Hunton Retail Law Resource

President Obama signed the Frank R. Lautenberg Chemical Safety for the 21st Century Act (“Lautenberg Act”) into law in June 2016, amending the core provisions of the Toxic Substances Control Act (“TSCA”) for the first time in nearly 40 years. Last month, Hunton & Williams detailed how the Lautenberg Act considerably broadens the Environmental Protection Agency’s (“EPA’s”) authority to evaluate chemical safety and regulate use of chemicals in all stages of the supply chain, including manufacturing, distribution and retail sale. Within six months, EPA must select at least 10 chemical substances and begin risk evaluations on them. EPA must also classify chemicals – including those currently in the retail supply chain – as “high priority” or “low priority” for review, and begin risk evaluations on 20 high priority chemicals within the next three and a half years.

For the retail and consumer product industry, the amendments to TSCA in the Lautenberg Act represent long-awaited and welcome reforms, but also bring with them a wave of new challenges. Perhaps most notably, under the previous TSCA framework, EPA was required to select the “least burdensome requirements” necessary in imposing restrictions on chemicals. Now, EPA has the power to take any measures it deems necessary to address safety risks associated with a chemical, including banning the substance entirely. Significantly, this means that EPA can now take the drastic measure of banning chemical substances currently widely used in retail and consumer products. Although the long-term implications of the Lautenberg Act’s amendments to TSCA depend on how EPA responds to its new mandates, the passage poses several immediate advantages and challenges for the retail industry:

Advantages

• New EPA classifications of “high-priority” and “low-priority” chemicals for review will allow retail product manufacturers and distributors to quickly identify the likelihood that their products will be affected by EPA’s evaluation of chemical safety risks over the next several months and years.
• EPA’s evaluation of chemicals currently existing in the supply chain will help retail product manufacturers and distributors to assess and mitigate long-term costs and risks associated with use of those chemicals.
• The Lautenberg Act permits manufacturers to petition EPA to review the safety of a particular chemical on an individual basis, provided that the manufacturer covers the costs of the review, even if the chemical would otherwise be classified by EPA as “low priority” for review. This enables a retail product manufacturer to obtain an EPA endorsement that its products are safe and will help alleviate any consumer concerns about the chemicals used sooner than EPA’s standard review process would ordinarily allow.

Challenges

• The Lautenberg Act does not eliminate difficulties associated with complying with disparate regulations in all states where retail product manufacturers and distributors do business. One concern under the previous TSCA framework was the lack of standardization across states’ chemical safety regimes, making compliance complicated and confusing for retail product manufacturers who participate in the nationwide market. The retail industry had hoped TSCA reforms would bring with them strong preemption provisions, standardizing chemical safety regulations and eliminating the difficulty in determining whether a particular product complies with differing state standards. While the Lautenberg Act does have some preemption provisions, existing state laws are, for the most part, exempted from preemption and states may also apply for waivers to continue enforcing their own standards.
• EPA may identify chemicals currently in the retail supply chain as “high priority” for review, raising consumer concern about products containing those chemicals and damaging the reputation of potentially entirely safe products even before EPA has conducted a formal risk evaluation.
• EPA may require new warning and product safety labels for products containing chemicals it identifies as posing safety risks, requiring retail manufacturers to incur significant costs to comply with EPA regulations.
• EPA’s power to completely ban substances rather than impose the “least burdensome requirements” may result in a complete ban on chemicals currently essential to the formulation of certain retail and consumer products. Manufacturers may be forced to either reformulate products or take products off of the market altogether.

Thus, while the Lautenberg Act poses a very real risk to the stability of the current retail supply chain, it also provides retail product manufacturers, distributors and sellers the opportunity to evaluate the chemicals used in their products, opt for safer and more sustainable alternatives in the event EPA classifies those chemicals as hazardous, and more effectively mitigate long-term costs and risks. As EPA moves forward in its initial review and classification of chemicals for review, Hunton & Williams will continue to monitor the implications for the retail and consumer product industry.