While political battles over the future of the Toxic Substances Control Act (TSCA) brew on Capitol Hill, the Environmental Appeals Board (EAB) at the headquarters of the US Environmental Protection Agency (EPA or Agency) at the other end of Pennsylvania Avenue has settled in the Agency’s favor one TSCA legal issue while simultaneously reversing an administrative law judge’s determination on another. In the process EPA set aside a landmark penalty in a case that had been closely watched in the regulated community for more than a year.  The two issues are pertinent to the scope and duration of the obligation under Section 8(e) of TSCA1 to immediately submit to EPA information which "reasonably supports the conclusion" that a chemical substance presents a "substantial risk of injury" to health or the environment.

In November 2013, an EPA administrative law judge found that Elementis Chromium, Inc. (Elementis) had violated Section 8(e) by not submitting to the EPA a study linking hexavalent chromium exposure to lung cancer.2  EPA's chief administrative law judge imposed a $2.5 million penalty which had been increased from $2.3 million in light of the apparent culpability of the company.  On March 13, 2015, the EABreversed the judge's determination that Elementis was liable and completely set aside the penalty.3

On its face, the vacating of the multimillion dollar penalty may appear to provide some certainty and comfort to parties subject to Section 8(e) regarding the scope of this reporting requirement.  However, the EAB's decision "flatly reject[ed]" Elementis's contention that the study as a whole did not constitute reportable information under Section 8(e).  The EAB also rejected Elementis's argument that the enforcement action was untimely because the civil enforcement action was not commenced within five years of the time when Elementis obtained the study.4  Instead, the EAB looked to longstanding EPA guidance that interprets TSCA § 8(e)'s reporting obligation to include an exemption from reporting "corroborative" information.  The EAB made a point of reiterating that it would have affirmed the administrative law judge's decision if it were solely guided by the text of TSCA Section 8(e), but said that the EPA guidance had constrained the statute's "broad reach."  There appears to be an opportunity, therefore, for the Agency to revise its historical guidance and expand the reporting obligation in the future.

Background on EPA's Enforcement Case

The focus of the Elementis enforcement proceeding was a workplace epidemiological study commissioned in 1998 by a trade group of which Elementis-the only US producer of basic hexavalent chromium chemicals-was a member.  The trade group and its members were interested in generating data that could provide a foundation for responding to data upon which the Occupational Safety and Health Administration (OSHA) would rely when considering modifications to the permissible exposure limit (PEL) for hexavalent chromium.  The trade group hoped that its epidemiological study would better characterize mortality rates and effects associated with exposures in more contemporary manufacturing conditions than were reflected in previous studies.

A final copy of the study commissioned by the trade group was submitted to an Elementis official in October 2002.  The report showed that workplace inhalation exposure to hexavalent chromium was associated with an increased incidence of lung cancer.  The Elementis official determined that Elementis was not required to submit the study to the EPA (though he admitted that he did not review TSCA or any EPA guidance documents to make this determination).  Two years earlier, an EPA employee had completed a similar study on behalf of the Agency.  The EPA study also had found a positive association between cumulative hexavalent chromium exposure and lung cancer.  Importantly, the lowest dose level associated with a statistically significant lung cancer effect in the EPA study was lower than the exposure level at which such an effect was observed in the trade group's study.

At the time the Elementis official received the final report on the trade group's study, a public request by OSHA for data on hexavalent chromium was pending.  Elementis did not submit the report, but it participated in OSHA's rulemaking proceedings on hexavalent chromium PELs between 2002 and 2006.  Late in the course of the rulemaking proceedings, a public interest group submitted the study to OSHA, but OSHA decided not to rely on it.  In 2006, the EPA learned of the existence of the study fromWashington Post articles.  In 2008, the EPA received the final study from Elementis in response to a subpoena; the EPA filed its administrative complaint against Elementis almost two years later, alleging that Elementis had violated TSCA § 8(e) by failing to immediately submit the final report of the epidemiological study when it obtained it in October 2002.

The Administrative Law Judge's Decision

In a prehearing determination made in March 2011, the Agency's chief administrative law judge deniedElementis's motion to dismiss the enforcement action as untimely.5  The denial was grounded in the judge's ruling that violations of TSCA § 8(e) are continuing in nature.  In 2013, after a three-day evidentiary hearing, the judge held that the trade group study was the type of information required to be submitted under Section 8(e) and that the study was not information that was "corroborative of well-established adverse effects," which EPA guidance would have interpreted as being exempt from the reporting requirement.  The administrative law judge said that the study did not concern a "well-established adverse effect" and that there were "multiple and significant distinctions" between the trade association study and the earlier EPA study.

The judge's opinion detailed five distinctions she concluded made the trade group study sufficiently different from its predecessors, including the EPA study, such that it was not merely "corroborative" of earlier data.  In particular, the judge called attention to: (1) the more modern conditions in the plants at which the workers studied had been employed; (2) the inclusion of "short-term" workers in the data analyzed; (3) reporting of data with respect to the presence of certain chemicals in the urine of the workers; (4) the level of detail provided about the "job exposure matrix" used in the study; and (5) efforts taken to control for the effects of smoking on the observations of lung effects in the workers studied.

The Environmental Appeals Board's Decision

In reversing the administrative law judge's decision, the EAB addressed three main issues: the statute of limitations, interpretation of Section 8(e), and the impact of EPA guidance on the interpretation of Section 8(e).  On the first two issues, the EAB squarely affirmed the judge's conclusions, but ruled for Elementis on the decisive third issue.

1.    The enforcement action was timely because failures to comply with Section 8(e) are continuing violations.The EAB concluded that the EPA's enforcement action was not time-barred because failure to comply with Section 8(e)'s reporting requirement was a continuing violation.  The EAB said this characterization was "not only the most natural reading" of TSCA but also "the interpretation that furthers Congress' purpose in enacting TSCA."  Since it ultimately did not find Elementis liable, the EAB did not take up the question of whether the EPA could recover daily penalties for the entire period of violation (from 2002 to 2008) or whether the Agency was limited to recovering penalties only for the days in which Elementis was in violation during the five-year limitations period preceding commencement of the enforcement action.

2.    Considering only Section 8(e) itself, the trade group's study was presumptively reportable information.The EAB was not at all persuaded by Elementis's "cramped reading" of Section 8(e), which would have limited the scope of information required to be reported. Elementis argued that the only reportable information in the trade group study would have added nothing to what the EPA already knew from its own study.  Therefore, Elementis contended, it was proper not to submit the trade group study because the EPA was adequately informed of the information.  The EAB instead concluded that the trade group's study, "in its entirety," was information that reasonably supported a conclusion of substantial risk of injury and that (in the absence of EPA guidance) would have been required to be submitted to the EPA.  The EAB noted that it is not merely the bare conclusion of a study that is reportable under Section 8(e), but the underlying data, assumptions, methodology, and analyses.

3.    Longstanding EPA guidance exempted the study from reporting because it was corroborative of a well-established adverse effect. After ruling against Elementis on the first two points, the EAB turned to EPA guidance dating back to 1978 that interprets Section 8(e) to include exemptions for otherwise reportable information, including an exemption for information that is "corroborative of well-established adverse effects in the scientific literature."6  The EAB said that a "consistent theme" of the guidance on this exemption is that information is non-corroborative only when it shows that the effects of a chemical substance or mixture are "of a more serious degree or a different kind" than previously known.  In this case's context, "more serious" would require either that a study show adverse effects occurring at lower dose levels or in a shorter timeframe.  Unlike the administrative law judge, the EAB found that, based on the EPA guidance, the trade group study did address a well-established adverse effect-lung cancer-resulting from inhalation exposures.  The EAB said that the EPA and the administrative law judge had "strayed far" from the meaning of the term "adverse effect" when they treated new information about lung cancer risk and the dose-response relationship between hexavalent chromium and lung cancer as new information about adverse effects.  The EAB then proceeded to find that the trade group's study was corroborative of hexavalent chromium's lung cancer effect.  The EAB said that none of the five distinctions that the administrative law judge identified between the trade group study and the EPA study showed that hexavalent chromium causes lung cancer at lower doses or within a shorter time to the onset of cancer in the prior study already in the Agency's possession.  Therefore, even if the trade group study provided new, valuable, or different information, it could not be non-corroborative under these circumstances.

Significance of the Decision to Companies Subject to TSCA

The EAB's decision returns in-house counsel and outside lawyers who advise businesses that manufacture, process, and distribute chemical substances to more solid ground when advising on whether a client should submit certain health and safety studies to the EPA pursuant to TSCA § 8(e).  Although Agency staff espouse a "when in doubt, report it" approach on corroborative studies, the EAB embraced the Agency's longstanding guidance and did not attempt to narrow the scope of the exemption for corroborative information.

Nonetheless, the EAB decision highlights the complexities of applying EPA's guidance on this exemption in the context of epidemiological studies such as the one involved in this case, especially where there are factual differences concerning the ways in which the exposures occurred and the factory conditions during the periods evaluated.  Not surprisingly, the EAB suggested that the Agency consider explicitly excluding epidemiological studies from the reporting exemption for corroborative information.  The EAB cited testimony from the enforcement proceeding regarding the use of epidemiological studies in an "incremental fashion" to develop scientific conclusions, which makes applying the current guidance's criteria difficult.  Alternatively, the EAB suggested that because cancer studies "can be particularly complex and controversial," it might be simpler for both the regulated community and the EPA to remove them from the exemption's scope.

It is still too early to predict whether the EPA will take up one of these suggestions or make some other move to revise its Section 8(e) policies.  In the wake of the EAB's decision, however, the regulated community would be better served if changes are to be announced in the form of formal guidance, allowing notice and comment, rather than as ad hoc interpretive letters or enforcement cases.