Will Importers of Articles Be Forced to Pay Costly Fees for TSCA Risk Evaluations or Face Potentially Draconian Penalties?
Unless EPA changes course, the answer is yes and more. EPA is scheduled to publish its preliminary list of manufacturers subject to fee obligations for risk evaluations this Monday, January 27, and the pre-publication notice should give importers much to worry about. In this post, I will explain EPA’s rationale behind this approach and share my thoughts on how the agency must address this question in pending and upcoming agency actions.
This troubling issue began with EPA’s rule entitled “Fees for the Administration of the Toxic Substances Control Act,” This rule requires “[m]anufacturers of a chemical substance that is subject to a risk evaluation under section 6(b) of [TSCA]” to pay the newly established fee for risk evaluations – a total of $1,350,000 per evaluation. EPA expressly denied requests for the agency to codify an exemption for importers of articles containing a chemical undergoing a risk evaluation. In EPA’s “Response to Public Comments on the Proposed Rule” document, the agency explained that “small quantities of chemicals and chemicals imported in articles may be subject to . . . risk evaluations under section 6” and, therefore, EPA cannot “categorically exempt these manufacturers and importers from fee obligations.” EPA’s pre-publication notice of the preliminary list of manufacturers reiterates the agency’s position: “All manufacturers (including importers) of these chemical substances, including those who import the chemical as part of an article, or manufacture (including import) chemical substances that are considered an impurity or byproduct, or in small amounts are subject to the Fees Rule requirements.” The agency furthers explains that “TSCA requires EPA to evaluate chemicals under their conditions of use, and conditions of use evaluated may involve import of articles containing the chemical, the manufacture of the chemical as an impurity or byproduct, or in small amounts.”
EPA essentially wanted to ensure that if, for example, an imported article represented a significant source of potential exposure to a chemical, the importer would be subject to the fee for the risk evaluation. Otherwise, the agency feared that the importer would be a free-rider while other manufacturers paid for the evaluation of the importer’s “condition of use.”
Despite this well-intentioned goal, EPA’s Fees Rule complicates this already complex issue by requiring an importer to “self-identify” as a manufacturer if the preliminary list of manufacturers published by EPA fails to identify the importer as a manufacturer obligated to pay the fee for a risk evaluation. Failure to self-identify could risk an EPA civil enforcement action that could potentially seek a maximum $40,576/day penalty for the number of days the importer has failed to make a payment pursuant to the Fees Rule.
EPA’s position implies that importers must now ask their upstream suppliers whether they use any of the 20 high-priority chemicals in their products. If the upstream suppliers refuse to provide an answer to that request – for proprietary business reasons or protection of trade secrets – the importer will need to decide whether to test all of its articles for the 20 high-priority chemicals, simply cease importing those articles for which it cannot verify the chemical composition, or risk civil lawsuits and enforcement actions for failing to identify themselves as a manufacturer of the chemical being evaluated.
Given these serious and burdensome impacts to importers, what should EPA do? The answer lies within the agency’s Response to Public Comments document, which articulated why EPA would not categorically exempt imported articles: “Although EPA may choose to exclude certain conditions of use from the scope of the risk evaluation, such decisions would be made on a case-by-case basis.” In other words, EPA’s scope documents will provide better clarity about which importers will be subject to the risk evaluation fees. Therefore, EPA’s public comment period on the preliminary list of manufacturers subject to the fees must extend at least 60 days after publication of the draft scope documents, which EPA committed to issuing in the scope documents for the first ten risk evaluations. (EPA’s notice of its preliminary list of manufacturers states that the comment period closes 60 days after the notice is published in the Federal Register. That is insufficient and likely impermissible.)
EPA needs to recognize that its scope documents require precision in terms of what articles will be subject to the risk evaluation. The agency must explicitly identify the articles to be evaluated and give proper notice to importers that they will be considered “manufacturers” for purposes of the TSCA risk evaluation. Conversely, the agency must affirmatively state that any article not explicitly included in the scope document will be excluded from the fee obligation associated with the risk evaluation. Importers should not – and cannot legally – be held liable for articles containing chemicals subject to TSCA risk evaluations if EPA has not provided sufficient notice that those articles are expressly included in the evaluations.
Regardless, importers of articles should consult with their counsel and technical experts about the 20 high-priority chemicals that EPA recently announced will be undergoing risk evaluations for the next three years.
As someone who helped lead EPA’s Office of Chemical Safety and Pollution Prevention (EPA’s office responsible for TSCA), I know the agency staff wants to avoid the unintentional pitfalls of TSCA implementation when made aware of them. I have confidence that EPA will appreciate the issues raised by the stakeholder community and take proactive steps to alleviate those concerns.