D.C. Circuit Court of Appeals Vacates the Confidential Business Rule under TSCA

The D.C. Circuit Court of Appeals vacated a portion of the Confidential Business Information rule (CBI) in the Toxic Substances Control Act (TSCA) regulations as the panel of judges found it unlawfully allows for the unwanted disclosure of chemical manufacturers' trade secrets.

TSCA Overview

TSCA was established by Congress to prevent unreasonable risks of injury to health and the environment from manufacture, processing, distribution in commerce, use and disposal of chemical substances and mixtures. Through TSCA, EPA is authorized to require reporting, record-keeping, and testing, and to impose restrictions relating to chemical substances and mixtures. Any party that intends to manufacture a chemical substance which is not yet on the TSCA Chemical Substance Inventory (CSI) must submit the required notice of such to EPA. EPA maintains two sections of the CSI in order to protect confidentiality while also facilitating the public knowledge of which chemical substances are already in commerce in the United States. The non-confidential section includes non-confidential chemical substances identified in part by their specific chemical identities and the confidential section includes public identifiers, such as accession numbers, for chemical substances whose identities are claimed as confidential. The confidential portion of the CSI is not available to the public and includes the specific chemical identities of chemical substances claimed as confidential.

Confidential Business Information Rule TSCA Overview

On June 7, 2023, EPA issued the final CBI rule. The CBI Rule concerns the assertion and treatment of confidential business information claims for information reported to or otherwise obtained by EPA under TSCA. Any entity submitting information to EPA under TSCA may claim that certain information is confidential business information, so long as it is permitted by the applicable regulations and TSCA section 2613. Generally, CBI claims must be substantiated and routinely reviewed by EPA. Additionally, CBI claims for chemical identities made prior to commercialization are not to be subject to such substantiation or review. The Rule exempts pre-commercialization CBI claims from substantiation and review until a post-commercialization claim is filed. The court found this consistent with the TSCA's provisions. As clarified by the Court of Appeals, Section 2613(c)(2) mandates that a CBI claim for information as outlined in subsections (A) through (G) shall not be subject to substantiation requirements and are not subject to durational limits to the exemption based upon a discrete period. The Court noted the “prior to” language is only present in subsection (G) and modifies the category of CBI that is exempt from substantiation. The Court held that while there is not a durational limit on the CBI exemption, it is not unconditional and could be waived.

Waiver of the Confidential Business Information Rule

The three-judge panel held that the CBI Rule under the regulations would allow downstream customers, such as processors or importers, that only know of a substance’s chemical name and non-confidential accession number to inadvertently waive confidentiality by submitting a report to the EPA that identifies the substance by its non-confidential referents. Even though the existing regulatory regime requires the downstream users of a chemical substance to submit such a report to EPA, the downstream user may not possess any confidential information regarding the chemical, and therefore would be unable to effectively assert or substantiate a CBI claim. The downstream customer, despite lacking the necessary confidential information, are required to assert and substantiate a CBI claim, even though the report they submit is likely to only contain non-confidential information regarding the chemical. Thus, although the downstream customer does not have the required information necessary to support such a claim, they are afforded no exception to this CBI assertion or substantiation requirement and the EPA may deem the CBI claim waived.

The Court was also concerned with the potential waiver of a competitor’s CBI claim and stated the rule “would allow downstream entities without knowledge to inadvertently or intentionally waive a competitor's CBI claim." Although the EPA has acknowledged this issue and stated it would be better addressed in later rules, the Court held that the current CBI Rule allows for unauthorized disclosures of confidential information and that EPA cannot wait to address the unlawful disclosures that are contrary to law.

Conclusion

The Court of Appeals concluded the CBI Rule is unlawful to the extent it allows a downstream entity reporting on a chemical substance by accession number and without knowledge of the underlying specific chemical identity to waive confidentiality for that specific chemical identity. Note the Court only vacated those specific requirements of the CBI Rule. It is likely that EPA will propose a revised CBI Rule within the year. Entities that utilize chemicals that are subject to TSCA reporting requirements and may be subject to the CBI Rule should stay abreast of any potential regulatory changes.

Environmental Defense Fund v. United States Environmental Protection Agency, 
No. 23-1166, 2024 WL 5176219 (D.C. Cir. Dec. 20, 2024)