By Lynn L. Bergeson and Carla N. Hutton
 
On December 29, 2022, the U.S. Environmental Protection Agency (EPA) Office of Inspector General (OIG) published a report entitled The EPA’s Fiscal Years 2020 and 2019 Toxic Substances Control Act Service Fee Fund Financial Statements. The Frank R. Lautenberg Chemical Safety for the 21st Century Act (Lautenberg Act) requires EPA to prepare and OIG to audit the Toxic Substances Control Act (TSCA) Service Fee Fund financial statements each year. According to OIG, its primary objectives were to determine whether:

• The financial statements were fairly stated in all material respects;
• EPA’s internal controls over financial reporting were in place; and
• EPA management complied with laws and regulations.

TSCA requires that the fees EPA charges be sufficient and not more than reasonably necessary to defray approximately 25 percent of the costs of administering specific sections of TSCA.
 
OIG rendered a “qualified opinion” on EPA’s fiscal years (FY) 2020 and 2019 TSCA Service Fee Fund financial statements, “meaning that, except for material errors in expenses and income from other appropriations, the fiscal years 2020 and 2019 financial statements were fairly presented.” OIG notes one material weakness, stating that “EPA materially understated the fiscal year 2019 ‘Expenses from Other Appropriations’ line item of the financial statements by nearly $25 million.” OIG did not identify any instances of noncompliance that would result in a material misstatement to the audited financial statements.
 
OIG notes that during its user fee analysis, it found that the TSCA fee structure in the fees rule during FYs 2020 and 2019 “appeared reasonable based on the data available when the EPA developed the fees rule.” The TSCA fees collected did not adequately offset the FYs 2020 and 2019 actual or projected costs of administering certain provisions of TSCA, however, “primarily because there were fewer fee-triggering activities than the EPA had projected for that period.”
 
OIG recommends that the chief financial officer correct the methodology for accounting for TSCA direct and indirect expenses from other appropriations to ensure that all costs for administering TSCA Sections 4 and 5, parts of Section 6, and Section 14 “are properly recorded and reported in the financial statements.” OIG states that EPA agreed with its recommendation and provided acceptable planned corrective actions. According to OIG, the recommendation is resolved with corrective actions pending.

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By Lynn L. Bergeson and Carla N. Hutton

The U.S. Environmental Protection Agency (EPA) announced on July 6, 2022, that it is inviting small businesses to participate as Small Entity Representatives (SER) for a Small Business Advocacy Review (SBAR) Panel that will focus on EPA’s development of a proposed rule to collect data to inform each step of the Toxic Substances Control Act (TSCA) risk evaluation and risk management process. EPA states that the proposed rule would establish a framework of reporting requirements based on a chemical’s status in the TSCA Section 6 Risk Evaluation/Risk Management Lifecycle. Additionally, the new data reporting rule would enhance the exposure-related data collected through the TSCA Chemical Data Reporting (CDR) process. According to EPA, collecting data geared specifically towards prioritization, risk evaluation, and risk management would help ensure that EPA has relevant and timely data to inform each step of the process for reviewing potential risks from existing chemicals. Self-nominations are due July 20, 2022.

The data reporting rule, including changes to CDR, is tiered to specific stages of the TSCA Section 6 existing chemicals program:

• Identifying a pre-prioritization pool of substances as potential candidates for prioritization;
• Selecting candidate chemicals and completing the prioritization process; and
• Assessing high-priority substances through a robust risk evaluation that may be followed by risk management actions (depending on the outcome of the risk evaluation).

According to EPA, tying specific reporting requirements to the activities that make use of reported data will also reduce the burden related to data collection efforts while ensuring that EPA has the information it needs to fulfill its risk evaluation and risk management responsibilities. EPA intends the proposed rule to create a framework to obtain information about potential hazards and exposure pathways related to certain chemicals, particularly occupational, environmental, and consumer exposure information. EPA’s ability to collect data under this proposed rule would derive from authorities in TSCA Sections 8(a) and 8(d), which give EPA authority to require:

• Manufacturers and processors to provide known or reasonably ascertainable information, including chemical identity, production volumes, uses, byproducts, and worker exposure; and
• Manufacturers, processors, and distributors to submit health and safety information.

EPA states that the potentially regulated community consists of entities that manufacture, import, or process chemical substances, potentially including when the chemical substance is manufactured as a byproduct or is part of a formulated product or article (including import and processing). According to EPA, it anticipates most respondents affected by this collection activity to be from the manufacturing sectors, including chemical manufacturing; petroleum and coal product manufacturing; chemical, petroleum, and merchant wholesalers; paper, plastics, paint, and printing ink manufacturing; electronic product and component manufacturing; or other activities, including utilities and construction.

The Panel, convened under the authority of the Small Business Regulatory Enforcement Fairness Act, will include federal representatives from the Small Business Administration (SBA), the Office of Management and Budget (OMB), and EPA. The Panel members ask a selected group of SERs to provide advice and recommendations on behalf of their company, government, or organization to inform the Panel members about the potential impacts of the proposed rule on small entities. EPA seeks self-nominations directly from the small entities that may be subject to the rule requirements. Other representatives, such as trade associations that exclusively or at least primarily represent potentially regulated small entities, may also serve as SERs.

More information on EPA’s July 27, 2021, webinar on the development of the rule is available in our July 29, 2021, memorandum.

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By Lynn L. Bergeson and Carla N. Hutton
 
The U.S. Environmental Protection Agency (EPA) announced on February 19, 2021, that it is inviting small businesses, governments, and not-for-profits to participate as Small Entity Representatives (SER) to provide advice and recommendations to a Small Business Advocacy Review (SBAR) Panel for C.I. Pigment Violet 29 (PV29).  The Panel will focus on EPA’s development of a proposed rule to address unreasonable risks identified in EPA’s recently completed Toxic Substances Control Act (TSCA) risk evaluation for PV29.  As reported in our January 25, 2021, memorandum, EPA reviewed 14 conditions of use for PV29, including as an intermediate for other perylene pigments, as well as a component of paints, coatings, industrial carpeting, and plastic and rubber products used primarily in the automobile industry, in ink used for commercial printing, and in consumer watercolors and artistic paints.  EPA determined that there are unreasonable risks to workers and occupational non-users (ONU) from ten out of 14 conditions of use.  EPA found no unreasonable risks to the environment, consumers, or the general public.  EPA is now moving to the risk management step in the TSCA process by working to draft regulations to protect public health from the unreasonable risks identified in the final risk evaluation.
 
According to EPA, the Regulatory Flexibility Act requires agencies to establish an SBAR Panel for rules that may have a significant economic impact on a substantial number of small entities.  The SBAR Panel will include federal representatives from the Small Business Administration (SBA), the Office of Management and Budget (OMB), and EPA.  The SBAR Panel will select SERs to provide comments on behalf of their company, community, or organization and advise the Panel on the potential impacts of the proposed rule on small entities.  EPA states that it is seeking self-nominations directly from the small entities that may be subject to the rule’s requirements.  EPA notes that other representatives, such as trade associations that exclusively or at least primarily represent potentially regulated small entities, may also serve as SERs.  Self-nominations may be submitted online and must be received by March 5, 2021.
 
EPA states that in addition to engaging with small businesses, it “is executing a robust outreach effort on risk management that includes formal consultations with state and local governments, tribes, and environmental justice communities.”  EPA notes that there will also be an open public comment period on any draft risk management regulation.

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By Lynn L. Bergeson and Carla N. Hutton
 
The U.S. Environmental Protection Agency (EPA) announced on February 11, 2021, that it is inviting small businesses, governments, and not-for-profits to participate as Small Entity Representatives (SER) to provide advice and recommendations to a Small Business Advocacy Review (SBAR) Panel for asbestos, part 1:  chrysotile asbestos.  The Panel will focus on EPA’s development of a proposed rule to address unreasonable risks identified in EPA’s recently completed Toxic Substances Control Act (TSCA) risk evaluation for asbestos, part 1:  chrysotile asbestos.  As reported in our January 4, 2021, memorandum, of the six use categories evaluated (chlor-alkali diaphragms, sheet gaskets, other gaskets, oilfield brake blocks, aftermarket automotive brakes/linings, and other vehicle friction products), EPA states that it found that there is unreasonable risk to workers, occupational non-users (ONU), consumers, and/or bystanders within each of the six chrysotile asbestos use categories.  EPA found no unreasonable risk to the environment.  EPA is now moving to the risk management step in the TSCA process by working to draft regulations to protect public health from the unreasonable risks identified in the final risk evaluation.
 
According to EPA, the Regulatory Flexibility Act requires agencies to establish an SBAR Panel for rules that may have a significant economic impact on a substantial number of small entities.  The SBAR Panel will include federal representatives from the Small Business Administration (SBA), the Office of Management and Budget (OMB), and EPA.  The SBAR Panel will select SERs to provide comments on behalf of their company, community, or organization and advise the Panel on the potential impacts of the proposed rule on small entities.  EPA states that it is seeking self-nominations directly from the small entities that may be subject to the rule’s requirements.  EPA notes that other representatives, such as trade associations that exclusively or at least primarily represent potentially regulated small entities, may also serve as SERs.  Self-nominations may be submitted online and must be received by February 25, 2021.
 
EPA states that in addition to engaging with small businesses, it “is executing a robust outreach effort on risk management that includes formal consultations with state and local governments, tribes, and environmental justice communities.”  EPA notes that there will also be an open public comment period on any draft risk management regulation.

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By Lynn L. Bergeson and Carla N. Hutton

The U.S. Environmental Protection Agency (EPA) announced on January 5, 2021, that it is inviting small businesses, governments, and not-for-profit organizations to participate as Small Entity Representatives (SER) to provide advice and recommendations to two Small Business Advocacy Review (SBAR) Panels.

One Panel will focus on EPA’s development of a proposed rule to address unreasonable risks identified in EPA’s recently completed Toxic Substances Control Act (TSCA) risk evaluation for perchloroethylene.  As reported in our December 17, 2020, memorandum, of the 61 conditions of use that EPA reviewed for perchloroethylene, EPA found that 59 present unreasonable risks to workers, occupational non-users (ONU), consumers, and bystanders.  The conditions of use that EPA determined do not present an unreasonable risk are distribution in commerce and industrial and commercial use in lubricants and greases for penetrating lubricants and cutting tool coolants.  EPA found no unreasonable risks to the environment.

The second Panel will focus on a risk management rulemaking for n-methylpyrrolidone (NMP).  As reported in our December 29, 2020, memorandum, of the 37 conditions of use that EPA reviewed for NMP, EPA found that 26 present unreasonable risks to workers and consumers.  These uses include an unreasonable risk to workers when domestically manufacturing or importing NMP, processing NMP for a variety of uses, and when used in a variety of industrial and commercial conditions of use.  These uses also include an unreasonable risk to consumers from one consumer use.  EPA found that NMP does not pose an unreasonable risk when distributed in commerce or in a variety of industrial and commercial and consumer applications.  EPA also determined that NMP does not present an unreasonable risk to the environment and the general population.

EPA is now moving to the risk management step in the TSCA process by working to draft regulations to protect public health from the unreasonable risks identified in the final risk evaluations.  According to EPA, the Regulatory Flexibility Act requires agencies to establish an SBAR Panel for rules that may have a significant economic impact on a substantial number of small entities.  The SBAR Panels will include federal representatives from the Small Business Administration (SBA), the Office of Management and Budget (OMB), and EPA.  The SBAR Panels will select SERs to provide comments on behalf of their companies, communities, or organizations and advise the Panels on the potential impacts of the proposed rule on small entities.  EPA states that it is seeking self-nominations directly from the small entities that may be subject to the rules’ requirements.  EPA notes that other representatives, such as trade associations that exclusively or at least primarily represent potentially regulated small entities, may also serve as SERs.  Self-nominations may be submitted online and must be received by January 19, 2021.

EPA states that in addition to engaging with small businesses, it “is executing a robust outreach effort on risk management that includes formal consultations with state and local governments, tribes, and environmental justice communities.”  EPA notes that there will also be an open public comment period on any draft risk management regulations.

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By Lynn L. Bergeson and Carla N. Hutton

The U.S. Environmental Protection Agency (EPA) announced on November 30, 2020, that it is inviting small businesses, governments, and not-for-profits to participate as Small Entity Representatives (SER) to provide advice and recommendations to two Small Business Advocacy Review (SBAR) Panels.  One Panel will focus on EPA’s development of a proposed rule to address unreasonable risks identified in EPA’s recently completed Toxic Substances Control Act (TSCA) risk evaluation for carbon tetrachloride.  As reported in our November 4, 2020, memorandum, EPA reviewed 15 conditions of use, “all of which are associated with industrial and commercial work and primarily involve the manufacturing of other chemicals.”  EPA found unreasonable risks to workers and occupational non-users (ONU) for 13 of the 15 conditions of use.  EPA found no unreasonable risks to the environment.  According to EPA, there are no consumer uses of this chemical.  The second Panel will focus on a risk management rulemaking for trichloroethylene (TCE).  As reported in our November 24, 2020, memorandum, of the 54 conditions of use that EPA reviewed, EPA found that 52 present an unreasonable risk to workers, ONUs, consumers, and bystanders.  EPA determined that distribution in commerce and consumer use of TCE in pepper spray do not present an unreasonable risk.  EPA also found no unreasonable risks to the environment.  EPA is now moving to the risk management step in the TSCA process by working to draft regulations to protect public health from the unreasonable risks identified in the final risk evaluations. 

According to EPA, the Regulatory Flexibility Act requires agencies to establish an SBAR Panel for rules that may have a significant economic impact on a substantial number of small entities.  The SBAR Panels will include federal representatives from the Small Business Administration (SBA), the Office of Management and Budget (OMB), and EPA.  The SBAR Panels will select SERs to provide comments on behalf of their company, community, or organization and advise the Panels on the potential impacts of the proposed rule on small entities.  EPA states that it is seeking self-nominations directly from the small entities that may be subject to the rules’ requirements.  EPA notes that other representatives, such as trade associations that exclusively or at least primarily represent potentially regulated small entities, may also serve as SERs.  Self-nominations may be submitted online and must be received by December 14, 2020.

EPA states that in addition to engaging with small businesses, it “is executing a robust outreach effort on risk management that includes formal consultations with state and local governments, tribes, and environmental justice communities.”  EPA notes that there will also be an open public comment period on any draft risk management regulations.

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By Lynn L. Bergeson and Carla N. Hutton
 
The U.S. Environmental Protection Agency’s (EPA) Office of Inspector General (OIG) published on September 30, 2020, its audit of EPA’s Toxic Substances Control Act (TSCA) Service Fee Fund financial statements for the period from Inception (June 22, 2016) through September 30, 2018.  The Frank R. Lautenberg Chemical Safety for the 21st Century Act (Lautenberg Act) requires EPA to prepare and OIG to audit the TSCA Service Fee Fund financial statements each year.  OIG states that its primary objectives were to determine whether the financial statements were fairly stated in all material respects; EPA’s internal controls over financial reporting were in place; and EPA management complied with laws and regulations.  OIG notes that the TSCA Service Fee Fund has been designed to defray up to 25 percent of the costs associated with implementing key TSCA provisions.  According to OIG, EPA overstated expenses from other appropriations by $8.4 million.  OIG states it found that EPA made errors in multiple iterations of its calculation for expenses from other appropriations.  No significant matters involving compliance with applicable laws and regulations, contracts, and grant agreements came to OIG’s attention during the course of the audit.
 
OIG recommends that the chief financial officer:  (1) improve the management review process for calculating expenses from other appropriations to be consistent with EPA component financial statement audits and to ensure that costs support the TSCA Service Fee Fund activities; and (2) establish written policies and procedures so that expenses from other appropriations in component audits reflect actual costs.  According to OIG, EPA concurred with its recommendations and provided “acceptable corrective actions and estimated completion dates.”  OIG states that it considers the recommendations resolved with corrective actions pending.

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By Lynn L. Bergeson and Carla N. Hutton
 
The U.S. Environmental Protection Agency (EPA) announced on September 16, 2020, that it is inviting small businesses, governments, and not-for-profits to participate as Small Entity Representatives (SER) to provide advice and recommendations to two Small Business Advocacy Review (SBAR) Panels.  There will be one Panel for methylene chloride and one Panel for 1-bromopropane (1-BP).  According to EPA, each Panel will focus on EPA’s development of proposed rules to address unreasonable risks identified in EPA’s recently completed Toxic Substances Control Act (TSCA) risk evaluations for these chemicals.  As reported in our June 25, 2020, memorandum, and August 11, 2020, memorandum, EPA’s final risk evaluations showed unreasonable risks to workers and consumers under certain conditions of use.  EPA is now moving to the risk management step in the TSCA process by working to draft regulations to protect public health from the unreasonable risks identified in the final risk evaluations.
 
According to EPA, the Regulatory Flexibility Act requires agencies to establish an SBAR Panel for rules that may have a significant economic impact on a substantial number of small entities.  The SBAR Panels will include federal representatives from the Small Business Administration (SBA), the Office of Management and Budget (OMB), and EPA.  The SBAR Panels will select SERs to provide comments on behalf of their company, community, or organization and advise the Panel on the potential impacts of the proposed rule on small entities.  EPA states that it is seeking self-nominations directly from the small entities that may be subject to the rule requirements.  EPA notes that other representatives, such as trade associations that exclusively or at least primarily represent potentially regulated small entities, may also serve as SERs.  Self-nominations may be submitted online for the methylene chloride and 1-BP SBAR Panels and must be received by September 30, 2020.
 
EPA states that in addition to engaging with small businesses, it “is executing a robust outreach effort on risk management that includes one-on-one meetings with stakeholders and formal consultations with state and local governments, tribes, and environmental justice communities.”  EPA notes that there will also be an open public comment period on any draft risk management regulations.

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By Lynn L. Bergeson, Charles M. Auer, and Carla N. Hutton

GAO released on March 6, 2019, a report entitled High-Risk Series:  Substantial Efforts Needed to Achieve Greater Progress on High-Risk Areas.  GAO’s high-risk program identifies government operations with vulnerabilities to fraud, waste, abuse, and mismanagement, or in need of transformation to address economy, efficiency, or effectiveness challenges.  GAO’s report describes the status of high-risk areas and outlines actions necessary to assure further progress.  GAO states that in the two years since its last high-risk report, three areas, including “Transforming EPA’s Process for Assessing and Controlling Toxic Chemicals,” have regressed in their ratings against GAO’s criteria for removal from the High-Risk List.  GAO notes that since adding this area to its High-Risk List in 2009, it has made 12 recommendations to EPA related to the IRIS Program and TSCA.  According to GAO, while EPA has taken steps to manage chemicals that pose risks to human health and the environment, leadership and implementation challenges remain.  More information is available in B&C’s March 8, 2019, memorandum, “EPA’s Process for Assessing and Controlling Toxic Chemicals Remains on GAO’s High-Risk List.”

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B&C is launching a podcast November 1, 2018.  It’s called All Things Chemical™ and it will engage listeners in intelligent, insightful conversation about everything related to industrial, pesticidal, and specialty chemicals and the law and business issues surrounding chemicals. B&C’s talented team of lawyers, scientists, and consultants will keep listeners abreast of the changing world of both domestic and international chemical regulation and provide analysis of the many intriguing and complicated issues surrounding this space.

A teaser introduction to the podcast is available now.  Full episodes will be available November 1, 2018, on iTunes, Spotify, and Stitcher.

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