Under recently released proposed regulations implementing California’s AB 1879 (2008), the state’s groundbreaking Green Chemistry legislation, manufacturers and retailers of consumer products will be subject to a new regulatory regime intended to reduce toxic chemicals in products. Under that regime, consumer products marketed in California may be required to undergo an assessment to reduce or eliminate specified chemicals, or be withdrawn from the market, as early as 2013.
California’s “green chemistry” law gives statutory authority for California’s Department of Toxic Substances Control (DTSC) to adopt regulations to identify chemicals of concern in consumer products and to evaluate safer alternatives to toxic chemicals through a science-based approach. The purpose of the legislation is to reduce the use of hazardous chemicals and the generation of toxic wastes by changing how society designs, manufactures and uses chemicals in processes and products.1 By January 1, 2011, DTSC must adopt regulations to establish a process by which specific chemical ingredients and consumer products containing them may be prioritized for regulation – subjecting these products to possible reformulation after undergoing an alternatives assessment.
On September 14, 2010, DTSC released for formal public review and comment its proposed Safer Consumer Product Alternatives regulations (Proposed Regulation) implementing that legislation.2 The 92-page Proposed Regulation is the culmination of a two-year process of stakeholder outreach, workshops and discussion drafts. Its release initiates the formal rulemaking process and the 45-day period for public comment, which closes on November 1, 2010. While a number of states have enacted or are considering “green chemistry” policies or legislation, and “green chemistry principles” featured as well in proposed federal Toxic Substances Control Act (TSCA) reform legislation introduced earlier this year, California’s legislation is the most comprehensive in its potential scope and objectives. Accordingly, the development of California’s Safer Consumer Products program, and now the Proposed Regulation, has been followed closely, and the final regulation, when it issues, likely will be considered as a model for other jurisdictions.
It should be noted that the Proposed Regulation is a framework regulation. It specifies only the general process for regulation; specific products and chemicals will not be regulated, nor will manufacturers, distributors and retailers be obliged to assess individual chemicals in their products or implement response actions until the relevant chemicals and the products containing them are listed by DTSC. DTSC is proposing to undertake all subsequent regulation of specific chemicals and specific products without engaging in further rulemaking; instead, the Safer Consumer Products Alternatives regulatory regime would be implemented using only the alternative processes described in the Proposed Regulation. Thus, once the Proposed Regulation issues as a final rule, it will be important for manufacturers, distributors and retailers whose products are marketed in California to follow closely the listing of specific chemicals and products that may trigger the obligation to perform an alternatives assessment and potentially to reformulate their products and implement other “response actions” for them.
A brief summary of the program’s highlights as set out in the Proposed Regulation follows below. All companies engaged in manufacture, distribution or sale of any “consumer products” (as defined below) that ultimately are sold in or into California should carefully review the Proposed Regulation and determine its potential impact on their business.
Potential Scope of Covered Products
Consumer Product Defined
he products to which the Safer Consumer Products Alternatives regulations may apply are specified in the statute. Although the initial focus is anticipated to be on consumer exposures from products used in households, the definition of “consumer products” in fact comprises almost all products. The statute defines this term as “a product or part of the product that is used, brought [sic] or leased for use by a person for any purpose.” The statute specifies only narrowly defined exclusions for foods, pesticides, drugs and medical devices, dental restorative materials and mercury lighting.3
Priority Chemicals and Priority Products
The potential universe of regulated products will be identified through two steps. First, DTSC will propose and adopt by March 1, 2012, a list of “Chemicals Under Consideration” and then prioritize them to propose by July 1, 2012, a list of “Priority Chemicals.” Second, using the list of Priority Chemicals, DTSC will then propose an initial list of “Products Under Consideration” that contain one or more of those chemicals, and, by December 1, 2013, adopt a final list of “Priority Products.”4 Priority Products marketed in California will then be subject to alternatives assessment and potential ingredient substitution and other response actions. The initial lists of Chemicals Under Consideration, Products Under Consideration, Priority Chemicals and Priority Products will be updated and thus likely will expand over time. Individuals may also petition DTSC to consider or list a chemical or product.5
These lists, as initially adopted and as subsequently revised, will be proposed and adopted using procedures for public notice and comment specified in the Proposed Regulation6 rather than by using statutory rulemaking processes.
Obligations (and Options) of Manufacturers, Distributors and Retailers Of Priority Products
Because the Proposed Regulation is intended to apply to products “placed in the stream of commerce in California,” it introduces the term “responsible entity” to designate the parties in the chain of distribution who will be deemed to have responsibility for the product. These parties are:
- the owner or licensee of the brand name or trademark under which the product is placed into the stream of commerce in California
- retailers who sell directly supply or offer the product for sale to consumers in California
- distributors who take title to the product “for the purposes of directly or indirectly placing the product into the stream of commerce in California”
- importers who bring or arrange to bring the product into California for this purpose
- any other party under a contractual agreement relating to the product with one of the above retailers, distributors or importers, unless the agreement specifically provides that the product “shall not be placed into the stream of commerce in California”7
The product manufacturer is likely to be the party who will respond to most (if not all) obligations under the Safer Consumer Product Alternatives regime. However, the other designated parties in the distribution chain can be held accountable if the manufacturer does not perform a required alternatives assessment on a listed Priority Product that continues to be marketed in California.8
Retailers, distributors and other responsible entities who are not the manufacturer can avoid responsibility under the regulation by notifying DTSC that they have ceased to market the product in or to California.9 However, once a product is listed as a Priority Product, all responsible entities who will continue to market the product into California must notify DTSC, and this information, along with product brand names, will be maintained on DTSC’s website.10
Manufacturers who wish to avoid notification or alternatives assessment obligations by withdrawing the product from the market in California must provide a certification that they have taken “all actions necessary to ensure that the product or component is no longer placed into the stream of commerce in California” and supply the names and contact information for all responsible entities for the product known to the manufacturer.11 A manufacturer may also comply by notifying DTSC that it has removed all listed chemicals from the product without replacing them with “another chemical or otherwise adding another chemical.”12
The central component of the Safer Consumer Products Alternatives program is the alternatives assessment under which the manufacturer (or other responsible entity) will evaluate alternatives that will reduce or eliminate Priority Chemical[s] present in the Priority Product being evaluated. The Proposed Regulation provides two types of Alternatives Assessment – Tier I and Tier II. A Tier I Alternatives Assessment is required if a product is reformulated voluntarily to reduce or eliminate a listed chemical. A Tier II Alternatives Assessment is mandatory for Priority Products once they are designated as such.
Tier I Alternatives Assessment
The Tier I Alternatives Assessment is triggered when a manufacturer (or other responsible entity) reformulates a product (not just a Priority Product), or replaces it on the market with an alternative product, in order to remove or reduce the concentration of any listed chemical present in the product. The manufacturer (or other responsible entity) undertaking the reformulation must present a detailed report to DTSC before placing the reformulated or replacement product on the market.13 Because a Tier I reformulation is a voluntary action, the report is likely designed as an informative mechanism for the public and competitors. It is not clear that such a detailed report can be required from a manufacturer who voluntarily undertakes an early alternatives assessment and reformulation before a product is listed as a Priority Product.
Tier II Alternatives Assessment
The Tier II Alternatives Assessment must be completed for any Priority Product which contains “any known or detectable amount”14 of the Priority Chemical[s] for which the product was listed by DTSC. Unintentionally added chemical ingredients that are not known nor reasonably expected to be known by the producer to be present in the product need not be considered, but only if specified due diligence conditions are satisfied.15 A manufacturer also may apply for an exemption if the relevant Priority Chemical[s] are present in the product below a specified de minimis level.16
Tier II Assessment Process and Report
Performance of the Tier II alternatives assessment is a two-step process. First a workplan for the assessment is submitted and reviewed by DTSC. Second, after the workplan is approved, the assessment is performed and the assessment report filed.17 The workplan must identify the Priority Chemicals for which the product was listed and any other Priority Chemicals present in the product. It is not clear, however, whether the assessment itself must address these additional chemicals.18
The Proposed Regulation provides only a general description and listing of factors to be considered in the two components of this process: (1) Chemical Hazard Assessment and Exposure Potential Assessment (Tier II-A); and (2) a Multimedia Life Cycle Evaluation (Tier II-B). Further information will be made available in upcoming guidance materials.19 In general it appears that the hazard assessment will evaluate potential public health and environmental impacts resulting from exposures to the product throughout its life cycle with respect to each Priority Chemical and each alternative for that chemical being considered. The exposure assessment will then address these potential impacts comparatively for the Priority Chemical and any alternatives proposed.20 The separate multimedia lifecycle assessment will then address specified life-cycle impacts for the alternatives that remain under consideration. It will also consider product functional and performance impacts, technological and economic feasibility impacts, environmental impacts and economic impacts.21
The assessment report must contain a detailed discussion of the analysis performed including methodologies (tools, models, software) used for each part of the assessment and data collected.22 The multimedia evaluation report must set out the selected alternative and a “detailed list and explanation of the selection decision,” whether the decision is to implement a change or substitution for the Priority Chemical or to make no changes in the product. If a change is decided, then the report must set out an implementation plan with “key milestones and dates.” Finally the report must identify any regulatory responses that the preparer “wishes to propose that would best limit exposure to or reduce the level of hazards posed by any Priority Chemical” that will remain in the product.23
Tier II alternatives assessment workplans and reports both will be reviewed by DTSC, which will issue a completeness determination (or notice of deficiency) within 60 days. However, if DTSC fails to act within that period, the plan or report is not deemed complete.24
All Tier II assessment workplans and reports must be prepared by assessors accredited by DTSC under a new accreditation program set out in the Proposed Regulation. Both the entity performing the assessment and the individual acting as “lead assessor” must be separately accredited.25
Manufacturers, trade associations and “public-private partnerships” may be accredited as “in-house assessment entities.”26 However, assessments performed by these entities must be separately reviewed and verified by another accredited lead assessor who has not participated in any way in the assessment and who has “no economic interest in any entity that manufactures or places into the stream of commerce in California” any listed chemical or listed product.27
Regulatory Response Actions
Once the alternatives assessment report is complete, the manufacturer may be subject to further disclosure and other requirements depending on the outcome of the alternatives assessment. If the assessment results in the recommendation of an alternative that does not contain a Priority Chemical and if the product will be reformulated or substituted accordingly, then no further response action is required.28 Otherwise, at a minimum, the responsible party will need to make available to consumers specified materials about the product, including safe handling procedures.29 Additionally, if the product after assessment would be classified as a hazardous waste at the end of its useful life, a comprehensive end-of-life management program for the product must be developed, funded and maintained.30
Significantly, if DTSC determines that an alternative exists that does not contain a Priority Chemical and that is both functionally equivalent to the Priority Product and technologically and economically feasible, then DTSC may prohibit the distribution of the Priority Product effective one year after providing notice of the safer alternative to the responsible entity and the manufacturer.31 Also, DTSC has the ability to impose other requirements as it deems necessary to limit exposure and reduce public health or environmental hazards.32 And DTSC may grant an exemption to the regulatory response requirements for any response action which can be shown to DTSC’s satisfaction to be in conflict with or duplicative of existing federal or California regulatory requirements or any international trade agreement ratified by the United States.33 In sum, DTSC has wide latitude to impose restrictions or exempt individual Priority Products based on its evaluation of the outcome of the alternatives assessment and other factors.
If a dispute arises between a regulated entity and DTSC, the Proposed Regulation requires that the parties attempt to resolve the dispute informally. However, for dispute involving enforcement of a regulatory response for a Priority Product, which may include end-of-life product management and sales prohibitions,34 a formal petition must be filed with DTSC.35 DTSC then has the discretion to deny review, which would constitute a final agency action, or grant review, triggering a more formal adjudicative process with briefing and a formal decision by DTSC. Notably, the deadlines for challenging a decision are very short and counselors should be diligent in determining the deadlines and appropriate filings.
Any failure to comply with the requirements of the Proposed Regulation is made subject to general statutory enforcement provisions governing hazardous waste.36 Failure to adequately respond to a notice of deficiency issued by DTSC for compliance with the requirements of the Proposed Regulation also may result in the responsible entity and the applicable product being listed on a separate “Failure to Comply” list that will be maintained on DTSC’s website, unless a dispute resolution proceeding regarding the notice of deficiency is then pending.37 Accordingly, it will be important for companies to trigger the dispute resolution process discussed above if they wish to fully protect their right to contest the notice of deficiency or the adequacy of their response to it.
Confidential Business Information
In addition to alternatives assessment workplans and reports, any person may be called upon to submit information to DTSC about products or chemicals, including market data.38 This information, together with other submittals made to DTSC as part of the Safer Consumer Products Alternatives program, will be made available on DTSC’s website.39 As required by the statute, confidential business information (CBI) can be protected. A process is provided for asserting CBI claims at the time of submission, submitting supporting information if requested by DTSC and obtaining judicial review prior to release of the information in the event DTSC disagrees with any CBI claim made.40 Consistent with the statute,41 “hazard trait” information may not be protected as CBI. The Proposed Regulation interprets this provision to include information identifying the manufacturer of any product that contains a listed chemical as well as information concerning the presence of listed chemicals in a product. Information that discloses chemical manufacturing processes may be protected.42
The Proposed Regulation sets out an ambitious and groundbreaking new regulatory regime that will affect product manufacturers, as well as retailers and distributors. Because the Safer Consumer Products Alternatives program described in the Proposed Regulation will be implemented without further rulemaking, the current 45-day public comment period is the last opportunity for parties who will be affected by this new regulatory regime to have input into the structure of the program and how it will be implemented.
Holland & Knight looks forward to assisting our clients in a more detailed review of the Proposed Regulation and its potential impact on their products and business, and to prepare comments as appropriate.
For more information about recent developments in California’s environmental laws, see Holland & Knight’s alerts on “Legal Perspectives on Recent California Climate Change Legislation” and "Harnessing Solar Radiation in the Mojave Desert.”