Chemical Industry Regulatory Update - January 2020

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

Date: January 10, 2020

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.

PFAS Regulation and Sampling Continue to Heat Up

Joel Eagle

It is a question we’ve heard so much recently: Are per- and polyfluoroalkyl substances (PFAS) really everywhere? The answer is certainly “yes” if measured by the flurry of recent federal and state “action plans” and proposed statutory and regulatory changes (including the proposed federal “PFAS Action Act of 2019” discussed below); Hollywood movies (“Dark Waters”); streaming documentaries (Netflix’s “The Devil We Know”); and a nearly constant flood of media coverage about PFAS. If the metric is the confirmed presence of PFAS in the environment through sampling, then the jury is still out. But extensive ongoing and planned nationwide groundwater and drinking water supply system sampling and investigations at known or suspected contaminated sites, will help answer whether PFAS are really everywhere.

Throughout 2019, the pace of actions to evaluate or address PFAS was overwhelming and is not showing signs of slowing down in 2020. One of the most recent and comprehensive steps occurred at the end of 2019, when the United States House Committee on Energy and Commerce passed H.R. 535, the "PFAS Action Act of 2019." The comprehensive bill contains 18 chapters that cover nearly every environmental statute and media that PFAS may impact. It is the first major legislation of any kind that the House is taking up in January 2020 could be subject to a prompt vote in the House. The bill may face greater obstacles in the Senate, but if passed, the law would designate two PFAS compounds, perfluorooctanoic acid and its salts (“PFOA”) and perfluorooctanesulfonic acid and its salts (“PFOS”), as “hazardous substances” under section 102(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). This development alone could have extensive downstream implications for potential site remediation and corresponding funding decisions and liability under CERCLA and other environmental laws.

In addition to CERCLA, the PFAS Action Act would amend several other laws pertaining to water discharges, water supplies, water bodies under the Clean Water Act, air emissions (Clean Air Act), site remediation (waste and cleanup laws - CERCLA and RCRA), reporting and data collection (EPCRA) and toxic substance regulation (TSCA). The House is expected to vote on the PFAS Action Act bill by mid-January 2020.

The PFAS Action Act committee vote concluded a busy 2019 in the PFAS world. In February 2019, the United States Environmental Protection Agency (EPA) issued the federal PFAS Action Plan in February 2019, setting out a series of proposed EPA actions to further evaluate PFAS’ potential nature and extent in the environmental, possible health effects from many of the PFAS family of compounds, and future statutory and regulatory changes (to name but a few of the proposed actions). Many states are implementing their own plans, both in coordination with the EPA and on their own. Late in 2019, Ohio and Connecticut became two of the most recent states to issue state-led Action Plans to evaluate the extent to which PFAS may be present in public and private drinking water systems. Read more here for additional updates and analysis of the Ohio and federal action plans.

PFAS compounds are commonly referred to as “ubiquitous” in the environment. If proven true, the impacts to the regulated community, municipalities and private parties could be extraordinary. Recent litigation and nine-figure settlements in several states have already demonstrated one of the impacts that PFAS can have. As the developments described above continue to unfold in 2020, the possible ramifications these “forever chemicals” may have on businesses, governments and individuals will surely crystalize.

EPA Aims to Better Coordinate Compliance and Enforcement Activities with “No Surprise” Inspections Policy for States

Tasha Miracle

The Environmental Protection Agency (EPA) formalized a policy this year that is designed to improve its coordination with states on compliance and enforcement activities. In the EPA’s memorandum announcing the policy (entitled Enhancing Effective Partnerships Between the EPA and the States in Civil Enforcement and Compliance Assurance Work), the agency outlined collaborative processes for EPA regions and the states to use in planning inspections and enforcement activities that include joint and early planning, regular communication and increased transparency. The EPA indicates these joint planning activities should also include strategic planning discussions that take into consideration issues like federal and state enforcement priorities and emerging issues. The EPA anticipates that such planning efforts will decrease and avoid duplicate inspection and enforcement activities, reduce burdens on the regulated community and avoid enforcement inspections that “surprise” the states.

In addition to proclaiming its intent to foster better cooperation with the states on these issues, the EPA affirmed that it intends to defer to states as the primary implementers of authorized programs in those states. Although, perhaps not surprisingly, the EPA reserved the right to take the lead when:

(1) there is a joint work plan or the state requests that EPA take the lead;
(2) violations of National Compliance Initiatives are involved;
(3) emergency situations arise;
(4) the state lacks equipment, resources, or expertise;
(5) multi-state or multi-jurisdictional issues arise;
(6) the state has failed to timely address significant violations;
(7) EPA criminal enforcement action is necessary;
(8) EPA is fulfilling its statutory duty to verify the efficacy of state programs; and/or
(9) a federally owned or operated facility or state-owned or operated facility is involved.

While the policy does not establish a binding mandate for EPA regions and the states to cooperate, it is another signal from EPA Administrator Andrew R. Wheeler that those states having authorized, delegated and approved environmental programs actually deserve a say in the compliance and enforcement activities occurring in their own back yards. Further, in a nod toward ensuring the policy is at least somewhat effective, the EPA acknowledges that issues may arise between EPA regions and states in implementing these practices and instructs federal and state officials to immediately escalate such issues to management levels (including to the Regional Administrators and State Secretaries or Commissioners, if necessary) for prompt resolution.

California Ban on Certain HFCs Took Effect on January 1, 2020

Bozana Lundberg

On January 1, 2020, California’s ban on the sale of foam containing hydrofluorocarbon (HFC) for certain end uses, including rigid polyurethane commercial refrigeration foam, goes into effect. California passed a state ban on certain HFCs after a federal court vacated the EPA’s ban on the same HFCs in 2017. The California ban was passed in 2018 in Senate Bill 1013 (the California Cooling Act). The ban incorporates all prohibitions on the use of HFCs found in USEPA’s federal regulations. See California Health & Safety Code § 39734(c) (referencing the Clean Air Act, 42 U.S.C. §§ 7671a and 7671k, and Appendix U and Appendix V of Subpart G of 40 C.F.R. Part 82).

The EPA sought to restrict manufacturers from making products that contain HFCs under Title VI of the Clean Air Act which was passed by Congress to address ozone depletion. HFCs are considered greenhouse gases which contribute to climate change, but they are not ozone depleting substances. HFCs are used as blowing agents that create bubbles in foams. The use of HFCs is increasing worldwide because they were initially approved as replacements for ozone depleting substances such as chlorofluorocarbons and hydrochlorofluorocarbons, which were phased out under the Montreal Protocol. The Montreal Protocol is a global agreement intended to phase out production and consumption of ozone depleting substances. Congress implemented the Montreal Protocol by passing Title VI to the Clean Air Act. Section 612 of the Clean Air Act mandated that ozone depleting substances be replaced “[t]o the maximum extent practicable … by chemicals, product substitutes, or alternative manufacturing processes that reduce overall risks to human health and the environment.” 42 U.S.C. § 7671k(a). Further, section 612 requires the EPA Administrator to issue rules banning the replacement of ozone-depleting substances “with any substitute substance which the Administrator determines may present adverse effects to human health or the environment.” See 42 U.S.C. § 7671k(c). Under section 612, the EPA’s Significant New Alternatives Policy Program (SNAP) lists which substances are safe substitutes and which are prohibited. Between 1990 and 2000, HFCs were permissible substitutes and many companies substituted ozone depleting substances with HFCs. In 2015, the EPA passed a rule to ban HFCs because they contribute to climate change.

Companies which manufacture HFCs challenged the 2015 Rule. In Mexichem Fluor, Inc. v. Environmental Protection Agency, 866 F.3d 451 (D.C. Cir. Aug. 8, 2017), the D.C. Circuit (in an opinion written by now Supreme Court Justice Kavanaugh) held that U.S. EPA’s authority to require manufacturers to replace ozone depleting substances did not include the authority to require manufacturers to stop using substitutes that are not themselves ozone depleting (such as HFCs). The court held that EPA could not prohibit the use of HFCs if those manufacturers already replaced ozone depleting substances with HFCs at a time when HFCs were listed as safe substitutes. The U.S. Supreme Court denied certiorari in 2018. A subsequent related decision, Mexichem Fluor, Inc. v. Environmental Protection Agency, 760 Fed. Appx. 6 (D.C. Cir. 2019), invalidated a 2016 rule on the same grounds and held that the EPA lacked authority to restrict manufacturers from using HFCs in products which the agency had previously found were permissible.

While the EPA no longer has authority to ban HFCs, states like California have moved forward with their own bans by copying the federal ban.

Companies should also be aware that the California Air Resources Board (CARB) has a separate set of regulations affecting HFCs, passed before SB 1013, which put in place labeling and record keeping requirements for refrigeration equipment and certain foams. The regulations are found in California Code of Regulations, title 17, §§ 95371, et seq. A list of end uses and HFC foams affected by CARB’s record keeping requirements can be found in 17 CCR § 95374, Table 1. Only the HFC foams listed in Table 1 have record keeping requirements because California did not add such requirements to the HFC foams subsequently banned under SB 1013. The effect of SB 1013 and CARB’s separate regulations is that there are banned HFC foams in California but only certain HFC foams listed in California’s regulations (found in Table 1) also have record keeping requirements.

For more information see Hydrofluorocarbon (HFC) Prohibitions in California, California Air Resources Board, available at: https://ww2.arb.ca.gov/resources/fact-sheets/hydrofluorocarbon-hfc-prohibitions-california

EPA Lists Twenty High Priority Chemicals for Risk Evaluation

Stephen J. Axtell

On December 20, 2019, the Environmental Protection Agency (EPA) announced its decision finalizing a list of twenty high-priority chemicals for risk evaluation under mandates added to Toxic Substances Control Act (TSCA) in the 2016 amendments to the statute. The newly listed chemicals include formaldehyde, chlorinated solvents, phthalates, flame retardants, a fragrance additive and a polymer precursor. The full list of listed chemicals can be found here. EPA proposed to list these chemicals on March 19, 2019 and collected public comments on the proposal. Read more here.

As part of the 2016 amendments to TSCA (known as the Frank R. Lautenberg Chemical Safety for the 21st Century Act), the EPA is required to designate various lists of chemicals that currently exist in commerce for risk evaluation in light of potential new data or developing science that may have arisen since these chemicals were evaluated in the past. The December listing of these chemicals is one step in a process of risk evaluations. The agency will be taking public comments in 2020 on scoping documents for each of these chemicals that will describe the hazards, exposures and conditions of use as well as the potentially exposed or susceptible subpopulations to be considered in each risk evaluation. Subsequently, the Agency will take public comment on draft risk evaluations before final issuance.

Megan Glowacki

In late December, Congress included in the National Defense Authorization Act 12 weeks of paid parental leave for all federal workers, which must coincide with the birth, adoption or fostering of a child. The new parental leave goes into effect in October 2020.  While the paid leave does not extend to workers who are not employed by the federal government, the move shows a substantial shift in U.S. policy regarding paid parental leave. Read more.  See here for additional employment regulations going into effect in early 2020.

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For more information about this newsletter or its contents, please 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.