2002 Inventory Update Rule Reporting Period Begins; EPA Reporting for Previously Exempted Polymers

Date: Sep 24, 2002

The Toxic Substances Control Act (TSCA) Inventory Update Rule (IUR) requires manufacturers and importers of certain chemical substances to report production and import quantities to the U.S. Environmental Protection Agency (EPA) every four years.  The latest reporting period (i.e., the 2002 IUR reporting period) began August 26, 2002, and extends until December 23, 2002.  If your company manufactured or imported more than 10,000 pounds of a substance that is listed on the TSCA Chemical Substance Inventory (TSCA Inventory) at any one facility during its last corporate fiscal year completed prior to August 26, 2002, then it will be required to file an IUR report with EPA during the reporting period.   

In general any substance that is listed on the TSCA Inventory must be reported if the 10,000-pound per year per site threshold is exceeded.  There are, however, several categories of substances that are exempt from IUR reporting, including:  inorganics, polymers, microorganisms, naturally occurring and hydrated forms of chemical substances.  Other exemptions exist for substances that are produced in small quantities for research and development, imported as part of an article, or manufactured as an impurity, by-product, or non-isolated intermediate.  Importantly, an otherwise exempt inorganic chemical substance, polymer, or microorganism, is subject to reporting if that substance is subject to a proposed or final rule issued pursuant to sections 4, 5(a)(2), 5(b)(4), or 6 of TSCA (e.g., test rules, significant new use rules) or to an order issued pursuant to section 5(e) or 5(f).

New Reporting Requirement Affects Previously Exempted Polymers

In a marked departure from past guidance and the plain language of the regulations, the 2002 IUR Instructional Manual notes that substances resulting from hydrolysis, depolymerization, or chemical modification of polymers (regardless of the degree of such hydrolysis, depolymerization, or chemical modification) must be reported unless they are otherwise excluded.  Previously, EPA treated such polymers as exempt from IUR reporting unless the hydrolysis, depolymerization, or chemical modification occurred to such an extent that the resulting product was no longer polymeric in structure.  If your company manufactures or imports such substances in reportable quantities, we advise you to carefully evaluate your reporting obligation in light of this new guidance. 

Small Business Exemption

A company may qualify for a small business exemption from reporting if it either (1) produces less than 100,000 pounds of the reportable substance and has total annual sales of less than $40 million (including those sales of the parent company), or (2) has annual sales of less than $4 million regardless of production/import volume.

EPA Imposes Hefty Penalties for IUR Violations

IUR reporting is a frequently overlooked requirement and EPA regularly levies substantial fines (up to $18,700 per chemical) against companies for seemingly minor IUR reporting violations such as leaving a chemical off the report or reporting an inaccurate production/import volume.  To avoid these and other reporting pitfalls, companies should carefully review their production/import records and prior IUR filings before they prepare and submit their 2002 IUR report.  Companies may be able to rely upon EPA's self-disclosure policy to correct past reporting errors or omissions.   

Upcoming Changes to the IUR Reporting Requirements

EPA is in the process of finalizing changes to the IUR reporting requirements and a final rule is expected before the end of the current reporting period.  Among the expected changes are:  an increase in the reporting threshold to 25,000 pounds per year, a requirement that companies submit additional exposure and use data, and the elimination of the exemption for inorganic chemical substances.  However, these changes will not affect companies' 2002 IUR reporting obligations, as they will not take effect until the next reporting period in 2006. 

If you desire further information regarding IUR reporting or if you have any questions about your company's potential reporting obligations, please contact Tom Berger at (202) 434-4 or berger@khlaw.com or Trent Doyle at (202) 434-4161 or doyle@khlaw.com.