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Compliance: Talk To Your Supply Chain

May 13, 2020
Exchanging information clearly and frequently with all stakeholders is essential

Much attention now focuses on COVID-19 and subsequent supply chain disruptions; here, we tackle supply chain communications and ways to optimize them. The Toxic Substances Control Act (TSCA) requires such communications, as do evolving best business practices. Managing supply chain communications effectively, and strategically optimizing the commercial interactions and exchanges of information they elicit are essential business practices.

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As demand increases for more information about chemical components to which workers and downstream customers may be exposed, federal and state regulators have stepped up efforts to compel the disclosure of chemical ingredient information to supply chain partners. Other initiatives urge voluntary disclosure of such information as a matter of good product stewardship and corporate governance, motivated in part by the business community’s desire to exert more control over the timing, optics and content of such disclosures. TSCA amendments enacted in 2016 also have enhanced the need for and the opportunities available to manage supply chain communications smartly and in a way that offers considerable commercial value.

The new TSCA requires a high degree of communication among chemical value chain partners. TSCA Section 8 reporting obligations are a case in point. Current chemical data reporting (CDR) requirements are extensive and include chemical identity, where the chemical is produced, manufacturing information, and certain processing and downstream user and use details. While the legal standard that applies to providing this information is “known to or reasonably ascertainable by,” sophisticated entities appreciate that it is in the manufacturer’s best interests to provide accurate, high-quality information, given the U.S. Environmental Protection Agency’s (EPA) reliance upon CDR information for regulatory prioritization purposes.

Revisions to TSCA Section 5 (new chemicals) have also heightened the need for enhanced communication among supply chain entities. The utility of a new chemical, and thus its commercial success, in part will reflect its ease of use in commercial settings without regulatory restriction.

Since the TSCA was amended, the EPA must make one of three alternative determinations under Section 5. If the EPA determines available information is insufficient to permit making a reasoned evaluation of the chemical’s health and environmental effects or the chemical may present an unreasonable risk or it has substantial production and exposure, the agency will issue a Section 5(e) order that sets out the control measures it deems necessary to protect against the unreasonable risk. Standard Section 5(e) provisions can include specific use prohibitions, restrictions on consumer use, no releases to water, worker protections, limits on production volume, prohibitions on domestic production, prohibitions on formation of respirable forms, and recordkeeping requirements. Clear communication between the chemical innovator and the downstream processor or user prior to the submission of the premanufacture notification can, in some instances, avoid a Section 5(e) order entirely.

Effective Supply Chain Communications

For stakeholders wishing to embrace a business strategy focusing on developing and curating proactive supply chain communication, here are a few suggestions:

Identify and prioritize stakeholders/suppliers. Know your customers and accommodate their needs. A new chemical notice requires information from entities throughout the supply chain, and accurately portraying its conditions of use is critical to understanding commercially feasible regulatory controls. The only way to elicit this information is to know your customers’ manufacturing operations, intended uses, and appetite for regulatory control.

Include the EPA in your list of stakeholders. Chemical producers often overlook the EPA as a critical supply chain stakeholder. This is a mistake. Let the new chemicals staff in on important product rollouts so that both parties can anticipate the regulatory trajectory, resource needs, and data development requirements.

Communicate often and clearly. Ensuring your customer base is aware of regulatory requirements with the products you manufacture and how they can address those requirements are considerations as important as the product itself. Routine, candid communication is foundational to all relationships, and commercial relationships forged by the TSCA are no exception.

LYNN L. BERGESON is Chemical Processing's Regulatory Editor. You can e-mail her at [email protected]

Lynn is managing director of Bergeson & Campbell, P.C., a Washington, D.C.-based law firm that concentrates on conventional, biobased, and nanoscale chemical industry issues. She served as chair of the American Bar Association Section of Environment, Energy, and Resources (2005-2006). The views expressed herein are solely those of the author. This column is not intended to provide, nor should be construed as, legal advice.

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