First TSCA Criminal Case Provides Lessons for Formulators

Date: May 19, 1997

Companies that formulate chemical mixtures should be wary of running afoul of the requirements of section 5 of TSCA. In 1996, Futura Coatings, Inc. was charged and was subsequently ordered by EPA to pay a $350,000 fine after pleading guilty to criminal violations of TSCA stemming from its manufacture of chemical substances during formulating operations that were not listed on the TSCA Inventory. In a 14-count criminal information, Futura admitted to the unlawful manufacture of over 54,000 pounds of three different chemical substances over a two-year period. The case is the first criminal case brought against a company for violating the Premanufacture Notification (PMN) requirements of section 5 of TSCA. The unlawful manufacture was brought to EPA's attention by an anonymous employee tip.

Futura's TSCA compliance problems arose from an error that may be common among formulators. It is tempting to view formulation operations as simply creating chemical mixtures that provide certain desired performance properties. While simply mixing existing chemical substances does not give rise to a TSCA PMN requirement, if chemical reactions occur and new non-exempt chemical substances are formed, the requirements of section 5 of TSCA apply and manufacture or import is prohibited until at least 90 days after a PMN is filed. Civil penalties for failing to comply with this requirement can be as high as $32,500 per chemical per day, and, as the instant case illustrates, criminal penalties can be imposed for knowing or willful violations of TSCA.

The Futura matter should not only serve to caution persons against continuing to manufacture or import substances known to be in violation of section 5 of TSCA, but also to remind companies that formulating operations can constitute the manufacture of new chemical substances subject to TSCA's PMN requirements. TSCA demands that manufacturers accurately determine the identity of the substances they manufacture for commercial purposes. Complex formulations can be particularly troublesome because multiple cross-products may form.