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California Begins Regulations on Manufacturing Lifecycle of Products

April 4, 2014
Manufacturers, distributors and retailers of these priority products will be subject to an unprecedented exercise that could result in disclosure of confidential business information, a duty to reformulate a product, possible loss of market share and perhaps a ban on the sale of a product in California.

On March 13, 2014, the California Department of Toxic Substances Control (DTSC) announced its first set of Initial Proposed Priority Products as part of the Safer Consumer Products (SCP) regulations. This initial Priority Product list features three product-chemical combinations:

Spray Polyurethane Foam (SPF) Systems containing unreacted diisocyanates. SPF Systems are commonly used for building insulation, weatherization, sealing and roofing.

Children’s Foam Padded Sleeping Products containing TDCPP (chlorinated Tris), which is a flame retardant.

Paint and Varnish Strippers and Surface Cleaners with Methylene Chloride.

This initial set of products -- sleeping mats, paint thinners, surface cleaners and home insulation -- is expected to expand to up to 185 product types in the next 10 years. The next set of products will be announced in October 2014.

Manufacturers, distributors and retailers of these priority products will be subject to an unprecedented exercise that could result in disclosure of confidential business information, a duty to reformulate a product, possible loss of market share and perhaps a ban on the sale of a product in California.

What Is Next? A Public Participation Rulemaking Process

DTSC’s announcement of the initial priority products list commences a rulemaking process for each product category. Prior to the formal commencement of the rulemaking procedures under both the Administrative Procedures Act (APA) and the California Environmental Quality Act (CEQA), DTSC will hold three workshops in May and June. DTSC has stated that the goals of these workshops will be to gain further understanding about the use, manufacture and sale of these products, as well as emerging science. The DTSC director has stated that by beginning this informal and formal public participation process, “[w]e are starting a conversation with manufacturers.”

Gorsen: Manufacturers should develop a long-term compliance strategy to prepare for future regulatory actions.

This public “conversation” will include a thorough analysis of the economic impacts of listing each product category. The analysis will look at, among many topics, the competitive advantages for business within the state, potential creation or elimination of businesses in the state, and impact on investment in the state.

This public “conversation” will also include a thorough analysis of the potential environmental impacts caused by the sale of each product category in the state. The environmental impact report will look at, among many topics, all the traditional impact areas for facilities and apply it to sales of products, such as impacts on air quality, water quality, exposure pathways of the chemical in the product and cumulative impacts of the introduction of the chemical in the product vis-à-vis all other sources of that chemical in California.

Some Key Issues to Be Decided in the Rulemaking

Many key decisions will be made during this rulemaking process. The scope of the product categories may be broadened or narrowed depending on the testimony provided.  The disposition of existing inventories of these products on shelves during and after the regulatory process is concluded  will be determined. The de minimis level or threshold levels for determining whether the chemical is present in the product, and hence the compliance obligations are triggered, will be decided. For example, it will be decided whether the threshold level for each product should be 1,000 ppm, 100 ppm, the practical quantitation limit or some other level.  It will likely determine the acceptable test methods manufacturers can use.  Lastly, this rulemaking may determine how confidential business information is collected, shared and protected during the regulatory process.

Manufacturers of products will want to monitor this rulemaking even if they do not make one of the initial set of listed products because the rulemaking may act to establish standards and precedents that will apply to all products sold in California.

What Are the Regulatory Compliance Obligations and When Will They Start? 

At this time, the rulemaking is projected to be concluded and final by April 2015. At that time, the final list of priority products will occur and the compliance obligations under the Safer Consumer Product regulations will begin.

Once the list is finalized, a manufacturer (or importer, assembler or retailer if the manufacturer does not step up to its responsibilities) must supply written notification to DTSC that is selling the listed product in California and that it has made one of three choices. The notifier must assert that it is either: 1) submitting itself for full regulatory compliance responsibilities, 2) removing the listed chemical from the product, or 3) ceasing all sales of the product in California. This initial notification requirement is subject to all the penalties and fines available to DTSC under the state’s hazardous waste control laws, which include up to $25,000 per day penalties for late filings.

After notification, the second stage of the regulatory compliance program will require manufacturers (or importers, assemblers, or retailers) to conduct an alternatives analysis that requires vast amounts of data, research and analysis of hazard traits and routes of exposure during the product’s lifecycle. The work plan for the alternatives analysis is required within 180 days of the list’s finalization.  The completed alternatives analysis is due 12 months after DTSC approves the work plan and must include study of whether the chemical is necessary in the product, identify and compare alternatives, and assess the viability and potential impacts of those alternatives.

The last phase of regulatory compliance could potentially be the most onerous.  DTSC can propose a regulatory response, ranging from no action to labeling, modification, or replacement of chemicals in the products, place of sale and workplace restrictions, mandatory recycling programs, or funding of research and development. It is unclear how each regulatory response will be selected so any criteria established for the first few product types may have precedential value for future listed products.

What Should Manufacturers (Importers, Assemblers or Retailers) Be Doing Now?

Manufacturers and those in the supply chain should engage in two main activities to prepare. First, they should monitor and participate in the rulemaking to ensure the rules established are workable and compliance can easily be achieved. Second, they should develop a long-term compliance strategy that prepares and anticipates future regulatory requirements and ensures there are no disruptions to their sales pipelines and market share. This should include review and enhancement of supplier training and communication, sales contracts, trade secret protocols and protection, data collection of listed candidate chemicals, and product risk assessment. Good planning now will ensure the most cost-effective compliance is achieved and costly crisis management later is avoided.

Maureen Gorsen is a partner at Alston & Bird LLP, located in Sacramento. She can be reached at [email protected].

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