EPA Eliminates Article Exemption for Benzidine-Based Chemical Substances in Significant New Use Rule

Under section 5(a)(1)(B) of the Toxic Substances Control Act (TSCA) (15 U.S.C. § 2601 et seq.), the U.S. Environmental Protection Agency (EPA) has the authority to require any person who intends to manufacture, import, or process any chemical substance for a “significant new use” to notify EPA prior to commencing such an activity.  EPA implements this authority by promulgating Significant New Use Rules (SNUR), which identify the substances subject to SNURs and their designated significant new uses.  Persons who intend to manufacture, import, or process a chemical substance for a significant new use must submit a notification called a significant new use notice (SNUN) to EPA at least 90 days in advance.

EPA recently finalized a SNUR[1][2] affecting benzidine-based chemical substances which were once widely used to dye leather, fabrics, and other materials used to make consumer items.  Save for some minor uses which will be allowed to continue, EPA asserts that none of the substances are currently in commercial production anywhere in the world.  Based on that conclusion, EPA asserts that any resumption of non-exempt commercial activity would be a significant new use.[3]  Significantly, the rule eliminates the exemption for importers and processors of articles containing these chemicals.

Following the release of the proposed SNUR, public commenters took exception with EPA’s proposal to eliminate the article exemption for a number of reasons including, lack of authority to regulate articles, the lack of a finding that such articles are present in commerce and pose an environmental or public health risk, and the unreasonable burden the rule would place on companies to monitor that articles they import or process are free of the listed chemicals.

EPA was unmoved by these comments.  In the final SNUR, the Agency claims that it is not regulating articles, per se, but the chemical substances that are a part of the article, authority clearly granted to it by the statute.  The EPA also dismissed the suggestion that the SNUR be limited to those articles whose importation or processing is imminent.  It argued that this SNUR is not about minimizing speculative risks these articles may pose. Instead it is an early warning system that a party is about to begin processing or importing an article with the named substance, thereby allowing the Agency to conduct the appropriate risk assessments for the notified actions. 

Finally, EPA pointed to product stewardship programs implemented by retailers as evidence that many companies have already begun screening their products for certain chemical substances.  Because a number of commercial manufacturers and retailers require their suppliers to comply with certain chemical substance information-sharing efforts, article importers should have no problem screening for the named chemical substances, as well. EPA makes no mention of the significant legal distinction between a breach of a contractual term and strict liability for violating a regulatory mandate and the potential for such violations to inspire class action civil actions for injuries, real or imagined.    

Moreover, if a violation is identified, every commercial user (note that retailers are users for this purpose) in possession of violative articles must immediately quarantine the product as soon as they become aware of the violation or expose themselves to criminal liability.  Absent EPA approval to re-export as part of settling an enforcement action, the only legal option is to destroy the article.  Benzidine-containing consumer products in the distribution chain or in consumers’ hands could implicate the jurisdiction of the U.S. Consumer Product Safety Commission (CPSC).  Companies might be required to report a potential substantial product hazard immediately to the CPSC and ultimately cooperate with the CPSC on a consumer-level recall. 

If one could be certain that no foreign manufacturer or processor was using any of the benzidine substances, there would be no need to monitor compliance.  Given the high stakes if one is found to be in violation of the SNUR, however, importers of articles that might conceivably contain benzidine-based substances covered by the SNUR may need to become intimately aware of the practices of raw material suppliers many steps removed from the immediate supplier of an article that will be imported.  There are many reasons why this level of intrusiveness will not be easy to achieve across a global supply chain, not the least of which will be the need for access to confidential formulation information and the likelihood that manufacture and use in the originating country will not be illegal.  Maintaining an effective compliance program will not be cheap or easy.  The effect will be to drive up the cost of importing any article that could potentially have been dyed with a benzidine-based chemical.