’s (EPA) 2016 Chemical Data Reporting (CDR) rule, Bergeson & Campbell, P.C. (B&C®) conducted a review of recent enforcement actions taken by EPA under the CDR rule. B&C reviewed enforcement action data from May 2007 through September 2014 and found 37 different cases involving an allegation of a violation of the CDR rule. Based on the data collected, B&C highlighted a number of trends that companies involved in the manufacturing and importing of chemical substances subject to the Toxic Substances Control Act (TSCA) may find compelling.

Recent Violations Discovered through EPA Audits; Expecting a Shift Post-2016

Most of the claimed violations that led to subsequent enforcement actions were discovered by an EPA audit. B&C noted that at least 25 of the 37 enforcement actions highlighted in this review resulted from either an EPA site inspection or an Information Request Letter (IRL). TSCA Section 11 authorizes EPA to conduct an inspection at any site where toxic chemicals are manufactured, processed, stored, or held before their distribution. It does not restrict EPA to conducting inspections only at sites where EPA has reason to believe a violation has occurred. These audits, therefore, can occur at any time as EPA is only required to present to the owner of the subject facility a written notice that the inspection will take place. This finding certainly highlights the importance for facilities to remain vigilant in maintaining full compliance at all times, as EPA can issue an audit notice at any time.

While audits were found to be the source of most violations since 2007, B&C cautions that this trend may shift given that EPA will be able easily to search, scrutinize, and compare CDR data that will be submitted in 2016 with past CDR reports and/or notices of commencement for new chemicals. Indeed, one of the primary components for EPA’s Next Generation Compliance program is to “[d]evelop and use innovative enforcement approaches (e.g., data analytics and targeting) to achieve more widespread compliance.” Further, in its “Innovative Enforcement” section of the Next Generation Compliance: Strategic Plan 2014-2017, EPA states: “By combining the lessons learned in implementing Next Generation Compliance with new capabilities in analyzing larger data sets, we will be able to better identify serious violators, ensure the integrity of electronic reporting, and more effectively and efficiently track compliance with settlements, while supporting new approaches to improve compliance.”

EPA Region 4 with Most Penalty Assessments

B&C’s review noted that certain EPA regions were considerably more active in pursuing CDR rule enforcement actions than others. Whether this is a function of what is publicly available by Regional EPA offices or some other factor is unclear. Regions 2, which covers New Jersey, New York, Puerto Rico, the U.S. Virgin Islands, and eight Tribal Nations, and Region 4, which covers Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, and six Tribes, were particularly consistent in identifying these violations during the reviewed time period. The vast majority of penalties were issued by Region 4; during the period of 2007-2014, 21 of the 37 CDR enforcement actions discovered by B&C occurred in Region 4. Companies with facilities that are located in Region 4 may wish to pay particular attention and ensure their reporting records are complete in anticipation of a potential EPA audit.

Assessed Penalty Fees Varied; Voluntary Disclosure Penalties Not Necessarily Lower

While EPA Regions 2 and 4 were consistent in penalizing CDR rule violations during the reviewed time period, EPA’s overall assessment of penalty figures varied widely. B&C’s review did not identify any regional trends in penalty assessment nor any significant increases or decreases of penalty amounts over the years reviewed. The penalties assessed in the cases B&C identified ranged from $4,200 to $503,110. Generally, companies that had greater numbers of chemicals that were not reported or reported with errors at their facilities were assessed higher total penalties, but this trend is not consistent. For example, Region 2 issued a total penalty of $180,000 to Landers-Segal Color Company for failing to report 19 different chemicals, but issued a penalty of only $65,000 to Special Materials Company for failing to report 31 different chemicals.

B&C’s review included a rough, per-chemical cost breakdown for each of the identified cases calculated by dividing the total cost of the penalty by the number of subject chemicals in each case. This cost breakdown also demonstrated widely varying penalties assessed by EPA. For example, EPA Region 4 assessed a total penalty of $141,566 in one case for reporting with errors eight chemicals and failing to report 14 chemicals. The rough, per-chemical cost breakdown in this case amounts to about $6,434 per chemical. In other cases, however, violations were assessed penalties by as much as $18,075 for failing to report a single chemical. It is important, therefore, that companies not assume that EPA will issue penalty assessments consistent with similar cases that occurred previously.

Finally, B&C’s review noted that voluntary disclosure of CDR rule violations did not necessarily work in a company’s favor. EPA encourages voluntary disclosure of violations by pledging that it will reduce penalties for CDR rule violations by as much as 50 percent in cases where the company voluntarily disclosed its violation. This did not, however, guarantee that the final assessed penalty was significantly lower than cases in which EPA discovered the violation through an audit. The review identified three cases in which the subject company voluntarily disclosed information about possible CDR rule violations and, in each case, the company was still assessed a significant penalty. In the first case, the company was assessed a penalty of $49,300 for failing to report nine chemicals. In the second case, the company was assessed a penalty of $125,910 for failing to report six chemicals and, in the third case, the company was assessed a penalty of $14,448 for failing to report one chemical.


While an EPA audit may be initiated at any time, there are steps that companies can take to ensure they are prepared. Maintaining accurate chemical production volume information at all facilities will help to ensure that a company does not report with errors or fail to report a substance under the CDR rule. Keeping these records up to date and readily available will allow companies to respond swiftly to any EPA requests for information and will help to avoid late reporting penalties. Participating in self-audits, or better still third-party audits, will help companies determine if there are potential recordkeeping gaps that must be addressed. Finally, any company that is unsure whether a chemical substance that was imported or manufactured at one of its facilities requires reporting under the CDR rule is encouraged to ask for additional help. B&C employs a number of regulatory consultants who are experts on TSCA reporting rules and can provide valuable information on those chemicals in question, allowing companies to avoid reporting with errors their products.