Chemical Industry Regulatory Update – September 2019

A Newsletter from The Adhesive and Sealant Council and Thompson Hine LLP

Date: September 10, 2019

The chemical industry is subject to complex and ever-evolving laws and regulations. New standards governing the production and use of chemicals are implemented every year worldwide, and existing laws and regulations are constantly changing to keep pace with new information and scientific advancements. Chemical Industry Regulatory Update provides a monthly digest of recent legislative and regulatory developments and related industry news.

California’s Green Chemistry Program Faces Its First Legal Challenge

William J. Hubbard

California’s Department of Toxic Substances Control (DTSC) launched its Safer Consumer Products green chemistry program in 2013. Under the program, the DTSC evaluates products for chemicals of concern, and based upon potential exposure to a chemical of concern might list a product as a priority product. The DTSC has prioritized products in the following categories: Beauty, Personal Care, and Hygiene Products; Cleaning Products; Household, School, and Workplace Furnishings and Décor; Building Products and Materials Used in Construction and Renovation; Consumable Office, School, and Business Supplies; Food Packaging; and Lead-Acid Batteries. Once a product is listed as a priority, manufacturers, importers and distributors are required to conduct a chemical alternatives analysis to evaluate whether a safer chemical can be substituted for the chemical of concern.

Effective July 1, 2018, spray polyurethane foam (SPF) systems with unreacted methylene diphenyl diisocyanates were listed as priority products. On August 9, 2019, the American Chemistry Council and an SPF manufacturer filed the first challenge to the Safer Consumer Products program, which seeks to force the DTSC to remove SPF systems as a listed priority product.  

Section 301 Tariff Exclusion Request Process for Imports of List 3 Chinese Products Ends September 30

David M. Schwartz & Scott E. Diamond*

Companies importing products from China that are classified under the Harmonized Tariff Schedule of the United States (HTS) subheadings included on Tranche/List 3, which are currently subject to a Section 301 25% tariff, have until September 30, 2019 to submit exclusion requests to the Office of the U.S. Trade Representative (USTR).

In June, the USTR announced the opening of an electronic portal for importers to submit exclusion requests for products included on Tranche/List 3, which have an annual trade value of approximately $200 billion. Once a product exclusion request is posted to the portal, companies supporting or objecting to the request have 14 days to file responses. Replies to these responses will be due the later of seven days after the close of the 14-day response period, or seven days after a response is posted on the portal.

While both the process and the exclusion request form for submission to the USTR are like those implemented for USTR’s Tranches/Lists 1 and 2 of HTS subheadings, this exclusion request process requires additional information. In addition to providing the applicable 10-digit HTS subheading, product name, and specific description and function, along with supporting data and the rationale for the requested exclusion, the requesting party must submit:

  • Specific data on the annual quantity and value of the Chinese-origin product, domestic product and third-country product purchased in 2017, 2018 and the first quarter of 2019. The requirement to identify and report domestic and third-country product data is new.
  • Gross revenues for 2018, the first quarter of 2018 and the first quarter of 2019.
  • For imports sold as final products, the Chinese-origin product’s percentage of 2018 total gross sales.
  • For imports used in the production of final products, the percentage of the total cost of producing the final product the Chinese-origin input accounts for and the final product’s percentage of 2018 total gross sales.

As with previous exclusion requests, the USTR requires that all requests clearly address whether the particular product is available only from China or can be sourced from the United States or third countries; whether the requesting party has sought to source the product from the United States; whether the additional duties have caused or will cause severe economic harm to the requesting party or U.S. interests; and whether the product is strategically important or related to the “Made in China 2025” initiative or other Chinese industrial programs.

Granted exclusions will be retroactive to September 24, 2018, when 10% tariffs were implemented on this tranche of HTS subheadings (which have since been raised to 25%), and will be valid for one year from the date the exclusion determination is published in the Federal Register.

*Not licensed to practice law

Marijuana Accommodations: Proceed with Caution

Megan S. Glowacki

Although marijuana remains a federally controlled substance, numerous states, such as Illinois, have legalized the use of recreational and/or medical marijuana. While employers are not required to forgo their drug-free workplace policies in these states, they may receive requests from employees or applicants to accommodate their use of medical marijuana outside the workplace to treat a disability. Employers should consult counsel when determining how to proceed, as each case requires an individualized analysis.

For more information, contact the editor, William J. Hubbard, or any of the authors.

Chemical Industry Regulatory Update is compiled by Thompson Hine lawyers on behalf of The Adhesive and Sealant Council. It should not be construed as legal advice, and the views and opinions expressed herein are those of the authors and do not necessarily reflect those of the ASC or its members.