On September 14, 2010, the California Department of Toxic Substances Control (DTSC) published proposed regulations that will impose sweeping new responsibilities and regulatory risks on companies world-wide that manufacture products for sale into California, as well as those California companies marketing consumer products in that state.
In 2008, California enacted precedent-setting legislation to export its stringent environmental standards to manufacturing world-wide, by focusing on consumer products sold into California. Under the banner of “green chemistry,” the laws require the DTSC to develop regulations to identify and prioritize toxic chemicals and ingredients on consumer products, and require manufacturers to prepare a lifecyclebased alternatives analysis to determine whether they could make their product and regulate toxic substances. The analysis focuses on the design of those consumer products, and the processes by which they are manufactured, to reduce the overall environmental footprint of the product and the use of what California perceives as potentially hazardous and toxic substances.
DTSC has been diligently developing straw and working draft regulations that would accomplish the law’s goals for the past year, in order to meet its January 1, 2011, deadline for final regulations. On September 14, DTSC posted its latest version of the regulations—creating a new regulatory program called the “Safer Consumer Products Alternatives”—and commenced the formal rulemaking process under the state’s Administrative Procedures Act (APA). September 14 starts the formal 45-day rulemaking process during which all stakeholders must make their comments to be included in the official record and receive consideration under the APA process. The 92-page draft regulations and related documents can be reviewed at:
Comments can be submitted to DTSC electronically by using the comment link on DTSC’s website. They also can be submitted via mail or e-mail, or at a public hearing to be held in Sacramento on November 1, 2010.
Who Will Have a Duty to Comply with These Regulations?
In previous draft versions of the regulations, it was clear that DTSC was not sure how or where to place the duty to comply along the supply chain. In one previous draft, DTSC proposed applying joint and several liability across the entire supply chain for compliance with the regulations, rather than be responsible for identifying the entity along the supply chain with responsibility for compliance. In the now officially proposed draft, DTSC places the duty to comply on a newly defined term, called the “responsible entity.” Companies selling products into California may be a “responsible entity” if they are:
- an owner or licensee of a brand name or trademark under which a consumer product is placed into the stream of commerce in California;
- a California importer;
- a California distributor;
- a retailer; or
- any person who is party to a contractual agreement with a California importer, distributor or retailer concerning a consumer product placed into the stream of commerce, unless that contractual agreement specifically states that the product shall not be sold in California.
There are also provisions that may allow a responsible entity to contractually delegate compliance responsibility to another entity in the supply chain, and by meeting certain notification and disclosure requirements in the regulations. The “supply chain” is defined as “every entity, other than the final purchaser or leaser of a finished consumer product, which comes in contact with the product, including, but not limited to, the product producer, manufacturer, importer, distributor, California importer, California distributor, and retailer.”
What Duties Will Compliance Entail?
Exhaustive data requirements: The proposed regulations include requirements for “responsible entities” to generate toxicity and ingredient data regarding product components developed in a complex global supply chain that currently does not exist and is currently not obtainable. This requirement would be expanded exponentially if and when a concurrent regulation being proposed by Cal/EPA’s Office of Environmental Health Hazard Assessment (OEHHA) to coordinate with the DTSC regulations is adopted. It would expand the types of hazard traits for which data could be requested far beyond carcinogenity and reproductive toxicity, for which we are familiar under Prop 65, to also include neurotoxicity, endocrine toxicity, epigenetic toxicity, ototoxicity and phytotoxicity, among others. See www.oehha.ca.gov/multimedia/green/pdf/081110prereghazard.pdf.
Alternatives Analysis: The regulations have an elaborate four-step process for identifying products that must comply with the alternatives analyses. Once that process is concluded and DTSC identifies a “chemical of concern” in a so-called “priority product,” the responsible entity for that product will be required to supply DTSC with information about its supply chain, notify DTSC that it will remove the chemical of concern, and/or provide tiered levels of alternatives analysis on how it could have made the product “safer.”
The DTSC defines “safer” as a “demonstrated net reduction of projected public health and environmental adverse impacts.”
These “alternatives analysis” requirements are elaborately described in the 92-page proposed regulations. Some examples include new legal duties imposed upon regulated companies to:
- provide the name and contact information for all entities in the global supply chain for the product;
- prepare work plans, reports and executive summaries on all life-cycle segments of the product and its safer alternatives, including raw materials mining; all intermediate manufacturing processes; distribution and transportation of product components; impacts and exposures during use of product; and end-of-life reuse, recycling or disposal; and
- prepare an analysis of substitution of chemical in the product, reduce concentration of chemical, or redesign the product to include alternative materials.
Unfortunately, there is great uncertainty as to what DTSC will consider to be an adequate alternatives analysis, although the regulations promise to have guidance out in advance of when the first product is required to perform one.
When Will the Duty to Comply Commence?
The draft regulations set out a schedule for its four-step identification and prioritization schedule over the next three years. Thus, the first product to be selected to attempt to comply with this new regulatory program would be in December 2013.
Step One: DTSC is proposing to first establish an initial list of “Chemicals Under Consideration” by June 1, 2011, and a final list by March 1, 2012.
Step Two: DTSC is proposing to establish an initial list of “Priority Chemicals” by July 1, 2012.
Step Three: DTSC is proposing to have an initial list of “Products Under Consideration” by March 1, 2013.
Step Four: DTSC is proposing to have an initial list of “Priority Products” by September 1, 2013, and a final list by December 1, 2013.
All companies selling consumer products in and into California obviously have a substantial interest in what ultimately is contained on each of these important “lists.” It is important to note that this listing process is not envisioned to be an exclusively government exercise, as the regulations also provide for a petition process for any person to add chemicals and products to the lists. After they are all developed, the duty to comply with the alternative analysis reporting and documentation for the responsible entity for that priority product will commence.
What Are the Consequences for Non-Compliance?
DTSC views its authority under the green chemistry laws as allowing it to seek civil and criminal fines and penalties against a responsible manufacturer, as well as possible bans on the sale of its products, if DTSC determines that the data submissions or alternatives analysis are inadequate. The laws authorize the broadest array of regulatory responses and enforcement options of any law governing chemicals and consumer products in the world. DTSC views its authority as including the power to:
- seek the imposition of fines of up to $25,000 per day per violation for failures to comply with the regulations (Cal. Health and Safety Code Sections 25188, 25189) and criminal misdemeanor violations for false statements in data and documents (Cal. Health and Safety Code Sections 25190, 25191);
- impose bans on the sale of products;
- require the use of specific safer substitute ingredients in products;
- require the funding of research and development of safer substitutes where a product contains an ingredient with toxic attributes for which the alternatives analysis has concluded that no safer substitute exists;
- require extended producer responsibility or take-back requirements on the product manufacturer at the end of the product’s useful life to the consumer; or
- impose “any other outcome the department determines accomplishes the requirements of this article.”
Of note, regarding this last enforcement option—the broad “any other outcome” option—the proposed regulations provide that DTSC may, under certain conditions, impose a recall of products found to contain what the DTSC regards as toxic ingredients.
The standards for how DTSC will determine whether a violation of its data submission or analysis requirements have occurred are vague, unclear, based on subjective determinations (e.g., “as DTSC deems appropriate”) and/or non-existent. Hence, navigating the DTSC’s regulations will be treacherous territory for anyone having a duty to comply.
As evidence of the skepticism DTSC is already showing in the veracity of the data and analysis it expects to receive from product manufacturers, the regulations require the following certification from an officer of the responsible entity to be included with all data, documents and analysis submitted under the regulations:
I certify under penalty of perjury that this document and all attachments were prepared or compiled under my direction or supervision to assure that qualified personnel properly gather and evaluate the information submitted. Based on my inquiry of the person or persons directly responsible for gathering the information, the information submitted is, to be the best of my knowledge and belief, true, accurate, and complete. I also certify that in carrying out the duties above, life cycle thinking and green chemistry principles were considered. I am aware that submitting false information or statements is punishable under all applicable provisions of law.