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June 13, 2016

TSCA Overhaul Creates Uncertain Litigation Risks for Chemical Manufacturers 

Massive Chemical Safety Reform Act on President's Desk

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The Frank R. Lautenberg Chemical Safety for the 21st Century Act ("Lautenberg Act"), designed to modernize the 40-year-old Toxic Substances Control Act ("TSCA"), is close to becoming law. The Act drastically restructures the chemical regulatory world and grants the EPA greater power to regulate both new and existing chemicals. Although the Act's focus is purely regulatory, several of its provisions will undoubtedly prove appealing to plaintiff lawyers, particularly in toxic tort contexts.

The Senate's vote came only two weeks after the House approved the Act, which spent five months in conference for reconciliation after both houses of Congress passed earlier versions of TSCA reform. The bill now goes to President Obama, who has endorsed the bill in the past and is expected to sign it shortly.

The Act changes when the EPA may consider cost and other non-risk factors when regulating chemical safety. Under previous law, the EPA was required to undertake a cost-benefit analysis before promulgating chemical safety rules. Under the Act, however, the EPA may not consider costs or other non-risk factors when determining whether or not to regulate a chemical. It may still perform cost-benefit analyses when determining the specifics of those regulations, but health and environmental risks are now the only factors the EPA may consider when deciding what chemicals to regulate. Further, the Act removes the old TSCA's requirement that adopted regulations must be the "least burdensome" regulations available.

As a result, the legislation eviscerates cases such as Indus. Union Dept. of AFL-CIO v. Am. Petroleum Inst., 448 U.S. 607 (1980), in which the Court struck down the EPA’s benzene standard for lack of tenable cost-benefit analysis. Prohibiting a cost-benefit analysis in the determination of safety will certainly embolden the plaintiff’s bar in arguing that manufacturers are driven purely by profit rather than the safety of their products or the health of their customers.

Under the Act, The EPA must now perform risk reviews for all existing chemicals, including those chemicals previously “grandfathered” in under current law, as well as for any new chemicals. In order to allow a new chemical onto the market, the EPA must make an affirmative finding that this new chemical is not likely to present an "unreasonable risk." All risk evaluations are subject to public notice-and-comment procedures, which will inevitably spawn litigation against manufacturers of products containing the evaluated chemicals.

The Act further requires specific regulatory protections for “potentially exposed or susceptible populations.” Exposed or susceptible populations “may include such groups as infants, children, pregnant women, workers, and the elderly.” Current law does not draw such distinctions.

The Act now allows the EPA to require testing without any evidence of risk. At the same time, the EPA Administrator must base decisions on “the weight of the scientific evidence” as established by "the best available science" including consideration of high-level studies and peer-reviewed literature. By requiring that regulatory actions rest upon a scientifically reliable foundation, this bill should prohibit agency action under the guise of health and safety when the best available scientific knowledge does not support the action, irrespective of the now obsolete cost-benefit analysis. After all, to qualify as “scientific knowledge,” an inference or assertion must be derived by the scientific method and supported by appropriate validation—i.e. good grounds, based on what is known. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 590 (1993). Nevertheless, manufacturers must be ever-vigilant for attempts by the plaintiff’s bar to influence regulatory action based upon junk science.

These increased testing standards ensure that chemical manufacturers can expect to see an increase in mass tort and toxic tort litigation.

The Act sharply restricts the confidentiality of business information concerning the health and safety of chemicals, which will be of enormous concern to manufacturers. It gives the public greater access to that information, and any confidentiality protections will expire in 10 years unless businesses can convince the EPA to re-substantiate the confidentiality of that information.

Manufacturers may find some solace in the bill’s preemption provisions. Under the bill, the new EPA risk evaluations are final and preempt state restrictions. However, state prohibitions or restrictions on a chemical enacted before April 22, 2016, and any other state law enacted before August 21, 2003, will not be preempted unless and until the EPA reviews that chemical. As a result, the bill could help avoid conflicts in standards manufacturers currently face. However, this preemption only applies to state restrictions, not reporting or monitoring requirements.

Bowman and Brooke will continue to monitor regulatory developments under the Lautenberg Act and report to you as developments unfold.