September 01, 2017

It's 2017, do you know where your substances are?

Kindra Kirkeby

Not just an environmental thing1

In the evolution of international chemical control laws, knowing where your products are going, and whether those products or their components are regulated in the myriad of jurisdictions they cross, is developing into an imperfect science of conjecture. While somewhat late to the game, in 2016, the United States finally adopted an update to its over 30-year-old chemical control legislation. Many companies are scrambling to determine whether the Toxic Substances Control Act (TSCA), as revised by the Frank R. Lautenberg Chemical Safety for the 21st Century Act (the “new TSCA” or Lautenberg)is going to have an impact on their multinational supply chain obligations. Chemical processors (often Toll Manufacturers), who had long presumed their manufacturer-customers would assure their downstream TSCA compliance, are now asking for formal assurances of compliance. Raw material suppliers are facing customer demands for broad certifications of compliance with all countries’chemical inventories, including verifying consistent identities for commodities they supply globally. And even articles importers are demanding universal chemical registration/notification/exemptions from those supplying the chemical components in their articles.

Reset retrospective

On June 22, 2017, EPA released pre-publication Federal Register notices of the final framework actions under Lautenberg. The final rules include, inter alia, the TSCA inventory notification rule, which requires reporting of any chemicals manufactured, imported, or processed in the United States “backward looking” in the ten years prior to the deadline; virtually mandating these manufacturers, importers, and processors conduct exhaustive reviews of their chemical processing and manufacture/import activities over the past ten years. While Lautenberg’s communicated goal is to create transparent processes and reasonable timelines with which manufacturers, importers, processors, and retailers can comply, echoes are being heard of the supply chain trickle-down effect that many companies experienced during the inception of Europe’s Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regulation. Lautenberg’s inventory reset has many companies intricately evaluating the substances, chemicals, mixtures, and articles that they are, or may be, importing, manufacturing, processing, and distributing in the United States. Even if they aren’t expecting to import or manufacture in the United States, they must be able to meet the demands of customers that will, or meet the demands of those customers that require global supply chain assurances from their suppliers.

The final inventory reset reporting rule, once final, will be mandatory for manufacturers and importers, and will continue to be voluntary for processors. However, processors who elect not to report may have implications as any substances not reported during the “backward-looking” reporting period will be designated as inactive. Once a substance has been designated as inactive, it can no longer be manufactured, imported, or processed in the United States until the forward-looking reporting requirements are satisfied.2 And for the ill-fated few that find that they have gaps in their chemical reporting, whether by development of new chemistries/knowledge, variations in manufacturing processes, or simply through a subsequent merger or acquisition, there is diminutive clemency outside of the U.S. Environmental Protection Agency’s (EPA’s) Audit Policy.

Supply chain challenges

While EPA withdrew some previously required elements for the “backward-looking” period, such as the removal of both the dates of commencement of commercial activity and the details on the specific commercial activity, the burden has merely shifted to industry to assure compliance. Despite giving manufacturers several tangible options to avoid the duplication of efforts where EPA already has active inventory notice, these measures merely shift the burden from the importer, manufacturer, processor, or retailer to their global suppliers and upstream supply chain manufacturers to provide access to an information pipeline. As entities place their substances into commerce, they will likely demand more detailed and comprehensive information from their upstream suppliers.

Companies that exclusively import or process chemical substances and products may find themselves in a similar bind, requiring their suppliers to provide more information than they previously required on both chemical composition and nomenclature.3 Likewise, suppliers of companies who have any aspirations of importing or selling to an importer who imports into the United States may find themselves in need of a more diligent understanding of global chemical control laws and how regulatory changes or certain suppliers’ materials outside of the United States may affect their sales into the United States.

The Lautenberg inventory rule may offer broader exemptions to imported articles, to suppliers of appropriately defined mixtures and to suppliers who have substances declared as impurities or by-products with no commercial purpose, but the devil is in the details. Multinational importers and manufacturers who haven’t looked at TSCA in 20 years will be reluctant to start now. It’s much easier for a large multinational conglomerate to require blanket statements of chemical inventory compliance—or even global chemical regulation compliance—or to require adding an addendum or additional clause to a universal supply agreement, than it is to bring together a team of international regulatory experts to reconcile these supply chain challenges. Companies with less robust regulatory teams, and even skilled departments with broad coverage, will be overburdened with requests for information across the supply chain.

Confidentiality concerns

Finally, any manufacturers or processors of a substance on the existing confidential inventory must ask to maintain that existing claim for confidentiality or the substance will be moved to the active inventory.4 Global suppliers, manufacturers, processors, importers, and retailers that have genuine concerns for protecting certain confidential business information will need to be proactive in protecting their intellectual property as it progresses downstream in the supply chain. Industry should anticipate and plan for the additional steps necessary to protect any information that could be disclosed as part of the inventory reset.


1 According to EPA’s Pre-Publication Final Rule, June 22, 2017,“You may be affected by this action if you domestically manufactured, imported, or processed a chemical substance listed on the TSCA Chemical Substance Inventory for nonexempt commercial purpose during the 10-year time period ending on June 21, 2016. You may also be affected by this action if you intend to domestically manufacture, import, or process in the future a chemical substance listed on the TSCA Chemical Substance Inventory.”

2 Under new TSCA § 8(b)(5), processing of an inactive chemical after EPA’s designation will be prohibited.

3 More substantive knowledge of the chemicals is essential to assuring they should be on any chemical inventory; compliance with Lautenberg,akin to other global chemical inventories, almost requires any entity that places a substance into commerce to verify and understand the products it handles.

4 The Lautenberg amendments advise to “seek to maintain an existing claim for protection against disclosure of the specific chemical identity of the substance as confidential.” TSCA § 8(b)(4)(B)(ii).

Kindra Kirkeby

Kindra Kirkeby is assistant counsel at NewMarket Corporation in Richmond, Virginia, where she specializes in counseling, compliance, and litigation matters involving global environmental, health, and safety issues. Mrs. Kirkeby spoke on a panel discussing chemical management reform at the Section’s 46th Spring Conference.