CALIFORNIA’S SAFER CONSUMER PRODUCTS REGULATION · Priority Products Prioritization Factors •...

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1 AnnMarie Sanford October 24, 2013 CALIFORNIA’S SAFER CONSUMER PRODUCTS REGULATION

Transcript of CALIFORNIA’S SAFER CONSUMER PRODUCTS REGULATION · Priority Products Prioritization Factors •...

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AnnMarie Sanford ½ October 24, 2013

CALIFORNIA’S SAFER CONSUMER PRODUCTS REGULATION

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Overview

In 2008, California enacted enabling legislation that required the California Department of Toxic Substances Control (“DTSC”) to: • Adopt regulations to establish a process to identify and

evaluate chemicals of concern in consumer products; • Identify safer alternatives; and • Specify regulatory responses that may be imposed by

the State upon completion of an alternatives analysis process.

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Overview

According to DTSC: “The goals of this program are to: • reduce toxic chemicals in consumer products, • create new business opportunities in the emerging

safer consumer products economy, and • reduce the burden on consumers and businesses

struggling to identify what’s in the products they buy for their families and customers.”

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Overview

Safer Consumer Products (“SCP”) Regulations • 9 versions of draft regulations were published from

2009 to 2013 • Regulations became effective October 1, 2013

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This is Michigan, Not California!

• Why is a California regulation relevant to Michigan businesses? − California is the largest economy in the U.S. − California is the 12th largest economy in the world (2012) − If a company sells a product in the U.S., it most likely sells

in California, so must comply with California laws • California has two stringent and far reaching laws that

regulate constituents in products − Safer Consumer Products Regulations − Prop 65 (Not addressed in this presentation)

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Overview: 4-Step Process

1. Immediate list of over 160 Candidate Chemicals (“CCs”) (which is expected to grow to 1,200) based on work already done by other authoritative bodies

2. Evaluate and prioritize product/CC combinations to develop a list of Priority Products (“PP”) for which an Alternatives Analyses (“AA”) must be conducted

3. Responsible entities must notify DTSC when their product is listed as a PP

4. DTSC to identify and require implementation of regulatory response to protect health and the environment, ranging from labeling to product bans

Little opportunity for an early off-ramp

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Timeframe for Implementation Milestones

• Initial Candidate Chemical list → Posted on DTSC’s website September 26, 2013

• First “Proposed” Priority Products list → 180 days after the regulations effective date (April 2014)

• First Priority Products list finalized → Requires rulemaking (may take up to one year)

• Priority Product Notification → 60 days after listing on final Priority Products list

• Preliminary AA Report → due to DTSC 180 days after listing on final Priority Products list

• Final AA Report → due to DTSC 1 year after the notice of compliance for the Preliminary AA Report

• Regulatory Response Implementation → To be specified by DTSC in the regulatory response determination

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Initial Candidate Chemical List

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What Products May be Regulated?

• With limited exemptions, all consumer products that are sold, offered for sale, distributed, supplied or manufactured in California − Includes products manufactured, stored or transported

through California solely for use outside California − Arguably includes buildings

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Product Exemptions

• Products exempted by law • Historical products no longer manufactured • Private individuals who sell used products to other

individuals are not subject to the requirement to conduct an AA

• Products determined by DTSC to be regulated by another federal or California program, BUT only if DTSC determines the other program provides equal or greater protection

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Responsible Entity for Compliance

• Principal Duty to Comply − Manufacturers − Persons who control the specifications and design of,

or use of chemicals in a product − U.S. importers of products

• Optional Duty to Comply if Principal Doesn’t Comply − Assemblers that assemble a product containing a

component that is regulated − Retailers

• Trade associations or consortiums acting on behalf of one or more responsible entities

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Assemblers and Retailers Options

• Assemblers or retailers that have been notified that the responsible entity has failed to comply are not required to comply with the SPC (i.e., conduct the AA) if: − Assembler or retailer notifies DTSC that it has ceased

ordering the product − Assembler or retailer provides DTSC with an estimate of

the length of time that will be needed to exhaust its remaining inventory of the PP

− Assembler or retailer certifies it the will not re-initiate ordering the product unless the non-compliance has been remedied

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Consequences of Non-compliance

• DTSC may issue a notice of non-compliance to manufacturers and importers

• If non-compliance is not remediated, the product and information concerning the product will be placed on the “Failure to Comply List” on DTSC’s website

• DTSC may conduct audits to determine compliance • Penalties

− Civil fines up to $25,000/day/violation − Criminal penalties ranging from $1,000 or up to 6 months

in jail, to $25,000 or up to 1 year for knowing violations

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Chemical and Product Information Gathering

• DTSC has the authority to obtain information it determines to be necessary to implement the SCP regulations

• This information gathering power may be used to gather information regarding ANY product or chemical, NOT just PPs or CCs (except for products exempted from the definition of “consumer product”)

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Priority Products Prioritization Factors

• Product-chemical combination must meet both of the following criteria: − There must be potential exposure to the CC in the

product; and − There must be the potential for one or more exposures to

contribute to or cause significant or widespread adverse public health and/or environmental impacts

• Once a PP has been listed, the regulated chemical in that product is referred to as a Chemical of Concern (“COC”)

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Initial Priority Products List

• DTSC will propose its initial list of PPs in April 2014 • The regulations limit this first list to 5 PPs • The initial PPs must contain one or more CCs that

have both listed hazard trait and exposure concerns • Review and update PPs list at least once every 3 years

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What Products May Initially be Regulated?

• Recent statements from DTSC: − Nail polish that contains toluene − Carpet adhesive with formaldehyde − Mercury in fluorescent light bulbs

• Prior statements from DTSC: − Cleaning products − Furniture seating foam containing flame retardants

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Product Listing and Responses

• DTSC shall post a description of the product-chemical combination on its website

• Within 60 days after a PP is listed, the responsible entity shall notify DTSC that its product is a PP

• Chemical Removal Intent • Product Removal Intent • Product-Chemical Replacement Intent

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Product Listing Response Options – Alternatives Analysis Threshold Exemption

• A product listed as a PP may be exempt from the requirement to perform an AA if the manufacturer submits an Alternatives Analysis Threshold (“AAT”) Exemption Notification to DTSC and the following apply: − COCs are present in the product SOLELY as contaminants

and Concentration of COCs does not exceed the Practical Quantitation Limit (“PQL”) for the chemicals; or

− DTSC may specify a threshold concentration for any COC that is an intentionally added ingredient

• NO EXEMPTION BASED ON RISK LEVEL

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First Stage of the AA (Six Steps)

• Step 1: Identify Product Requirements and Functions of COCs

• Step 2: Identify Alternatives for COCs • Step 3: Identify Factors Relevant for Comparing

Alternatives • Step 4: Initial Evaluation and Screening of

Alternative Replacement Chemicals • Step 5: Consider Additional Information • Step 6: Prepare Preliminary AA Report

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Second Stage of the AA (Five Steps)

• Step 1: Identify Factors Relevant for Comparison of Alternatives

• Step 2: Compare PP and Alternatives • Step 3: Consider Additional Information • Step 4: Alternative Selection Decision

− Select either an alternative or decide to retain the PP • Step 5: Prepare Final AA Report

Subject to public comment (all documents submitted to DTSC are publicly

available)

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Regulatory Responses – Decision Criteria

• DTSC determines the responses necessary to protect the public health or environment

• Selection factors include: − Effects on sensitive subpopulations − Ease of implementation − Existing federal and/or California State regulatory

requirements applicable to COCs or replacement CCs in the product

− Cost − The ease of enforcing the regulatory response(s)

• No clear description on how to weigh these very broad factors

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Regulatory Responses from DTSC

• Supplement the AA Report • Product Information to consumers (e.g, labeling) • Use restrictions on chemicals and products • Prohibit sales • Incorporate engineering safety measures or

administrative controls • End-of-Life management programs (waste

disposal/recycling) • Initiate R&D project or fund a grant for Green

Chemistry and Green Engineering research (if no safe alternative exists or the selected alternative reduces but does not eliminate use of the CCs)

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Public Comments on AA Reports

• The responsible entity is required to respond to public comments, NOT DTSC

• No guidance on how DTSC selects which comments require a response

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Trade Secret Protection

• Trade secret protection may NOT be claimed for any hazard trait submission or for any chemical identity information associated with a hazard trait submission

• The identity of a chemical that is the subject of a hazard trait submission may be temporarily masked only if that chemical is an alternative considered or proposed in an AA AND a patent application is pending for the chemical or its contemplated use in the product

• Trade secret denials may be appealed to a court of law

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• Process changes • Profits generated by trade

secret • Estimated value of

information to your competitors

• Brand name of the PP • Information concerning all

known chemicals in the selected alternatives that are CCs, that differ from the chemicals in the PP, or that are present in the selected alternates at a higher concentration than the PP

• MSDS or SDS related to the PP

What is Disclosed?

• Name of chemical • Product design process • Marketing lists • Production volumes • Supply chain information

(names of manufacturers, importers (if any), distributors, persons to whom PP were directly sold (other than final purchasers or lessees))

• Identification and location of manufacturer’s and/or importer’s retail sales outlets in California where the PP was offered for sale

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How to Protect Confidential Business Information

• Provide upfront justification for trade secret claim • File redacted versions of submitted documents for

public disclosure • File a lawsuit appealing any denial of trade secret claim

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Final Thoughts

• SCP Regulations grant the DTSC significant discretion with little or no independent review

• Focus is chemical elimination rather than safe use − Companies must build a strong administrative record − On its face, the SCP Regulations suggest that de minimis risk need

not be reduced − DTSC likely to prefer chemicals substitution − DTSC will issue implementation guidance − A well thought out and implemented regulatory strategy is necessary

to navigate this regulation • Global supply chain is complex • Timelines for AA process are aggressive and are not in alignment

with industry’s experience involving the development of alternative formulations

• Limited, if any, trade secret protection likely will become a factor in decisions regarding whether to participate in the California market

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Impacted Entities

• Primary responsible companies – Manufacturer/Designer or U.S. importer

• Distributors, retailers, and others could be liable and contracts need to allocate the burden of compliance

• Companies need to protect their intellectual property • CleanTech companies may have increased Green

Chemistry products markets • The SCP regulations may impact health effects

litigation

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Potential Tasks

• Review the initial list of CCs to determine if your company uses any CCs in the manufacture of its products

• Retain qualified consultants if company lacks in-house staff to perform required tasks

• Allocate risks in supply chain contracts • Preserve ability to disclose required information

without incurring penalties for breach of confidentiality provisions

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Potential Tasks

• Assess the interaction with Prop 65, Consumer Product Safety Improvement Act, the Toxic Substance Control Act, among others

• Perform a chemical audit to determine regulatory trends, at least for the major chemical constituents

• Assess how the SCP regulations could be integrated into a corporate sustainability program

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• Companies should identify current federal and state chemicals regulations applicable to the company’s products and work to comply with them

• Track regulatory developments (alone or through trade associations) since more changes are coming − Comment on regulations and challenge regulations if

needed (again, alone or through trade associations)

Conclusion

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Questions & Answers

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For more information, visit www.pepperlaw.com.

AnnMarie Sanford 248.359.7359

[email protected]