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Industry, NGOs, Republicans, and Democrats Bond over Chemistry

Former Associate
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by Michael C. Ford and Farris J. Gillman*

The Frank R. Lautenberg Chemical Safety for the 21st Century Act was passed in the House by an overwhelming vote of 403 – 12.  After passing the Senate, it was signed into law by President Obama on June 22, 2016. The Lautenberg Act is the first major environmental law to pass since 1990.  With over 85,000 chemicals and compounds in use across the United States, this statute has the potential to greatly affect the marketplace for goods throughout the economy.  Groups associated with the chemical industry hope that it will bring stability to the regulation of chemicals and increase consumer trust and confidence in their products.  Environmentalists laud it as a long awaited and necessary reform, but still worry that it has not gone far enough.

The Lautenberg Act is an overhaul of the Toxic Substances Control Act (TSCA), passed in 1976. TSCA gave the Environmental Protection Agency (EPA) the authority to require reporting, testing, and restrictions on chemical substances.  TSCA was meant to protect the public and environment from unreasonable risk of injury associated with the production, supply, and distribution of chemical substances.  Notably, this did not include chemicals in food, cosmetics, and pesticides.  In spite of this grant of authority, TSCA left EPA largely toothless, grandfathering in 60,000 preexisting chemicals in use as of 1972.  Moreover, in 40 years, EPA only used TSCA to ban a handful of chemical substances.  This largely stemmed from the fact that it required little to no premarket testing, effectively assuming chemicals to be safe unless proven otherwise.  Additionally, EPA has a very high burden of proof that it must meet to show that a chemical poses an “unreasonable risk.”  This prevented EPA from banning even the subject of perhaps one of the longest tort episodes in history, asbestos, which is banned in 50 other countries.  The result is that states were left to regulate chemicals in the absence of a strong regulatory presence from the federal government.  For companies operating in more than one state, this considerably increased their burden in complying with regulations as they were applied haphazardly across the country with varying restrictions in different states.

The Lautenberg Act changes EPA’s powers under TSCA in several ways that will primarily affect chemical substance manufacturers. Of course, as these substances are incorporated into virtually all other products on the market, other manufacturers will likely see the effects of this regulation and experience some externalities from it as well.  EPA can order testing from chemical manufacturers using a tiered approach and charge a fee for reviewing the results.  Fees for smaller businesses will be lower.  Over the course of testing, companies will be unable to use trade secret protection against the government for their products, but EPA will keep all confidential business information (CBI) private until 10 years after the disclosure.  Companies can obtain 10-year extensions for CBI protection, but the assumption is that CBI related to chemicals that are ultimately banned or phased out will be made available to the public.  EPA also has a time limit to assess new chemicals and order testing.  If the agency fails to do so in a timely manner, it will have to refund the company’s application fees.  Additionally, EPA will be resetting its existing inventory list created under TSCA.  In doing so, it will reevaluate all of the chemicals on the list and new submissions from the industry, with the order of that review based on the chemical’s health risks.

Notably, federal regulation of the chemical industry will preempt state regulation under the Lautenberg Act. State regulations from before April 22, 2016 will not be subject to preemption.  However, states will not be able to regulate chemicals while EPA is evaluating a chemical, which could take up to three years, without obtaining a waiver to do so from EPA.

Many believe the full effects of the Lautenberg Act will not be felt for a full generation.  EPA may have the power to increase testing, but it remains to be seen if it can outright ban a chemical in practice.  Chemical organizations and societies have remained confident that the reform will help, not hinder their industry, and environmental and public health groups remain cautiously optimistic that this new Act will increase human and environmental safety.  The politicians are still in disbelief that they actually agreed on something, and ultimately, what the statute does not tell us, time will.

*Farris J. Gillman is a 2016 summer associate in Snell & Wilmer’s Phoenix office.