Regulatory Developments

Predictions and Outlook for U.S. Federal and International Chemical Regulatory Policy 2017

January 4, 2017

Predictions and Outlook for EPA’s Office of Chemical Safety and Pollution Prevention (OCSPP) 2017

Click here for a PDF brochure of the memorandum

2016 was full of surprises, two of which will drive much of the agenda for OCSPP during 2017. First, Congress significantly amended the Toxic Substances Control Act (TSCA). The changes are intended to reform the program to address the widely recognized deficiencies in the law, especially regarding existing chemicals, chemical testing, Confidential Business Information (CBI) claims, and preemption of state actions. Although many thought the chances of successful TSCA legislation were slim, the second surprise event was even more unexpected -- the election of Donald Trump as President.

What the implementation of new TSCA will look like, along with the general environmental program and emphasis of the new Trump Administration, is very unclear this early in the New Year (the new President will not arrive until January 20). What is more predictable is that the operating environment of OCSPP will change significantly, with uncertain impacts on both the U.S. Environmental Protection Agency’s (EPA) pesticide and toxic chemical regulatory programs. EPA institutionally may never be the same, and while much of the political debate is likely to concern the climate change issue, all EPA programs will likely see new or different emphasis on how, when, or why to impose any appropriate regulatory controls.

Along with a new Republican President, both the House and Senate remained with Republican majorities. EPA will now be under great pressure to align with the party platform and long-standing calls from Congressional critics to be more flexible and business-oriented in implementing its programs. Current and past policies and interpretations will be under intense scrutiny and likely to change, while Democrats in Congress and environmental advocates who supported Obama Administration policies will resist significant changes. Specific predictions about policies and decisions are purely speculative at this point, but it likely means EPA will be operating in a volatile and often hostile environment (induced by both friends and foes alike).

What is also more predictable is that Non-government Organization (NGO) environmental advocates will need to change their approach in attempting to move their agenda and policy goals away from a now unfriendly Administration. What has happened in the past during a change in Administration like this is that there is a renewed emphasis on litigation and petition challenges to avoid the executive and legislative branches. Advocacy through the judicial branch of government may be slow and uneven, but it will be seen as more likely to be a successful forum.

Operating Environment

Few things can get the attention of federal civil servants more than a promise to eliminate their Agency by the President-elect. Mr. Trump at various times promised to eliminate EPA and change the fundamental direction of the Agency on climate change and, generally, to reduce the regulatory burdens of environmental regulations on businesses. While a new President is unlikely to eliminate EPA, simply stating threats of personnel cuts, a reduced budget, workforce “reform” of changed work conditions or retirement benefits -- initiatives which are also part of the Trump platform -- will have an immediate impact on the EPA operating environment. If budget and personnel cuts are proposed, there will not only be an immediate effect on EPA morale but more specifically could lead to a large increase of staff retirements to avoid proposed changes or even simply to not want to work under the direction of the new leadership.

New Leadership

Mr. Trump has nominated E. Scott Pruitt to be EPA’s next Administrator, who is currently the Attorney General of Oklahoma. Pruitt is on record as opposing the Obama Administration initiatives on climate change and water pollution. For OCSPP, it is not clear what direction any general “stop EPA” rhetoric might mean for the regulation of pesticides and chemicals. Regulated industries will continue to need a credible and competent EPA staff to review and approve applications for both pesticides and new chemicals. The surprise election of Mr. Trump also makes unclear what type of background the new Administration will seek in a new OCSPP Assistant Administrator. Even with an emphasis on being more business friendly, programs will still have to process applications and complete risk assessments.

The regulated community is reported to be informing the incoming leadership on the need for a functional, effective program. Administration-wide initiatives, however, might swamp any pleas for an exception to government-wide budget cuts, personnel policies such as a hiring freeze, or changes to pay or retirement policies. This could be especially impactful on the toxics program, since with the new TSCA amendments there are many new rules and related initiatives that are due to be completed in 2017 and beyond, and the program is to “ramp up” its hiring and contracting budgets to help implement the new law.

Congressional Relations

Similarly, a new Republican President will complement the Republican Congress, a Congress that has been hostile to many EPA initiatives developed under the Obama Administration. This will be more evident in the pesticide program, especially where the pesticide industry has objected to policies regarding changes to the 10x safety factor and the use of epidemiological data in risk assessments, certain changes to the Worker Protection Standard (WPS), and polices to protect pollinators. In recent years, the registrant community has raised concerns about the “science integrity” of EPA decisions, and has lodged complaints about policies that industry believes have been issued or developed without sufficient transparency or requisite notice and comment rulemaking authority. These subjects generally are certain to be the focus of Congressional oversight and policy lobbying of any new EPA leadership team.

Some of these issues will be discussed in more detail below. Taken together, EPA may face a more engaged and involved Congress since the Committee leadership of the authorizing and Congressional Oversight Committees will now assume they will get more deference to their initiatives. For the toxics program, implementation of new TSCA will be the top priority of both Congress and any constituencies.

Contributors: Lynn L. Bergeson, Lisa M. Campbell, James V. Aidala, Charles M. Auer

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Biotech Forecast

The September 16, 2016, release of the proposed update to the 1986 Coordinated Framework for the Regulation of Biotechnology (Coordinated Framework) marked a major achievement of the Obama Administration. It provides a comprehensive summary of the roles and responsibilities of EPA, the U.S. Food and Drug Administration (FDA), and the U.S. Department of Agriculture (USDA) with respect to the regulation of biotechnology products. The companion document that was released on the same day, the National Strategy for Modernizing the Regulatory System for Biotechnology Products (National Strategy), sets forth a long-term strategy intended to ensure that the federal regulatory system is equipped to assess efficiently the risks, if any, of the future products of biotechnology. The reports reflect the efforts of many in response to the July 2015 directive from the White House Office of Science and Technology Policy (OSTP), OMB, the U.S. Trade Representative, and the Council on Environmental Quality directing EPA, FDA, and USDA to update the Coordinated Framework for the Regulation of Biotechnology. Public comment on the proposed update was accepted until November 1, 2016.

The National Strategy sets forth a vision for ensuring that the federal regulatory system is equipped to assess efficiently the risks, if any, associated with future products of biotechnology while supporting innovation, protecting health and the environment, maintaining public confidence in the regulatory process, increasing transparency and predictability, and reducing unnecessary costs and burdens. In the National Strategy, the federal agencies demonstrate their sustained commitment to ensuring the safety of future biotechnology products, increasing public confidence in the regulatory system, and preventing unnecessary barriers to future innovation and competitiveness. For more information, see our memoranda on our website under the key phrase Biobased Products, Biotechnology.

The update to the Coordinated Framework represents a useful first step in a process that urgently needs to continue into the next Administration. The work to date nicely lays out a blueprint for action that stakeholders can only hope will be a priority for the next Administration. The White House seeks continued engagement from key stakeholders, including public and private organizations such as companies, universities and research institutes, trade associations, scientific societies, foundations, consumer organizations, non-profits, and individual citizens.

What remains to be seen is how the Trump Administration addresses both documents, or even if it will. We would expect a natural delay occasioned by the transition to the new Administration. Whether incoming leadership in the White House OSTP and in the federal agencies charged with regulating products of biotechnology pick up where the Obama Administration left off is entirely unclear. We note that the update to the Coordinated Framework was largely driven by the need for clarity by the regulated community. Continued activity to implement the update may resonate with the incoming Administration.

Contributors: Lynn L. Bergeson, Charles M. Auer, Kathleen M. Roberts, Richard E. Engler, Carla N. Hutton

B&C professionals are well-known as being at the forefront of legal, regulatory, and science policy deliberation and advocacy in the rapidly-developing field of industrial biotechnology. The Woodrow Wilson International Center for Scholars asked us last year to collaborate in writing and releasing "The DNA of the U.S. Regulatory System: Are We Getting It Right for Synthetic Biology?" which looks at the current regulatory oversight of synthetic biology in the United States through case studies of synthetic organisms, synthetic chemicals, biopesticides, biomining products, and genetically modified plants, which are regulated by EPA, FDA, and USDA.

 

Office of Pollution Prevention and Toxics (OPPT) Predictions

One of the big questions posed in our 2016 Predictions memo was resoundingly answered when Congress passed, by large bipartisan majorities, and President Obama signed the Frank R. Lautenberg Chemical Safety for the 21st Century Act on June 22, 2016. The past six months have been a whirlwind of activity for EPA and, given our expectation that the Trump Administration will work to implement new TSCA, 2017 promises to be busier still. The early implementation of such a complex, nuanced statute, presents difficult challenges under the best of circumstances and, as we have noted in our many memoranda and blog posts, there are numerous rules and actions that are required to be completed by June 2017. These and other likely actions for 2017 are summarized and briefly commented upon below. Add to this the challenges presented by a new Administration of a different party and things truly could get interesting.

At the same time, as strong believers in our small “r” republican model of governance, we recognize that there can be benefits when legislation is passed under one party but initially administered by the other party. This was the case when old TSCA was enacted under President Ford and first implemented under a different Administration (President Carter) and party. Now, given the surprising electoral outcome, the same type of opportunity for realizing bipartisan progress in dealing with chemical issues is presented in the case of new TSCA.

As faithful readers will know, we have raised concerns with some of the new TSCA interpretations and approaches that have or seem to be coming forward from EPA over the past six months. A new Administration will, at a minimum, allow for a reconsideration of early policies and initial interpretations of new TSCA. We can hope for a carefully considered, measured, and balanced approach to come forward under the new Administration, an approach that can properly address old TSCA’s deficiencies and impediments, and serve to realize the potential that we saw when the bipartisan TSCA Amendments were first unveiled by Congress in the Spring of 2016.

Actions Expected to be Taken/Completed in 2017

The items listed below are, with one exception, measures required under new TSCA. Since promulgation will occur during the new Administration, the final rules are likely to differ, to a greater or lesser extent, from the proposals. It is also possible that rules could be re-proposed or the comment period re-opened to allow the Trump Administration to get its ideas into play; this, however, could cause such actions to miss their statutory deadlines.

April 2017

  • Publication of inventory of mercury supply, use, and trade in the United States (Section 8(b)(10)(B)).

June 2017

  • Promulgate procedural rules establishing prioritization and risk evaluations processes and criteria. The proposed rules are expected to issue in early 2017. (Section 6(b)(1)(A)).
  • Promulgate Inventory reset reporting rule. The proposal is expected to issue in early 2017. (Section 8(b)(4)).
  • Establish the Science Advisory Committee on Chemicals (Section 26(o)). EPA published a notice requesting comment on a set of 29 candidates for the SACC by January 9, 2017, a date that ensures that the final selection will fall to the Trump Administration. See our TSCA blog post for more information.
  • Issue guidance document for interested persons to use in preparing draft risk evaluations (Section 26(l)(5)).
  • Issue scope documents for the ten risk evaluation chemicals announced by EPA on November 29, 2016. 81 Fed. Reg. 91927 (Dec. 19, 2016). This step is required to be completed within six months of the announcement (Section 6(b)(4)(D)). The chemicals include 1,4-dioxane, 1-bromopropane, asbestos, carbon tetrachloride, cyclic aliphatic bromide cluster, methylene chloride, N-methylpyrrolidone (NMP), Pigment Violet 29, tetrachloroethylene (perchloroethylene), and trichloroethylene (TCE).
  • Complete EPA consultation with the Small Business Administration, review adequacy of the definition of a small manufacturer, and determine, after notice and comment, whether revision of the standard is necessary (Section 8(a)(3)(C)).

We also expect EPA to propose and promulgate, perhaps by June 2017, the fees rule at Section 26(b). Although this timeline is not required by new TSCA, EPA has expressed its desire to issue a final rule within one year of new TSCA enactment and we think timely completion of this action in 2017 is likely.

For more than 25 years, B&C has offered clients an unparalleled level of experience and excellence in matters relating to TSCA. Our TSCA practice group includes five former senior EPA officials, an extensive scientific staff, including seven Ph.D.s, and a robust and highly experienced team of lawyers, scientists, and regulatory professionals. Contact Lynn L. Bergeson if you would like to discuss how our team can assist you with product approval, product review, and general compliance measures under TSCA.

Actions that May Come Forward in Early 2017

These items are discretionary and if proposed by the Obama Administration, could be allowed to continue or may be withdrawn by the Trump Administration. In addition, the Congressional Review Act (CRA) allows Congress to review, via an expedited legislative process, promulgated federal regulations within 60 legislative days of their issuance and, by passage of a joint resolution, to overrule a regulation. If signed by the President, the action invalidates the regulation. The best known example of the use of this procedure is invalidation of the ergonomics rule issued by the Occupational Health and Safety Administration in 2001.

  • Promulgation of a Significant New Use Rule (SNUR) on long-chain perfluoroalkyl carboxylate and sulfonate chemical substances. The rule could be promulgated in part in 2017, although it appears that under new TSCA, EPA would need to re-propose the rule if it wishes to make imported articles containing such chemicals subject to the SNUR. The issue concerns the requirement at Section 5(a)(5) that EPA make an affirmative finding that the reasonable potential for exposure to the chemical from the article(s) justifies notification.
  • Proposed SNUR on use of TCE in non-aerosol spray degreasers. We expect this rule to be proposed sometime in 2017.
  • Two proposed Section 6(a) TCE rules. The first rule concerns use as a spotting agent in dry cleaning and in consumer aerosol spray degreasers. The second rule, which is identified as an economically significant rule, concerns use as a vapor degreasing agent. The first rule, published in the Federal Register on December 16, 2016, has some likelihood of proceeding while we believe there is significant potential for the second TCE rule to be withdrawn or be re-proposed.

In addition, we note EPA’s decision to conduct a risk evaluation focused on other uses of TCE and observe that this decision could have ripple effects. While the savings provision at Section 26(p)(2) enables EPA to rely on final risk assessments in taking the Section 6 actions discussed in the preceding paragraph, we observe that TCE’s risk assessment is quite controversial, particularly regarding the interpretation of certain key adverse effects, and that issues encountered in preparing the new risk evaluation seem likely to “bleed through” and affect at least the vapor degreasing action.

  • Proposed Section 6(a) rule on use of methylene chloride and NMP in paint strippers. We believe this rule, if issued in final as written is likely to be affected by the new Administration. We believe that EPA’s decision to undertake new risk evaluations for these chemicals increases the likelihood that the rule will be withdrawn or at least be re-proposed once the new risk evaluation has been issued in final (2019 timeframe).
  • Promulgation of Section 8(a) reporting and recordkeeping rule on existing chemical nanoscale materials. We believe that if EPA promulgates a narrow rule that, for example, does not require advance notification of manufacture of such nanoscale materials, such a rule could enter into force under the new Administration, depending on the specifics of what is required. If, on the other hand, the rule includes the proposed notification requirement (see our April 6, 2015, memorandum, “EPA Proposes Reporting and Recordkeeping Requirements for Nanoscale Materials”), we believe it could become the target of consideration under the CRA or an announcement by the Trump Administration that EPA will not enforce this requirement, pending amendment or withdrawal of the action. While the Section 8(a) rule does not meet the $100 million economic impact criterion to be considered a “major rule” under the CRA, we believe it could be identified by Congress as presenting “significant adverse effects” on competition and innovation and, if so, would be subject to CRA review.

Expected Fate of Other Rules and Actions

Several other proposed rules seem unlikely to get much traction in the Trump Administration. These include the 2012 proposed SNUR and test rule on certain polybrominated diphenyl ethers (PBDE), the 2014 proposed SNUR on nonylphenol and nonylphenol ethoxylates (NP/NPE), and the 2016 proposed amendments to the SNUR procedural rule to update the hazard communication requirements and other aspects. The PBDEs rules are unlikely to proceed due to the issues presented by the proposals and the requirement under new TSCA for EPA to justify notification for PBDEs in imported articles. The proposed NP/NPEs SNUR also presented a number of issues as discussed in our memo "EPA Proposes SNUR for Nonylphenols and Nonylphenol Ethoxylates," and we believe it is unlikely that the proposed regulation will be pursued. The SNUR procedural rule could be withdrawn or might eventually be promulgated as a narrow rule that avoids some of the issues encountered in the proposal.

One of the open actions concerns follow-up by EPA on an expected proposed rule for Section 8(a) and 8(d) reporting on oil and gas production (i.e., fracking) chemicals that was occasioned by a Section 21 petition filed in 2011. We do not expect to see this rule pursued in the new Administration.

Our 2016 Predictions memo also noted and discussed several enforcement actions as well as “clarifications” premised on chemical identity issues as a way to challenge the presence of existing chemicals listed on the Inventory. Examples discussed included attempts to clarify EPA’s existing guidance on statutory mixtures and enforcement actions targeting “fractions” such as chlorinated paraffins (see our memorandum "EPA’s Enforcement Actions Target 'Fractions'" and our 2012 article "Are TSCA Section 8(b)(2) Statutory Mixture Categories Subject to Reporting Under the Chemical Data Reporting Rule?"); the NP/NPE SNUR discussed also presented a number of nomenclature issues. New TSCA Section 8(b) provisions concerning the legal status of Class 2 nomenclatures and the treatment of the individual members of statutory mixture categories as being “included” on the Inventory have clarified some of these issues, although exactly how things get sorted out is yet to be discerned. At any event, we think that the new Administration is not likely to continue the enforcement approach that previously caused us such heartburn.

New Chemicals

Notifying new chemical substances and new uses of chemical substances subject to significant new use rules will be challenging in the New Year. New TSCA Section 5 requires EPA OPPT to review and make a determination for all Premanufacture Notification (PMN) new chemicals, and the process OPPT is developing has unduly slowed the review process and raised many questions. EPA wisely convened a stakeholder meeting December 14, 2016, and stakeholders expressed broad discontent with the lack of transparency as well as frustration with the lengthy delays they are experiencing. That said, little was learned on how OPPT intends to address the problems that OPPT’s implementation of new TSCA has created, and OPPT remains consumed by new chemical notifications -- the review of which will continue to bring uncertain results and invite costly delays. This is an area which should get the close attention of the incoming Administration, given the need for the ongoing innovation potential provided by new chemical introductions in ensuring the continued competitiveness of the domestic chemical sector.

Other New TSCA Actions that Could Occur in 2017

We expect EPA to use its new TSCA Section 4 order authority in the coming year. The limitations in data sets available for most TSCA chemicals are relatively significant and we believe that EPA, perhaps starting with chemicals in the 2014 update to the Work Plan, will take steps to require additional testing. While this could include both hazard and exposure information, we think that 2017 actions will most likely focus on the former and possibly on targeted exposure information. We are hopeful that EPA, at the same time, will begin in 2017 to sort out its thinking regarding its approach to tiered exposure testing, a new element under new TSCA.

For breaking news and expert analysis regarding TSCA reform implementation and related legal and administrative developments, visit and subscribe to B&C’s TSCA blog: www.TSCAblog.com.

 

 


 
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