
The U.S. Environmental Protection Agency (EPA) released on March 20, 2019, a list of 20 chemicals that EPA has suggested as candidates for high priority designation under the Toxic Substances Control Act (TSCA), as reported in our March 22, 2019, memorandum “EPA Releases List of 40 Chemicals Undergoing Prioritization for Risk Evaluation.” Should those chemicals go forward as high priority, they will be subject to risk evaluation under TSCA Section 6. Industry stakeholder responses to this candidate list proposal and follow up actions with EPA related to risk evaluation work optimally will be conducted under existing or potentially newly formed chemical consortia.
But what if your chemical is not on
the list of 20? If you want to protect or even increase your business
market advantage, consider inviting your commercial rivals to join an industry
advocacy group anyway. This is particularly important if you have a
chemical of commercial interest on the TSCA Work Plan Chemicals list.
In today’s regulatory environment, engaging in advocacy opportunities with your
company’s competitors makes sense. Consolidating experience, knowledge,
and finances allows a company to achieve far more and faster than it could
individually. Given that amended TSCA requires EPA to look to the TSCA
Work Plan Chemicals to identify chemicals for future prioritization
consideration, we know those chemicals will be subject to regulatory scrutiny
eventually. So setting up and working under a consortium umbrella now
makes sense. Even if your chemical is not yet on the proverbial radar
screen, there is benefit of organizing with others early. Groups that
wait to organize will deplete valuable limited time to form, leaving less time
to engage effectively and comprehensively on EPA’s proposed actions.
Organizing industry groups now means reduced cost, greater flexibility,
increased time for strategic planning, and less aggravation in the long
run.
Beyond prioritization and risk evaluation under Section 6, we also know that
EPA anticipates industry group engagement for testing under TSCA Section
4. Within the risk framework rulemakings, EPA expressed repeatedly and
clearly that it anticipates TSCA obligations will be shared collaboratively and
addressed by consortia groups. Even within a general regulatory advocacy
context, in many respects, EPA appropriately prefers working with industry
coalitions to save time, obtain greater use and exposure information, and
leverage more efficiently its own resources.
Congress explicitly included the concepts of industry consortia as part of
amended TSCA legislation under Section 4, as it relates to efforts to reduce
animal testing, and Section 26, in anticipation of increased Agency fee
payments.
So working under a consortium umbrella makes sense. But before proceeding
with group formation, there are some important factors to consider:
- Antitrust
Protection: Members of an industry
group must consider the need to protect against antitrust concerns.
It is reasonable to anticipate that outsiders may be concerned with key
competitors working together. It could be perceived as opportunities
for dishonest companies to pursue unfair market activities, such as price
fixing or monopolization efforts. To address such concerns, industry
consortia must be managed in a way that ensures federal antitrust laws are
followed. This can be achieved through a third-party management
service, which provides administrative structure to the group, including
specific meeting agendas and minutes, and competent antitrust counsel at
meetings to ensure discussions or exchanges of prohibited information do
not occur.
- Regulatory
Experience: Today’s regulations are
complex. It is nearly impossible for today’s company representatives
to have in-depth knowledge of the myriad of regulatory statutes impacting
their commercial chemical products. Having easy access to experts to
assist the consortium in understanding the regulatory pressures for a
specific chemical, as well as insight on strategic approaches, is
invaluable.
- Financial
Experience: As
organizations consider management service providers, they should
appreciate that for many regulatory programs, the amount of money to
collect and disburse is not insignificant. Under TSCA Section 6,
industry consortia will need to collect over $1,000,000 to cover
anticipated EPA fees. TSCA Section 4 requires fee payments of about
$10,000 to $30,000 — PLUS costs associated with the specific testing
required. Costs under the EPA Endocrine Disruptor Screening Program,
while still in hibernation but potentially could progress soon, could be
over $1,000,000. A consortium should consider whether its management
service provider has the ability to collect and disburse funds needed to
cover required industry fees, contract testing, administrative management,
and other costs associated with consortium work. In some cases,
there may be federal tax implications. As such, it is recommended
that consortium financial management be conducted under the auspices of a
certified public accountant.
- Sunset Provisions: While details on the why, when, and how of setting up a new industry group is important, companies should also think about the parameters for shutting down the group when its work is completed. A consortium should be maintained only if additional work is needed. Otherwise, there should be an easy option for members to disband when the work is done.
As mentioned, companies should be thinking ahead if chemical products important to them were not on the March 20 list. The new normal is not what you think and going it alone is not smart. The time to prepare for the future of your company’s products is now, and to do that, you will need to coordinate with others in your commercial space.
If you are interested in forming a new consortium, joining an existing B&C® Consortia Management, L.L.C. (BCCM) consortium (see partial list here: http://www.bc-cm.com/affiliate-associations), or need more information on consortia benefits, contact BCCM Vice President Kathleen Roberts, kroberts@bc-cm.org or (202) 833-6581.
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