Diversified Industrials

The Implications of a Biden Administration on Chemicals Regulation

With the November elections quickly approaching, speculation is growing about what a Biden win could mean for environmental regulations. As the primary regulatory agency with jurisdiction over environmental issues, the Environmental Protection Agency (EPA) has a number of tools at its disposal to execute the President’s environmental agenda.

Under the Trump Administration, the EPA focused on reducing many of the regulations that were established during the Obama years with the goal of reviving the American manufacturing base and increasing reliance on domestic energy production. Examples of such rollbacks include:

  • Replacing the Clean Power Plan regulations with the Affordable Clean Energy rule, which reduced restrictions on coal-fired power plants
  • Reducing mileage and emissions standards for auto manufacturers
  • Eliminating methane emission requirements for oil and gas producers

The Trump Administration’s approach is also evident in the EPA’s less-is-more approach to the regulation of chemicals under the Toxic Substances Control Act (TSCA). It is likely that a Biden EPA will reverse this policy approach and pursue a far more aggressive approach to chemical review and the management of chemicals.

The evolution and implementation of TSCA

TSCA was originally passed by Congress in 1976 to provide EPA with the authority to address the production, importation, use, and disposal of chemicals. However, over the years, TSCA’s authority was diminished through court rulings, overlapping laws, and consumer deselection, which resulted in broad stakeholder dissatisfaction with the process. In 2016, the Lautenberg Chemical Safety Act (LCSA) was passed to amend TSCA to allow for a more clear and comprehensive review process for chemicals either currently on or entering the marketplace.

When the LCSA passed, there was an approximate backlog of 300 chemicals in the queue for evaluation. By the time President Obama left office in January of 2017, the backlog had nearly doubled due to the expanded review process. The Trump Administration took a different approach to the implementation of the reformed TSCA, narrowing the scope of chemicals under review to “intended use” only and requiring less input from manufacturers. By August of 2017, the backlog was gone, and environmental groups were raising concerns that the Trump Administration was rubberstamping chemicals that could pose a risk to public health. In the time since, the Trump Administration has outlined a total of thirty high-priority chemicals for review. The evaluation deadline for the initial ten chemicals passed in June of 2020, with only two reviews completed.

How TSCA could change under President Biden

In the years since President Obama left office, there has been growing pressure from environmental groups to pursue a more aggressive chemical management strategy. Vice President Biden has also committed to environmental justice as a policy platform. Both are likely to result in an EPA that takes a stricter approach to implementing TSCA. Here’s what we think could be ahead.

  • Expanded data submission requirements for industry. Expect a Biden EPA to require companies to submit a larger body of data on chemicals in evaluation, both at the beginning and throughout the review process.
  • Longer review and approval processes. Expect a more robust public comment period and more stringent data requirements, which will likely result in a backlog of chemicals awaiting review.
  • Reevaluation of Trump-era reviews. Expect the reevaluation of Trump-era reviews with an expanded evaluation scope beyond just “intended use.”
  • Reprioritization of most controversial chemicals. Expect the Biden Administration to reprioritize priority chemicals to include substances that are highly controversial and dominating public discourse.
  • Taking a more European approach to chemicals management. The EU is widely regarded as a first mover in chemicals management, establishing regulations often adopted by other nations. Expect increased alignment between a Biden EPA and the European Chemicals Agency (ECHA) and its Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH) regulation.

Key considerations for the industry

Critical to navigating changes in the implementation of TSCA is understanding the process and the different stakeholders that influence the process. While the law remains unchanged, a potential Biden Administration’s implementation of the law is likely to put an increased onus on the industry to engage with EPA during the review process and fund such reviews. A Biden EPA is also more likely to consider input from a broader group of stakeholders who will participate in what is likely to be a more robust public comment period. Understanding how the process works and who will be providing input to the process will allow your company to plan and dedicate the necessary resources to navigating reviews or complying with resulting regulatory controls.

Beyond the TSCA process, is the perception of the substance in question. Regulatory milestones can often warrant broader scrutiny of a substance and its respective manufacturer. In an era where information is at our fingertips, tracking and activating around issues is easier than ever. We have seen this play out through a number of substances including PFAS, Glyphosate, and Talc. This has created a new reality under which companies have had to operate. Increasingly, companies are facing threats to their business that go beyond legislative or regulatory action to include NGO activism, negative headlines, investor concerns, and targeted litigation.

These challenges are often the result of a sophisticated ecosystem of players ranging from environmental groups to scientists to trial lawyers engaging on these issues in the public domain and pressuring decisionmakers to take sweeping approaches to regulation. The reason these challenges matter is because they often result in public skepticism, product deselection, and litigation.

Critical to navigating this new reality is proactive stakeholder engagement. This can take the form of educating policymakers on the value of your substance to both society and to the value chain; engaging the value chain to advocate on behalf of industry; communicating openly and transparently with the communities in which you operate; maintaining a dialogue with investors about what challenges your company could face and what your plan is to address those challenges; and educating media on your point of view.

As companies prepare for a potential shake up in Washington, understanding how the implementation of TSCA may change is critically important. The stakes are high, and industry’s freedom to operate may be curtailed if companies are not well-prepared for the potential of a new Administration.

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