By Lynn L. Bergeson and Carla N. Hutton
On May 28, 2020, the U.S. Environmental Protection Agency (EPA) Office of Inspector General (OIG) issued a report entitled EPA Toxic Substances Control Act Consent Orders Need Better Coordination. OIG conducted the evaluation to determine what actions EPA took to verify compliance with the requirements of the 2009 Toxic Substances Control Act (TSCA) Premanufacture Notice Consent Order with DuPont (responsibilities transferred to The Chemours Company in 2015) to prevent the release of GenX chemicals in the Cape Fear River in North Carolina. OIG notes that GenX chemicals are a type of per- and polyfluoroalkyl substances (PFAS) found in surface water, groundwater, drinking water, rain water, and air emissions. OIG found insufficient communication and coordination between the two EPA offices responsible for developing and enforcing the consent order requirements designed to reduce risks in the manufacture of GenX chemicals. Under the 2009 Consent Order, EPA required DuPont to determine how to recover and capture 99 percent of GenX’s manufacturing discharges and air emissions. The Consent Order was not reviewed or approved by the Office of Enforcement and Compliance Assurance (OECA), which is responsible for conducting inspections to verify compliance, however. Until June 2017, EPA’s actions to verify compliance with the 2009 Consent Order and new chemicals testing requirements consisted of tracking and reviewing information provided by the manufacturer. According to OIG, following the local media coverage of the presence of GenX chemicals in the Cape Fear River in 2017, Region 4 and EPA contractors conducted EPA’s first on-site compliance monitoring inspection at the Fayetteville Works facility, which manufactures GenX. OIG found that the Region 4 inspectors were unaware of the 2009 Consent Order and its requirements until the inspection was requested by EPA headquarters.
OIG recommends that EPA establish and implement processes:
- For OECA to review and approve the terms and conditions of TSCA Section 5(e) Consent Orders that it is responsible for verifying during compliance monitoring and enforcement activities; and
- To provide final TSCA Section 5(e) Consent Orders to regions and verify that the regions have the final consent orders.
OIG states that EPA “did not provide an acceptable corrective action for Recommendation 1, and we consider this recommendation unresolved.” For Recommendation 2, EPA provided an alternative course of action that OIG finds acceptable. OIG considers Recommendation 2 resolved with corrective action pending.
By Lynn L. Bergeson and Carla N. Hutton
On May 20, 2020, the U.S. Environmental Protection Agency (EPA) issued a press release announcing a final agreement with Swix Sport USA (Swix) resolving Toxic Substances Control Act (TSCA) violations associated with the importation of noncompliant ski wax products containing per- and polyfluoroalkyl substances (PFAS). According to the press release, Swix agrees to pay a fine and develop a $1 million educational program to raise awareness in ski communities about PFAS chemicals in ski waxes. EPA states that Swix violated the TSCA Premanufacturing Notice requirements and Import Certification requirements when it imported ski wax products containing six different PFAS chemicals on at least 83 occasions that were not included on the TSCA Inventory or otherwise exempt for commercial purposes. Once the chemicals were identified, Swix immediately ceased importation of the products containing the PFAS substances and quarantined products in its control in the United States.
Under the terms of the settlement, Swix has agreed to spend approximately $1 million to develop and implement an outreach and training program referred to as a Responsible Waxing Project (RWP) and pay a $375,625 civil penalty. The RWP is aimed at: (1) educating the ski racing community about PFAS chemicals in racing waxes and their impact on the environment; and (2) promoting the use of wax alternatives with lower environmental impact, including but not limited to racing waxes that are PFAS-free. Another objective of the RWP is to educate and motivate the ski racing community to phase out (and ultimately eliminate) the use of PFAS-containing waxes in ski racing beginning with the 2020 ski season.
EPA notes that the RWP has several elements, including an education and training component for ski wax technicians on the proper disposal of racing wax shavings and the use of appropriate personal protective equipment (PPE) during the waxing process. Other RWP elements include:
- PFAS ski wax education program, including two on-site presentations at a major ski event that attracts more than 10,000 participants;
- Training for wax technicians on the proper use of PPE, proper ventilation, and proper disposal of wax shavings;
- Program for ski wax coaches available online and used at on-site presentations at a minimum of ten events designed for coach certifications;
- Additional outreach to college racing teams and clubs that educates high school and college level skiers about the RWP content;
- A dedicated Swix project manager who oversees the project to completion;
- Website development for all videos created as part of the settlement for technicians, coaches, and teams; and
- Distribution of PFAS alternative wax information materials at a minimum of 50 ski sites.
EPA’s Environmental Appeals Board approved the consent agreement and final order on May 13, 2020.
By Lynn L. Bergeson and Carla N. Hutton
The U.S. Environmental Protection Agency (EPA) announced on April 2, 2020, that it sent a letter to all members of Congress to correct the record on its temporary policy regarding enforcement of environmental legal obligations during the COVID-19 pandemic. EPA states that “[a]s should be apparent to anyone who reads the policy, allegations that EPA ‘will cease all enforcement actions during the coronavirus pandemic’ and that the temporary policy ‘absolves polluters of all responsibility’ are simply not true.” According to EPA, it expects regulated entities to comply with all obligations, and if they do not, EPA emphasizes that the policy says EPA will consider the pandemic, on a case-by-case basis, when determining an appropriate response. Furthermore, in cases that may involve acute risks, or imminent threats, or failure of pollution control or other equipment that may result in exceedances, “EPA’s willingness to provide even that consideration is conditioned on the facility contacting the appropriate EPA region, or authorized state or tribe, to allow regulators to work with that facility to mitigate or eliminate such risks or threats.”
EPA states that it is “not unusual for EPA to exercise enforcement discretion to address emergency situations that disrupt normal operations, such as hurricanes. What is unusual is that the current crisis caused by the COVID-19 pandemic affects the entire nation,” rather that a discrete geographic area.” According to EPA, it developed the temporary policy to allow it to prioritize its resources to respond to acute risks and imminent threats, rather than making case-by-case determinations regarding routine monitoring and reporting. EPA notes that the development of the policy was a group effort, involving “multiple calls” and with “drafts shared among EPA staff and managers, both career and political, at both headquarters and in the regions.” Once the COVID-19 threat has ended, “EPA expects regulated facilities to comply with regulatory requirements, where reasonably practicable, and to return to compliance as quickly as possible.” Additionally, according to EPA, “the policy makes clear that EPA expects operators of public water systems to continue normal operations and maintenance during this time, as well as required sampling, to ensure the safety of vital drinking water supplies.”
More information on EPA’s temporary policy is available in our March 27, 2020, blog item, “EPA Announces Temporary Enforcement Discretion Policy.”
By Lynn L. Bergeson and Carla N. Hutton
The U.S. Environmental Protection Agency (EPA) announced on March 26, 2020, a temporary policy regarding enforcement of environmental legal obligations during the COVID-19 pandemic. EPA states that its temporary enforcement discretion policy applies to civil violations during the COVID-19 outbreak. The policy addresses different categories of noncompliance differently. For example, according to EPA, it “does not expect to seek penalties for noncompliance with routine monitoring and reporting obligations that are the result of the COVID-19 pandemic but does expect operators of public water systems to continue to ensure the safety of our drinking water supplies.” The policy describes the steps that regulated facilities should take to qualify for enforcement discretion. To be eligible for enforcement discretion, the policy requires facilities to document decisions made to prevent or mitigate noncompliance and demonstrate how the noncompliance was caused by the COVID-19 pandemic.
EPA notes that its policy does not provide leniency for intentional criminal violations of law and that it does not apply to activities that are carried out under Superfund and Resource Conservation and Recovery Act (RCRA) Corrective Action enforcement instruments. EPA states that it will address these matters in separate communications. The policy states that it does not apply to imports. According to the policy, EPA is “especially concerned about pesticide products entering the United States, or produced, manufactured, distributed in the United States, that claim to address COVID-19 impacts.” EPA “expects to focus on ensuring compliance with requirements applicable to these products to ensure protection of public health.”
The policy will apply retroactively beginning on March 13, 2020. EPA will assess the continued need for and scope of this temporary policy on a regular basis and will update it if EPA determines modifications are necessary. To provide fair and sufficient notice to the public, EPA states that it will post a notification on its website at least seven days prior to terminating the temporary policy.
By Lynn L. Bergeson and Carla N. Hutton
The U.S. Environmental Protection Agency (EPA) promulgated a final rule on January 13, 2020, to adjust the level of the maximum (and minimum) statutory civil monetary penalty amounts under the statutes it administers, including the Toxic Substances Control Act (TSCA). 85 Fed. Reg. 1751. EPA states that this action is mandated by the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended through the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Act). The 2015 Act prescribes a formula for annually adjusting the statutory maximum (and minimum) amount of civil penalties to reflect inflation, maintain the deterrent effect of statutory civil penalties, and promote compliance with the law. EPA notes that the rule does not necessarily revise the penalty amounts that it chooses to seek pursuant to its civil penalty policies in a particular case. EPA’s civil penalty policies, which guide enforcement personnel on how to exercise EPA’s statutory penalty authorities, take into account a number of fact-specific considerations, e.g., the seriousness of the violation, the violator’s good faith efforts to comply, any economic benefit gained by the violator as a result of its noncompliance, and a violator’s ability to pay. The final rule was effective January 13, 2020.
By Lynn L. Bergeson and Carla N. Hutton
On July 5, 2019, the U.S. Court of Appeals for the District of Columbia Circuit rejected an “invitation” to recognize liability under the False Claims Act (FCA) based on a company’s failure to meet a Toxic Substances Control Act (TSCA) reporting requirement and failure to pay an unassessed TSCA penalty. Kasowitz Benson Torres LLP v. BASF Corp. (No. 1:16-cv-02269). The court states that the FCA imposes civil liability on anyone who defrauds the federal government of money or property. Under the FCA, a third party may file suit on behalf of the government and collect a “substantial” bounty if successful. The law firm Kasowitz Benson Torres LLP (Kasowitz) filed suit in 2016, claiming that several chemical manufacturers violated TSCA by “repeatedly failing to inform” the U.S. Environmental Protection Agency (EPA) of “information regarding the dangers of isocyanate chemicals.” Kasowitz argued that the manufacturers’ failure to disclose this information and their subsequent actions deprived the government of property (substantial risk information) and money (TSCA civil penalties and contract damages). The court noted that Kasowitz demanded “billions of dollars in damages, even though the government openly support[ed] the defendants.” The district court dismissed its lawsuit, and Kasowitz appealed, asking the court “to become the first court to recognize FCA liability based on the defendants’ failure to meet a TSCA reporting requirement and on their failure to pay an unassessed TSCA penalty. We decline the invitation and affirm the dismissal.”
Kasowitz claimed that the defendants -- BASF Corporation, Covestro LLC, Dow Chemical Company, and Huntsman International LLC -- “manufacture isocyanate chemicals, which are used to produce various polyurethane-based materials such as paint, adhesives, rigid foam for insulation, flexible foam for mattresses and cushions, and parts for automotive interiors.” According to Kasowitz, the defendants acquired information as early as the 1970s about the adverse health effects of isocyanate chemicals. The companies failed to disclose this information to EPA, however, despite participating in EPA’s Compliance Audit Program. Kasowitz argued that the companies’ TSCA violations and their failure to pay penalties for those violations deprived the government of its money and property.
In its analysis of Kasowitz’s claims, the court describes the allegation that the companies violated FCA’s reverse false claim provision by “knowingly conceal[ing] or . . . improperly avoid[ing] . . . an obligation to pay” money as a non-starter. The court notes that “[i]t is undisputed that the EPA did not assess TSCA penalties against the defendants for failing to report substantial risk information regarding isocyanate chemicals.” As a result, there was no FCA “obligation” for the companies to conceal or avoid. In its decision, the court states that once EPA has taken successful administrative action, it has discretion to impose an appropriate civil penalty, including no penalty. According to the court, two TSCA provisions make this conclusion “inescapable”: (1) TSCA expressly grants the EPA authority to remit or otherwise decline to impose a civil penalty; and (2) TSCA itself recognizes that not every violation results in a civil penalty. Under EPA’s Compliance Audit Program, the court states that a company that failed to report substantial risk information faced no additional penalty and was in the same position it would have been had it not participated in the Program at all. Kasowitz also argued that the companies violated the reverse false claim provision by “knowingly conceal[ing] or . . . improperly avoid[ing] . . . an obligation to pay or transmit” property in the form of substantial risk information. The court considered whether the TSCA obligation to inform the EPA of substantial risk information qualifies as an obligation to transmit property. The court “conclude[d] that TSCA does not require the transmission of a property interest. TSCA gives the EPA one -- and only one -- interest in substantial risk information: the right to be informed of it.”
By Zameer Qureshi
Lynn L. Bergeson, Managing Partner at Bergeson & Campbell, P.C. (B&C®), presented at Chemical Watch Enforcement Summit Europe in Brussels on November 4, 2016. Topics covered by Ms. Bergeson included “A New [Toxic Substances Control Act (TSCA)] and Expanded Enforcement and Product Liability Opportunities,” “Next Generation Compliance and Implications for Businesses,” and “eDisclosure -- The New Normal?”
Ms. Bergeson informed attendees of the significant amendments made to chemical regulation in the U.S. by the Frank R. Lautenberg Chemical Safety for the 21st Century Act (new TSCA). She indicated that new TSCA amends TSCA in a number of ways and provided delegates with useful detail on the significant amendments made by new TSCA, stating that new TSCA:
- Resets the Chemical Inventory based on industry-supplied data;
- Requires screening assessments for all “active substances”;
- Mandates risk evaluation for all “high-priority” substances and risk management for some substances;
- Compels substantiation of confidential business information (CBI) claims; and
- Authorizes testing order authority (i.e., the U.S. Environmental Protection Agency (EPA) can compel chemical testing in addition to the more traditional test rule and consent order testing procedures).
Ms. Bergeson utilized a slide entitled “New Compliance Mandates = New Enforcement Opportunities” to address EPA’s expanded authority under new TSCA (e.g., Section 4 test orders, Section 5 new chemical safety “determinations,” and Section 6 prioritization). She expressed that EPA’s expanded authority under new TSCA gives rise to significant opportunities for enforcement of allegations of non-compliance when Section 4 test orders are issued.
Regarding testing, Ms. Bergeson stated “the [U.S.] testing program has relevance for people anywhere in the world” as chemical manufacturers can be expected to be ordered to test, and manufacturers include importers. Ms. Bergeson expressed that more testing will trigger an enhanced need to consider reporting under new TSCA Section 8(e). She described the possible outcomes of new chemical safety “determinations” by EPA under Section 5 and indicated that as a consequence of new TSCA “we’re going to see lots and lots of new [Significant New Use Rules (SNUR)].” Additionally, Ms. Bergeson stated “[Chemical Data Reporting (CDR)] requirements and Section 8 requirements are much more robust now.”
Drawing on her experience and current information from EPA, Ms. Bergeson analyzed “Next Generation Compliance” and provided insights to attendees on what it means for industry. She relied on a diagram from EPA that indicates Next Generation Compliance encompasses an intersection of “Regulation and Permit Design,” “Advanced Monitoring,” “Electronic Reporting,” “Transparency,” and “Innovative Enforcement.” Ms. Bergeson stated “Next Gen Compliance is an Obama Administration initiative” and emphasized the relevance of the U.S. presidential election for the future of Next Generation Compliance by stating “Next Generation Compliance will likely grow under the Clinton Administration or may die on the vine under a Trump Administration.” She then discussed each of the individual components of Next Generation Compliance.
Regarding Regulation and Permit Design, Ms. Bergeson stated that EPA’s goals were to “make permits clearer,” promote self-monitoring and third-party reporting, make compliance easier than non-compliance, and leverage market forces and incentives.
Ms. Bergeson stated that the expansion of “Advanced Monitoring Technologies” means there are new tools that can assist industry. She described the usefulness of real-time monitoring (i.e., knowing about releases into the environment on a real-time basis), facility feedback loops, fenceline and community monitoring, and remote sensing. Ms. Bergeson noted, as a potential drawback of Advanced Monitoring, that “technologies that have not necessarily been vetted” are finding their way into enforcement consent agreements. She then indicated that while this may be fine, the reliability of such technologies for regulatory purposes is untested and reliance on such technologies in regulatory contexts should not replace more traditional notice and comment rulemaking.
Ms. Bergeson stated “Electronic Reporting is a huge part of Next Generation Compliance; the era of submitting paper [is over],” and informed delegates that “information technologies enable new solutions, but invite concerns regarding accuracy and regulatory reliability.” She stated “Electronic Reporting does not always go as intended and greatly facilitates finding non-compliance.” Ms. Bergeson referenced the relevant EPA memorandum and informed attendees that Electronic Reporting is the default mechanism for providing information under new TSCA, and stated that Ohio Discharge Monitoring Report Electronic Reporting “checks submissions overnight and sends notices” if there are problems, thereby allowing the permittee to make corrections and resubmit.
Regarding Innovative Enforcement, Ms. Bergeson expressed that EPA is using Next Generation tools in enforcement settlements, and that Innovative Enforcement enhances targeting and data analysis to identify and address the most serious violations. She stated “we really like new technologies, but if a technology is new it may not be standardized, making reliance on it necessarily more focused to enforcement and not rulemaking purposes.” Additionally, Ms. Bergeson informed delegates that there is “a little concern in the regulated community in the U.S.” that some of the new technologies evolving from Innovative Enforcement efforts could undermine the notice and comment rulemaking process if these technologies are used for purposes beyond consent orders.
Ms. Bergeson stated that EPA’s “eDisclosure” portal provides companies with a new way to self-report violations of environmental law and is intended to “streamline confessions” by the “legal and corporate community,” and described the two-tier system within EPA’s eDisclosure portal and stated that for some violations “you can get on with your life.”
Ms. Bergeson stated “we always urge [B&C] clients to fix the problem immediately … The issue arises in some contexts of ‘do we tell EPA?’” She then informed delegates of the underpinning principles of eDisclosure by stating “it is believed that self-confessing should be rewarded.” Ms. Bergeson advised that companies can seek to reduce penalties by self-confessing, but the decision to self-confess is always fact dependent, and then indicated that the future of eDisclosure could be significantly impacted by the outcome of the U.S. presidential election.
Ms. Bergeson addressed “Design and Use of Safer Chemicals” and told attendees that EPA has “tried very hard” to promote Safer Chemicals through Green Chemistry, Safer Choice Labels, and the Safer Chemical Ingredient List, and that “creative technologies that are better, cheaper, and less toxic” are actively encouraged by EPA and welcomed by the U.S. chemical regulatory community.
Ms. Bergeson expressed that the implications of new TSCA are significant for the chemical manufacturing, importing, and downstream user sectors and provided beneficial “Closing Thoughts” to attendees. She stated that chemical manufacturers, importers, and downstream users need to:
- Read and understand the law and engage in “trade associations’ implementation activities”;
- Assess chemical product inventories;
- Manage the “business and optics” of chemical assessment, management, and substitution;
- Assess CBI options; and
- Manage chemical data information carefully.
Ms. Bergeson stated that the “implications of new TSCA are paradigm shifting … In the next two to five years we’re going to see opportunities for non-compliance.” Regarding CBI, Ms. Bergeson stated “we need to be very cognizant … Some of the changes are very subtle and it is an area ripe for enforcement … Assertion of CBI is at a higher standard -- EPA will be very vigilant.” Ms. Bergeson emphasized EPA’s “much richer implementation authority” under new TSCA and informed delegates that Next Generation enforcement and eDisclosure tools “add to the pressure” on the U.S. chemical industry to monitor carefully chemical portfolios.
Ms. Bergeson answered a number of questions on new TSCA and EPA’s likely enforcement of it. In response to a delegate’s question relating to the capacity of EPA to manage enforcement of new TSCA, she stated that EPA requires greater resources and is currently recruiting. Ms. Bergeson answered questions from attendees on timelines for pending rules from EPA and highlighted EPA’s interest in expediting its rulemaking on fees. She indicated that fees will be higher under new TSCA. Ms. Bergeson responded to a question regarding the scope of new TSCA by clarifying that new TSCA relates to industrial chemicals and that the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and the Federal Food, Drug, and Cosmetic Act (FFDCA) will continue to maintain their previous regulatory scope. Ms. Bergeson indicated that the only exception is found under TSCA Section 8(b)(10), which requires any or all mercury or mercury compounds, or any intentional use of mercury in a manufacturing process to be reported to EPA under the mercury inventory and reporting provisions, regardless of whether the use of the mercury or mercury compound is regulated under FIFRA or FFDCA.