The U.S. Environmental Appeals Board (EAB) issued an opinion this month that sheds light on section 8(e) of the Toxic Substances Control Act (TSCA); specifically, the applicability of the “continuing violations doctrine” to section 8(e) non-compliance and the scope of the provision’s reporting exemption for corroborative information.[1] The EAB decision overturned an administrative law judge (ALJ) ruling finding Elementis Chromium, Inc., an international specialty chemicals company, liable under section 8(e) because it did not report to EPA an epidemiological study on hexavalent chromium.[2] Rejecting the ALJ’s ruling on the grounds that both the ALJ and the EPA had misapplied EPA guidance on section 8(e), the EAB held that Elementis was not in violation of section 8(e) reporting obligations and vacated the $2.5 million penalty levied by the ALJ against Elementis.

Facts of the Case

A trade group of which Elementis is a member commissioned an epidemiological study on the risks posed to workers from inhalation exposure to chromium in modern chromium manufacturing facilities. EPA was simultaneously conducting a similar study, which ultimately indicated a positive association between cumulative hexavalent chromium exposure and lung cancer. In 2002, two years after the completion of the EPA study, the Elementis study reached the same conclusion. Significantly, the exposure levels investigated in the Elementis study were “substantially higher” than the lowest dose level in the EPA study.  EPA became aware of the Elementis study from a Washington Post article and, in 2008, obtained the study by way of a subpoena. In 2010, EPA filed an administrative complaint alleging that Elementis had violated TSCA section 8(e) by failing to immediately report this study to EPA.

ALJ Ruling

The ALJ rejected the argument that the 5-year general statute of limitations was applicable to section 8(e) violations and barred the enforcement action against Elementis, finding that the complaint had been timely filed under the continuing violations doctrine. Under this doctrine, ongoing inaction gives rise to new violations each day the violative conduct continues. The ALJ also concluded that Elementis was not exempt from reporting the epidemiology study under section 8(e). This provision states:

Any person who manufactures, processes, or distributes in commerce a chemical substance or mixtures and who obtains information which reasonably supports the conclusion that such substance or mixtures presents a substantial risk of injury to health or the environment shall immediatelyinform the Administrator of such information unless such person has actual knowledge that the Administrator has been adequately informed of such information.

(Emphasis added). Under EPA guidance, the agency is “adequately informed” of information that is “corroborative of a well-established adverse effect.” The ALJ concluded that the Elementis study did not concern a “well-established adverse effect” and contained distinct and more accurate information on exposure than had been included in a comparable EPA study.  The ALJ imposed a penalty of $2,571,800, which reflected 2,211 days of violation.  Elementis appealed.

EAB Holding and Analysis

The EAB first agreed with the ALJ that the “continuing violations doctrine” applies to section 8(e) violations. The EAB noted that in other contexts, similar violations are regarded as continuing for as long as the notice or reporting obligation remains unfulfilled (e.g., reporting under Emergency Planning and Community Right-to-Know Act). In addition, the EAB observed that it furthers the purpose of TSCA to interpret the violation as ongoing; a single violation would not have the necessary deterrent effect and the evil Congress sought to prevent under section 8(e) continues each day that EPA is deprived of the information.  Concluding that the violations were ongoing up until Elementis disclosed the study to EPA, the EAB concluded that EPA had timely filed its complaint within the applicable 5-year statute of limitations.

Turning to the merits of the case, the EAB held that Elementis was not required to submit its study on hexavalent chromium to EPA under section 8(e) because the study was exempt from the reporting requirement as corroborative information.  The EAB preliminarily noted that the entirety of the Elementis study would have been reportable had the exemption not applied. The opinion indicated that section 8(e) “requires a manufacturer to report information it obtains about a chemical if the information verifies, corroborates, or substantiates a conclusion that the chemical poses a substantial risk of injury.” The EAB determined that the study’s methodology, data, and analytics all supported a finding of substantial risk of injury from chromium inhalation exposure and rejected Elementis’ argument that the section 8(e) reporting requirements only applied to the study’s one-line conclusion.

Recognizing that the complete study was reportable, the EAB nevertheless found that EPA was already “adequately informed” of the information. The EAB looked to EPA guidance documents which arguably “broaden” the section 8(e) “adequately informed” exemption. As described in the opinion, under these guidance documents, EPA is adequately informed of information that is “corroborative of a well-established adverse effect.”[3]  EPA’s 1991 TSCA Section 8(e) Reporting Guide clarified that “information that newly identifies a serious toxic effect at a lower dose level . . . or confirms a serious effect that was previously only suspected” is not corroborative.[4] Based on this guidance, the EAB held that lung cancer is a “well-established adverse effect” of hexavalent chromium exposure and that the Elementis study is corroborative of this effect because it demonstrates that the cumulative dose of hexavalent chromium that causes cancer is not lower than previously documented.

The EAB rejected both EPA arguments and the analysis of the ALJ. First, it dismissed EPA’s assertion that non-corroborative information is simply new, different, or additional information.  It also found that EPA quoted its own guidance out of context in claiming that all new exposure data is reportable information.  With respect to the ALJ's analysis, the EAB found that the ALJ had misapplied EPA guidance in determining that the Elementis study was non-corroborative because it offered more accurate data than the EPA study. The EAB emphasized that, under EPA guidance, non-corroborative data must show “adverse effects of a more serious degree or a different kind.” Further, the EAB did not agree with the ALJ’s conclusion that the exclusion of certain short-term workers from the Elementis study was significant.  For these reasons, the EAB reversed the ALJ's finding of liability and vacated the penalty assessment.

Discussion

Notably, the EAB opinion did not even mention the leading case on the application of the general statute of limitations to TSCA, 3M Co. v. Browner, 17 F.3d 1453 (D.C. Cir. 1994), which held that the failure to submit a PMN is not a continuing violation.

This case had the potential to obtain a judicial ruling on the statute of limitations question for section 8(e) violations, just as the 3M case did for PMN violations.  The ruling on the merits, however, means that Elementis won the case and thus cannot appeal the statute of limitations ruling.  If EPA appeals its loss on the merits to a court of appeals, then Elementis would likely seek review of the statute of  limitations question also.

The statute of limitations issue could have been addressed in earlier cases that were settled prior to final decision.  For example, in 2004 EPA brought a section 8(e) enforcement action against DuPont for its failure to submit a one-page report from 1981 allegedly subject to section 8(e).  EPA calculated the potential penalty for this alleged violation at $183,837,500, based on assessment of maximum daily penalties for nearly 20 years.  Faced with such massive potential liability, DuPont settled for a substantial (but much smaller) penalty.

Also of interest is the opinion’s assertion that the entire study contained reportable information but for the corroborative nature of the study.  In practice, companies rarely submit entire studies to EPA under section 8(e).  In most cases, they submit brief summaries of studies, and EPA must then request the full studies as underlying data if it chooses to do so.  The EAB’s ruling could put that practice in jeopardy.  It is unlikely that EPA plans to bring enforcement actions for failure to submit entire studies where summaries are provided, however.