Regulatory Developments

Beware the “Naturally Occurring” Exemption

January 10, 2014

Intuitively, entities in the "biobased" space may think the "naturally occurring" substance exemption under the Toxic Substances Control Act (TSCA), the law that governs chemical products in the U.S., applies to their "biobased" materials. The scope of the exemption is limited, however, and complications arise when companies mistakenly assume a material is naturally occurring and therefore exempt from TSCA. TSCA has a very narrow definition of a naturally occurring substance, which is:

[A]ny chemical substance which is naturally occurring and: (1) Which is (i) unprocessed or (ii) processed only by manual, mechanical, or gravitational means; by dissolution in water; by flotation; or by heating solely to remove water; or (2) Which is extracted from air by any means. . . 40 C.F.R. ยง 710.4(b).

Careful consideration as to the material in question and how it is processed must be given to determine if the naturally occurring exemption applies. Using the flowchart of biochemical conversion developed by the U.S. Department of Energy Bioenergy Technologies Office as a template, see thoughts as to whether the naturally occurring exemption applies in each of the processing steps.

In Step A, it is likely that the feedstock supply is biomass that is either unprocessed or processed only by manual, mechanical, or gravitational means. If that is true, the biomass would be considered naturally occurring.
In Step B, in which the cell walls are broken down, one must consider whether the feedstock/biomass is simply heated or if chemicals are added. In the first instance, output from Step B would continue to be considered naturally occurring, but in the second instance, it would not.
In Step C, enzymes or other catalysts are added to the biomass, which enables the sugars to be separated.
In Step D1/D2, microorganisms, or chemical catalysts are used to convert the sugars to other building block chemicals. The derived substances generated in these steps (C, D1 or D2) -- and any additional steps -- would not be considered naturally occurring.
Importantly, once a naturally occurring substance is processed chemically, it is no longer considered naturally occurring, nor are its derivatives considered naturally occurring.

To provide further perspective, consider the guidance that the U.S. Environmental Protection Agency (EPA) has offered for other industries. In response to an inquiry from The Fertilizer Institute, EPA argued that the production of phosphoric acid through digestion of phosphate rock with sulfuric acid does not meet the naturally occurring exemption criteria. In guidance provided to the mining industry, EPA stated that fractions separated out from extracted ores or minerals would, likewise, not be considered naturally occurring.

The concept of extracting useful materials from rock or ore is similar to the idea of extracting useful compounds from plant materials. Applying the EPA logic in the examples above to biobased chemical products, the plant product (equivalent to the rock or ore above) would be considered naturally occurring, but once the starting substance has been transformed -- whether by fermentation, enzymatic or other processes -- the materials produced are now subject to TSCA.

Being subject to TSCA means the chemical substance must be listed on the TSCA Inventory (unless another exemption applies) and is subject to reporting and recordkeeping requirements under TSCA. If the substance is not listed on the TSCA Inventory, it requires pre-market notification and cannot be manufactured for commercial use until it is added to the Inventory via a new chemical notification submitted to EPA under TSCA Section 5. Biobased chemical substances are subject to the same regulatory requirements as any manufactured chemical substance. These would include new chemical notification and significant new use restrictions under Section 5, restrictions under Section 6, reporting obligations under Sections 8(a), 8(d), and 8(e), recordkeeping under Section 8(c), reporting obligations under Chemical Data Reporting (CDR) (Section 8), reporting obligations under Section 12(b), and associated penalties or enforcement provisions.

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