The key to complying with EPA’s new chemical evaluation program is knowledge.

Adhesives. Paints. Toys. Consumer Electronics. Athletic footwear. Furniture. The factor common to all these products is that they contain chemicals. According to the American Chemistry Council, more than 96 percent of all manufactured goods are touched directly through the business of chemistry. As the US Environmental Protection Agency begins to implement a new chemical evaluation and regulatory program, it should come as no surprise that EPA activities will affect the products you make, use, and in which you may invest.

For about 40 years, the Toxic Substances Control Act (TSCA), the primary law that governed how EPA regulated and approved chemicals for use in commerce, remained unchanged. It also proved to be ineffective in addressing those chemicals that pre-dated the statute’s enactment and were therefore never reviewed for safety by EPA. In June of 2016, President Obama signed the Lautenberg Chemical Safety for the 21st Century Act into law, radically changing the way EPA could evaluate and regulate chemicals for safety. However, before EPA could start exercising its new power, EPA had to promulgate the rules establishing the framework for the new program. EPA unveiled those final rules concerning the inventory reset, prioritization and risk evaluation, on June 22 of this year, and now the work begins.

What changed?

Today, EPA does not know exactly which chemicals are being used in the US. EPA has a historical compilation of all chemicals that have been in commerce since TSCA was enacted, known as the Inventory. If a chemical is on the Inventory, it can be used. If it is not listed, it cannot. EPA is about to commence a reset process. EPA will require all manufacturers to identify the chemicals they make. If a chemical is not identified as being “actively” in commerce, it cannot legally be used. A question manufacturers must ask themselves is “Do we know what chemicals we use in our products or are contained in our products?” If a manufacturer does not know, it can’t monitor the legal status of the chemical, and therefore of the product they make.

That lack of knowledge can have other consequences as well. Once EPA knows which chemicals are indeed being used, they have to decide whether a chemical and its uses pose a concern that would warrant a risk evaluation. For the first time, EPA will have to evaluate, on some level, every chemical in commerce in the US. This prioritization process requires EPA to assess all information it can amass concerning the hazards, uses and users of each chemical and the chemical-containing products. If a manufacturer does not know what it is in its products, it will not know when EPA starts to study those chemicals for prioritization. Furthermore, it will not be able to provide EPA with information that could help EPA shape its prioritization determination for each chemical.

Additionally, ignorance may prove not to be blissful if EPA decides that a chemical is indeed a high priority, and needs a risk evaluation. Chemicals designated as “high priority” will be subject to a full safety assessment of the chemical for specified uses, and could result in risk management, use restrictions and bans. No manufacturer wants to be surprised with the news that an integral ingredient or component is no longer available due to EPA regulation.

In order to be prepared for these new EPA actions, companies should be proactive. Manufacturers need to know what they know – and what they want to know – about the chemicals in their products. Manufacturers also need to know who else uses they chemicals about which they care. If manufacturers are well informed as to the potential hazards posed by chemicals in their product, or have data that demonstrate the safe use of chemicals in their products, they know the risk they face of potential EPA regulatory action, and whether they can with stand the challenge that may present. Knowing the other uses of the chemical, and the companies that rely on those uses as well will be extremely useful to complete that risk profile.

Knowing the other users of a chemical is important for other reasons. During the review process, EPA has the authority to order companies to generate new data and conduct testing, a costly proposition. Any time EPA makes such a demand, there is always the opportunity for companies to form consortia so that costs can be shared. Accordingly, if a chemical is undergoing an EPA ordered safety assessment and testing is required, companies might want to consider a cost-sharing agreement. Another benefit to knowing others users stems from a provision that allows manufacturers to “nominate” chemicals for a risk evaluation so long that industry pay for such review in full. If a chemical is critical to a number of companies, they again may want to form consortia so that the costs can be shared, a final determination issued, and the issue of the safety of the chemical be settled with finality.

Industry must take stock of the new requirements, determine the resources needed to meet those requirements, and strategize how to make best use of the new regulatory structure and tools at the disposal of both EPA and industry. With good industry planning, both EPA and industry can benefit.

Judah Prero is Counsel in Sidley Austin LLP’s Environmental group where he focuses on chemical management laws and regulations, including the Toxic Substances Control Act, Chemical Facility Antiterrorism Standards, the Occupational Health and Safety Act and the Clean Air Act’s Risk Management Plan program.