White Paper

Implications of the TSCA Inventory Update Rule Amendments for the Mining and Mineral

Processing Industry February 9, 2005

On January 7, 2003 (68 Fed. Reg. 848), the U.S. Environmental Protection Agency (EPA) issued amendments to its reporting regulations for chemicals listed in its Chemical Substances Inventory , developed under Section 8 of the Toxic Substances Control Act (TSCA). This rule, known as the Inventory Update Rule Amendments (IURA), established a set of reporting requirement in Subpart C of 40 CFR Part 710. EPA first established reporting requirements for chemicals on the TSCA Inventory in 1977. Those requirements did not cover inorganic substances and thus had minimal impact on the mining and mineral processing industry. The IURA, however, has expanded the scope of TSCA reporting to include inorganic substances, which necessarily requires mining and mineral processing companies to assess the application of the rule to their operations. The purpose of this White Paper is to provide an overview of the IURA and highlight the key issues that mining and mineral processing companies will need to consider when deciding how to comply with these regulations. This White Paper is not intended to provide legal advice on any specific matter for a particular company. In determining their potential reporting obligations, companies should consult with their legal counsel.

Executive Summary The IURA is a significant expansion of a long-standing TSCA reporting obligation for chemical substances in commerce. The IURA modifies pre-existing TSCA reporting in two important respects: (1) the reporting obligation applies to inorganic (as well as organic) chemical substances; and (2) reports for larger volume chemical substances must include information about the processing and use of these substances in the hands of the customers of the reporting entity. Reporting under the IURA has two tiers. A company that manufactures more than 25,000 pounds of a substance on the TSCA Inventory of existing chemical substances for commercial purposes at a single site must file an IURA report. This base report must include (1) information identifying the company, facility and reportable chemical substance; (2) the volume of production of the substance, including information about the form of the chemical and highest concentration of the chemical shipped off-site or reacted in processes at the site of manufacture; and (3) the number of workers reasonably likely to be exposed to the substance.

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A company that manufactures more than 300,000 pounds of a substance for commercial purposes at a single site must provide more detailed information about “downstream” processing and use of the substance. This obligation does not apply for inorganic substances during the first round of IURA reporting. IURA reports are due every four years. The first round of such reporting covers activities in 2005, with the report (on EPA’s Form U) being filed before December 23, 2006. EPA has proposed to change the report submission period to January 1 through April 30. See 70 FR 3658 (January 26, 2005). A mining company must consider a series of threshold questions in deciding what, if any, chemical substances it must report. IURA applies to substances that a company manufactures; it does not apply to chemicals that the company processes or uses. The IURA also exempts “naturally occurring chemical substances” from reporting. A wide array of extraction, beneficiation and processing operations in the mining industry fall within this exemption. In addition, some products of the mining industry fall under the authority of other statutes and are not “chemical substances” subject to regulation under TSCA. Finally EPA’s TSCA reporting rules contain a series of general exemptions that may be applicable to mining operations. These exemptions cover impurities, byproducts, reactions associated with use of a product, additions of physical-chemical properties and non-isolated intermediates. For those chemical substances that must be reported, a company must determine what chemical nomenclature and numeric identifier it must use in its report. Where some of the reported data qualifies as “confidential business information”, a company must take certain steps to prevent public disclosure of the information. The IURA applies to importation of chemical substances, and importers will want to consider some of the special provisions in the IURA applicable to such activities. The IURA provides a procedure that allows the public to petition for “partial exemptions” from reporting. If EPA grants a partial exemption for a substance, reporters would not submit the second tier of information about downstream processing and use for that substance. A successful petitioner must show that the second tier of IURA information is of “low current interest”.

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Background of the IURA To understand the intent of the IURA, it is helpful to understand the structure of the TSCA regulatory program. Under TSCA, EPA is authorized to regulate new and existing chemical substances in commerce. EPA conducts a “pre-manufacture” review of all new chemical substances and imposes controls as needed to protect public health and the environment.1 EPA also has authority to collect available information, mandate toxicity testing and impose management controls (including a ban) on existing chemical substances. In 1979, EPA first compiled the TSCA Inventory of existing chemical substances in commerce. The primary role of the Inventory is to serve as a touchstone for defining when a chemical substance is “new” and thus must pass through the pre-manufacture review process established in Section 5 of the statute. A chemical is defined as a “new chemical substance” if it is not on the TSCA Inventory. 2 The secondary role of the TSCA Inventory is to provide the broadest list of existing chemical substances that EPA would consider in screening for potential environmental risks. Historically EPA has required limited reporting on a subset of the TSCA Inventory as a means of defining, at a very broad level, what chemicals might warrant further investigation, risk assessment or risk management. EPA’s original 1977 Inventory Update Rule, which is the platform for the IURA, was focused on non-polymeric organic chemicals manufactured for commercial purposes at a single site in volumes exceeding 10,000 pounds per year. The original IUR, which has remained essentially unchanged for many years, required limited information about manufacturing sites and the volume of chemicals manufactured. With the 2003 IURA, EPA is collecting information on a wider range of chemical substances, most notably inorganics, and is requiring much more extensive information about potential exposure to each chemical substance throughout the chain of commerce. EPA sees this information as assisting several governmental initiatives, including screening of “high production volume” chemicals, development of models for new chemical review, issuance of “exposure-based” testing rules and pollution prevention programs.

The IURA Reporting Requirements A. Chemicals Covered3

1 This review begins with the filing of a Pre-Manufacture Notice (PMN). 2 Once a new chemical substance passes through EPA’s PMN process and enters commerce, it is added to the TSCA Inventory. 3 See 40 CFR §710.45 and §710.46.

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The IURA applies to chemical substances contained in the Master Inventory File, which is the list of substances that make up the TSCA Inventory. It includes the substances that were contained in the initial version of the Inventory as compiled in 1979, as well as all new chemical substances that have since passed through the TSCA new chemical pre-manufacture review program and have been introduced into commerce. The IURA applies to both organic and inorganic chemical substances. The reporting requirements for inorganics will be phased in, as discussed later in this paper. Chemical substances in the following categories are exempt from reporting:4

• Polymers; • Microorganisms; • Naturally occurring chemical substances; and • Certain forms of natural gas.

The exemption for naturally occurring chemical substances, which will be discussed later in this paper, is particularly important for mining and mineral processing companies’ compliance strategies. B. Persons and Activities Subject to the IURA5 The IURA only applies to the manufacture of chemical substances. The regulatory definition of “manufacture” includes actions that produce or import a chemical substance. Other forms of chemical handling recognized under TSCA, such as “processing”, “distribution in commerce”, “use” and “disposal” do not trigger IURA reporting. A manufacturer becomes responsible for filing an IURA report for a chemical substance if it manufactures for commercial purposes more than 25,000 pounds of that substance at a single site in the “reporting year” specified in the IURA. 6 For the first round of IURA reporting, the reporting year is calendar year 2005. IURA data is collected on a four-year cycle, so currently the next reporting year is 2009.7 Historically the “submission period” for filing IURA reports has been August through December for the year following the reporting year (i.e., 2006 for the first round of the IURA). Note, however, that EPA has proposed to change the “submission period” for IURA reports to a period of January 1 through April 30.8

4 The exemptions for polymers, microorganisms and certain forms of natural gas do not apply to a chemical substance for which EPA writes a rule under Section 4 or 6 or takes other regulatory action under Section 5. Naturally occurring chemical substances are not subject to this exception. 5 See 40 CFR §710.48, §710.49, and §710.50. 6 The IURA increased the reporting threshold from 10,000 to 25,000 pounds. 7 On January 26, 2005, EPA proposed to put the IURA on a five-year reporting cycle which would make the next reporting year 2010. 70 Fed.Reg.3658. 8 70 Fed.Reg. 3658 (January 26, 2005).

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The IURA also exempts certain persons and activities from the reporting program. Companies that qualify as “small manufacturers” are not required to report.9 A company is categorized as a small manufacturer if its total annual sales, including the sales of its parent company, do not exceed $4 million. A company can also qualify as a small manufacturer if its total annual sales, including the sales of its parent company, are less than $40 million provided that it does not produce or import more than 100,000 pounds of an Inventory substance at any one site. In addition, the IURA does not apply to certain forms of manufacturing. The following situations are exempt from reporting:

• Manufacture solely in small quantities for research and development; • Importation of a substance as part of an article; and • Manufacture of a chemical substance in a context that fits within an exemption

specified in 40 CFR §720.30(g) or (h).

The latter exemption, which will be discussed in more detail later in this paper, provides exemptions for byproducts, impurities, non-isolated intermediates and other substances formed during common commercial processing and handling of a chemical substance. C. What Needs to Be Reported The IURA establishes two tiers of reporting. Companies manufacturing chemical substances in a manner that triggers reporting, as identified above, must file an IURA report form that contains a base set of information. The base set of information, which must be filed for each site manufacturing more than 25,000 pounds of a chemical substance, includes the following:10

• The technical contact for the company, including an address, telephone number and email address;

• The parent company name and Dun & Bradstreet Number for the company; • For each reporting site, the Dun & Bradstreet Number, the site name and address,

and the county or parish in which the site is located; • The Chemical Abstract Service (CAS) Number for each reportable chemical

substance, or a comparable number, such as an EPA Accession Number or EPA Pre-Manufacture Notice (PMN) case file number, if the CAS Number is not known or reasonably ascertainable;11

• An indication of whether the chemical substance is manufactured in the U.S., imported into the U.S., or both;

9 See definition at 40 CFR §704.3. 10 Each submitter files a separate form for each chemical at each site that requires a report. Note, however, that EPA has proposed to reinstate the previous requirement that submitters report manufactured volume separately from imported volume. 70 Fed.Reg. 3658, 3663 (January 26, 2005). 11 The submitter must also enter a code indicating what type of identification number is being used.

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• An indication of whether the chemical substance is “site- limited”; 12 • The total volume of the chemical substance manufactured (including imported) at

the site;13 • The total number of workers reasonably likely to be exposed to the chemical

substance at the site;14 • The maximum concentration (measured by weight percent) of the chemical

substance sent offsite or, for site- limited chemical substances, reacted on-site to produce another chemical substance;15

• The physical form of the chemical substance as it is sent offsite or, in the case of site- limited chemical substances, reacted on-site;16and

• The percentage of the site’s production volume of the chemical substance that is associated with each physical form of the substance designated above.17

As part of the submission of the IURA form, an authorized official of the submitter company signs a certification statement. The IURA requires a second tier of exposure-related information, specified at 40 CFR §710.52(c)(4), for larger sites with production exceeding 300,000 pounds of a reportable substance. These more extensive reporting requirements do not apply in the following situations:

• Inorganic substances in the 2005/2006 reporting cycle – As a means of phasing in the IURA reporting requirements for inorganics, EPA is not requiring the reporting of this second tier of information during the first IURA cycle. Manufacturers of inorganic substances will be required to provide this information in future reporting cycles.

• Petroleum process streams – The regulations, at 40 CFR §710.46(b)(1), exempt a long list of chemical substances, identified by CAS Number, that are associated with the petroleum industry.

• Other “Partially Exempt” chemical substances – The regulations establish a framework for EPA to exempt specific chemicals from the more extensive reporting requirements in 40 CFR §710.52(c)(4), specifying the criteria and petition process for future exemptions. (The specific elements of this framework

12 A “site-limited” chemical substance is manufactured and processed only within the site and is not distributed for commercial purposes outside the s ite. 13 The volume estimate must be reported to two significant figures within 10% plus or minus of the actual volume manufactured. 14 Submitters must select one of eight categories of workforce sizes (e.g., less than 10 workers, at least 10 but less than 25 workers) specified in 40 CFR §710.52(c)(3)(vi). 15 Submitters must select one of five categories of maximum weight percentage (e.g., less than 1%, from 1% to 30%) specified in 40 CFR §710.52(c)(3)(vii). 16 Under 40 CFR §710.52(c)(3)(viii), the physical form of a chemical substance is expressed by one of six designations: dry powder, pellets or large crystals, water- or solvent-wet solid, other solid, gas or vapor, and liquid. 17 This information can be rounded off to the nearest 10%.

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are discussed in more detail later in this paper.) EPA has provided partial exemptions for a list of over 80 chemicals, identified at 40 CFR §710.46(b)(2)(iv).18 EPA exempted these substances based on experience in the TSCA existing chemical program, the High Production Volume Challenge Program, and the European Union chemicals program suggesting that the substances are “low priority” for further assessment or risk management.

Unless exempted through one of these mechanisms, a site manufacturing more than 300,000 pounds of a chemical substance must include the following information on its IURA form:

• Designation of the processing or use category for the chemical substance at sites that receive the substance directly or indirectly (through a broker or customer of the submitter);19

• For each activity designated above, the North American Industrial Classification System (NAICS) code associated with the activity; 20

• For each NAICS code identified above, the submitter must identify the “industrial function category” that describes how the chemical substance is used by downstream customers;21

• The estimated percentage of the site’s production volume, rounded to the nearest 10%, attributable to the various combinations of processing/use designations, NAICS codes and industrial function categories;

• For each combination of processing/use designations, NAICS codes and industrial function categories, the number of sites at which the reportable chemical substance is processed or used;22

• For each combination of processing/use designations, NAICS codes and industrial function categories, the number of workers reasonably likely to be exposed to the chemical substance, characterized by the same range categories that are applicable to the analogous information at the submitter’s own site;

18 In its proposed rule of January 26, 2005 (70 Fed. Reg. 3658), EPA sought comment on the addition of 26 additional petroleum streams to this list. 19 The regulations, at CFR §710.52(c)(4)(i)(A), establish five categories characterizing the processing or use activity: (1) processing as a reactant, (2) processing – incorporation into formulation, mixture or reaction product, (3) processing – incorporation into article, (4) processing – repackaging, and (5) use - nonincorporative activities. Note that EPA has proposed that processing and use information need be submitted only on domestic processing and use activities. No reports would be required on processing and use activities outside the U.S. 70 Fed.Reg. 3658, 3663 (January 26, 2005). 20 The processing and use designations and the NAICS codes need to be considered together. Some submitters may distribute a chemical substance for multiple processing/use categories in a single NAICS code. Other submitters may distribute a chemical substance for the same processing/use designation in multiple NAICS codes. The submitter is expected to provide the combination of processing/use designations and NAICS codes that describe the general market for the chemical substance. 21 Where a submitter has more than 10 unique combinations of processing/use designation and NAICS codes, the submitter need only report industrial function categories for the 10 unique combinations that account for the largest percentage of the submitter’s production volume. 22 This information is reported in one of seven categories for the number of sites (e.g., less than 10 sites, from 10 to 25 sites.)

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• Identification of the commercial or consumer product categories where the reportable substance is used;23

• For each commercial or consumer product category reported above, an indication of whether the substance is or is not present in or on a product used by children under the age of 14, or a certification that such information is not readily obtainable;

• The estimated percentage of annual production of the reportable substance, rounded to the closest 10%, that is associated with each commercial or consumer product category; and

• In each commercial or consumer product category for the reportable substance, an estimated typical maximum concentration of the substance in the product category, using the same categories of percentage concentrations that apply to offsite distribution of the substance from the submitter’s manufacturing site.

In assembling and reporting the information for the IURA, the submitter faces two different standards defining the degree of care it must take to obtain information. In the case of the first tier of information, which is required for all IURA reports, the submitter must provide all information that is “known or reasonably ascertainable”. Under this standard, the submitter is responsible for all information in its “possession or control” as well as information that a “reasonable person similarly situated might be expected to possess, control, or know.”24 For the second tier of downstream exposure information, a lesser burden is imposed. Submitters must provide information that is “readily obtainable.” This standard does not require extensive file searches, but rather encompasses information known by “management and supervisory employees of the submitter company who are responsible for manufacturing, processing, distribution, technical services and marketing of the reportable chemical substance.”25 IURA reporting must be provided on TSCA “Form U”. A version of this form (both in electronic format and hard-copy), along with instructions for completing the form, is under development at EPA. Paper forms or magnetic media versions of the forms must be submitted to the address specified at 40 CFR §710.59(d). Submitters may view some of the information provided under the IURA as “confidential business information” (CBI) that warrants protection from public disclosure under a set of federal statutes, including TSCA. The general rules that apply to the protection of CBI

23 The regulations, at 40 CFR §710.52(c)(4)(ii)(A) identify 19 commercial and consumer product categories (e.g., automotive care products, electrical and electronic products, metal products.) If more than 10 categories apply to the substance, the submitter need only report the 10 categories that cumulatively make up the largest percentage of the submitter’s annual production. Note that EPA has proposed consolidating two categories into one, adding a new category, and deleting another category for a total of 18 categories. 70 Fed.Reg. 3658, 3662-63 (January 26, 2005). 24 See definitions at 40 CFR §710.43. This is the standard that has historically applied to IUR reporting. 25 See definition at 40 CFR §710.43.

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under TSCA and other EPA statutes are set forth in 40 CFR Part 2. In addition, the IURA sets out specific criteria that submitters must satisfy in order to preserve a confidentiality claim for the following types of information:

• Chemical identity; • Site identity; or • Production volume.

The issue of CBI protection will be discussed in greater detail later in this paper. The IURA requires submitters to maintain records fo r five years after the effective date of the submission period. For the first round of the IURA, the last day of the submission period (currently December 23, 2006, but this could change to April 30, 2006 per EPA’s January 26, 2005, proposed rule ) is the effective date. Thus the records supporting the information provided in the first round of IURA reports must be retained until the end of 2011, although that date could change to April 30, 2011.26

What IURA Obligations Should Companies Consider in 2005/2006? The triggers for filing an IURA report on an inorganic substance are

• “Manufacture”, not processing or use, of the substance; • Manufacture of 25,000 pound of the substance at a single site; and • Manufacture takes place in reporting year 2005.

Reporting does not apply to

• Naturally occurring substances, including substances that are mined and processed by “physical” means;

• Impurities and byproducts; • Substances created incidental to use of the substance; • Substances created in manufacture of an article; • Substances created when a physical-chemical property is added to another

substance or mixture; or • Non-isolated intermediates.

A report on an inorganic substance in 2006 would include information on

• Identification of the company and the reporting facility; • Chemical Abstract Service or other EPA identification number for the

reportable substance; • Indication of whether substance is an import or U.S. manufactured; • Indication of whether substance is “site-limited”; • Volume of substance manufactured;

26 As indicated earlier, EPA has proposed to extend the reporting cycle for IURA reports to five years. In this proposed rule EPA declares that it is not proposing to extend the record retention period beyond the current five-year requirement but the agency encourages submitters to retain records longer than the required five year period. 70 Fed.Reg. 3658, 3660 (January 26, 2005).

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• Number of workers reasonably likely to be exposed in manufacture; • Maximum concentration of substance sent off-site or reacted on-site; and • Percentage of site production associated with each physical form of the

substance sent off-site or reacted on-site. The report must be filed

• Between August 25 and December 23, 2006, under current rules(but this could change to January 1 and April 30, 2006); and

• On Form U, which is under development by EPA.

Strategic Issues for Filing of IURA Reports in 2006

For most mining and mineral processing companies the first round of IURA reporting will be their first experience with TSCA’s information collection regulations. Accordingly, companies will need to make determinations about how the elements of the TSCA regulatory framework apply to the activities and materials involved in their operations. This section of the White Paper explains the issues, and some of the choices, companies will need to address in deciding when an IURA report is required and how an IURA report should be filed. A. Application of manufacturing and processing definitions in conjunction with the exemption for naturally occurring substances27 As a threshold matter, mining and mineral processing companies must decide what chemical substances they manufacture for purposes of the IURA. This is essential because IURA reporting only applies to chemical substances that are manufactured at a site. In contrast, a company is not required to report on a chemical substance that it processes or uses at a site. The definitions of these terms do not squarely address mining operations.28 EPA defines the term “manufacture” to mean “manufacture, produce or import for commercial purposes.” The other key term “process” means “preparation of a chemical substance or mixture after its manufacture, for distribution in commerce” in the same or different physical form or in an article. 1. Discussion of mining and “manufacturing” in the IURA 27 As mining and mineral processing companies decide how to apply the TSCA definitions of manufacture and processing to their operations, they should consider the relationship of their TSCA compliance strategy to their approach to reporting under the Toxic Release Inventory (TRI) program. Under TRI reporting is triggered by the manufacture , processing or use of listed chemicals. The application of these terms to the mining industry has been the subject of substantial litigation. Mining companies can certainly decide that the terms manufacture and processing have differing meanings under TRI and the IURA, but they should consider how to explain those distinctions. 28 See 40 CFR §710.3

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In the preamble to the final IURA rule, EPA sets forth its view on the applicability of the manufacturing definition to mining. The key section of the preamble states:

Mining, which includes extracting metal ores or minerals from their natural deposits by any means, including secondary recovery of metal ores from reuse or other storage piles, wastes, or rock dumps, or from mill tailings derived from the mining, cleaning or concentration of metal ores, is production and is considered to be a manufacturing activity under TSCA.29

Companies should recognize that this statement is not legally binding since it is not specified in the statute and was not promulgated through a legislative rule. It is perhaps a “statement of policy” or “interpretive rule” under the Administrative Procedure Act.30 The essence of EPA’s statement is that “extracting metal ores or minerals from their natural deposits by any means” is manufacturing under TSCA. Companies could read this statement to mean that manufacturing under TSCA is complete once a company has extracted an ore from a natural mineral deposit. Subsequent actions taken on such ore would be “processing” of the mineral in the ore to make it ready for distribution in commerce. Under this interpretation IURA reporting would only be triggered for sites where ore is initially separated from its natural state. Subsequent actions on the ore, which might take place on the same site or a different site, would not trigger IURA reporting. EPA might also take the position that manufacturing continues as long as a company is “extracting” a mineral from a matrix of materials. Under this theory, a wide range of downstream beneficiation and processing steps, which the industry would not characterize as extraction operations, would nonetheless be labeled manufacturing under TSCA. EPA appears to be leaning toward the latter interpretation of the IURA, based on correspondence it has had with The Fertilizer Institute.31 In its May 23, 2003 letter, EPA analyzes production of phosphoric acid through digestion of phosphate rock with sulfuric acid. EPA focuses on the chemical reaction that occurs in this step, arguing that the exemption for “naturally occurring” chemical substances is not applicable. Yet EPA’s conclusion that the phosphoric acid generated from this process is IURA reportable presumes that this form of mineral processing is “manufacturing” rather than “processing” under TSCA.

29 68 Fed. Reg. 878 (January 7, 2003). 30 In the NMA v. Browner litigation, EPA characterized preamble statements of this nature as policy statements or interpretive rules, and the court accepted this view. To be consistent with its own position, EPA would logically take a similar view of its statements about the applicability of the IURA definition of manufacturing to mining. 31 Letter from Mary Ellen Weber, EPA to William C. Herz, The Fertilizer Institute (May 23, 2003).

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2. Discussion of mining as “manufacturing” in other TSCA rules In the early years of the TSCA program, EPA issued regulations that addressed the applicability of TSCA’s definition of “manufacture” to mining operations. These regulatory actions did not arise in conjunction with the TSCA Inventory and thus would not be controlling for the IURA. Nonetheless, these actions provide some insights about how EPA could interpret the IURA requirements. In 1982, EPA issued regulations to obtain information on the industrial and commercial uses of asbestos.32 The rule required facilities that mine or mill asbestos to provide information about the quantity of bulk asbestos produced. In addition, facilities engaged in primary and secondary processing of asbestos had to supply information about the products produced with asbestos. In the course of this rulemaking, EPA indicated that mining and milling of bulk asbestos constituted manufacturing under TSCA. Specifically 40 CFR §763.63 (h) defines “miner of asbestos” as follows:

“Miner of asbestos” is a person who produces asbestos by mining or extracting asbestos-containing ore so that it may be further milled to produce bulk asbestos for distribution in commerce and includes persons who conduct milling operations to produce bulk asbestos by processing asbestos-containing ore. Milling involves the separation of the fibers from the ore, grading and sorting the fibers, or fiberizing crude asbestos ore. To mine or mill is to “manufacture” for commercial purposes under TSCA.

In defining the universe of asbestos “processors”, EPA refers to those who mix bulk asbestos with other materials, repackage bulk asbestos or further process asbestos mixtures into articles or other substances.33 Examples of primary processors include those who incorporate bulk asbestos into asbestos cement, asbestos paper and asbestos-reinforced plastics. An automobile manufacturer who incorporates asbestos felt into a vehicle as a hood insulation blanket or a paint formulator that incorporates an additive into an asbestos-containing paint are secondary processors. Thus, in this context, “processing” under TSCA does not encompass actions that separate bulk asbestos from crude asbestos ore. In 1983 EPA issued its general regulations implementing Section (c) of TSCA, which requires manufacturers and processors to keep records of allegations about significant adverse reactions to health or the environment caused by chemical substances or mixtures.34 To avoid excessive regulatory burdens, 40 CFR §717.7(a) exempts from this recordkeeping requirement any manufacture of a chemical substance that 32 47 Fed. Reg. 33198 (July 30, 1982). 33 See 47 Fed. Reg. 33202 (July 30, 1982). 34 40 CFR Part 717 promulgated at 48 Fed. Reg. 38178 (August 22, 1983).

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solely involves mining or other solely extractive functions, e.g., those companies or sites within a company whose sole function is to mine mineral ores, extract petroleum or natural gas, quarry non-metallic minerals (including extraction of salts from seawater or brines), mine or otherwise extract coal, or separate gases from the atmosphere. This exemption may include, but is not necessarily limited to, firms engaged in activities as described in SIC Division B – Mining and SIC Code 2813 – Industrial Gases.35

In discussing this exemption, EPA has made several statements about the scope of “extraction” activities, as well as the applicability of the TSCA definition of manufacturing to mineral mining, beneficiation and processing activity. EPA indicated that the act of extracting ore is “production” of a chemical substance and thus manufacturing under TSCA. 36 In addition, EPA said that processing steps taken after a mineral is extracted from the ground, such as retorting of oil shale to produce oil is a manufacturing step that would not be exempt under the rule.37 EPA’s most fulsome discussion of this issue is found in a guidance document issued shortly after the Section 8(c) rules were issued. In response to a questions about when “extraction” ended and “processing” begins, EPA offered the following response:38

Persons are exempt from the rule provided the means by which they manufacture a chemical substance involves mining or other solely extractive functions. This exemption applies to companies or sites within a company whose sole function is mining or extracting naturally occurring materials. EPA considers extraction to be a primarily mechanical process such as crushing, grinding, drying, milling, leaching, etc. These are normal steps taken to remove raw materials from the earth, and prepare it for distribution in commerce as a “raw material.” Operations beyond this point, such as distilling, refining, smelting, etc. are processes of separating out marketable fractions, and are considered processes covered by the rule. They are in fact primary chemical manufacturing activities that make a person subject to the rule.

This rule and guidance was issued almost 20 years ago, so its relevance to the IURA is not clear. At the same time, these statements provide perspective on the positions that EPA might take. To the extent that EPA follows the interpretive approach of the Section

35 It should be noted that SIC Division B includes operations that constitute beneficiation as well as extraction activity. 36 48 Fed. Reg. 38182 (August 22, 1983). 37 Id. 38 EPA, “Questions and Answers Concerning the TSCA Section 8(c) Rule: Questions Received at Seminar on Toxic Substances Control Act Section 8(c) Recordkeeping and Reporting Allegations of Adverse Reactions November 10, 1983” (July 1984)

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8(c) rule, a wide range of beneficiation and processing activities would be characterized as manufacturing for purposes of the IURA. 3. Exemption for “naturally occurring” chemical substances When making decisions about the classification of mining operations as either “manufacturing” or “processing” activity, companies also need to factor in the exemption in the IURA for “naturally occurring” chemical substances.39 Under this provision an IURA report is not required for a naturally occurring substance in its unprocessed state or if it is processed “only by manual, mechanical or gravitational means; by dissolution in water; by flotation or by heating solely to remove water.”40 EPA emphasizes that this is a “process-specific exclusion rather than a chemical- or industry-specific one.”41 A chemical substance manufactured by one of the processes specified above is exempt; if that same material is manufactured by another process, it would be subject to the IURA. In various drafts of EPA’s Instructions for the filing of IURA reports, EPA has begun to provide examples of the applicability this exemption. Such examples provide insights into how EPA is viewing this exemption:42

• Calcined clays formed by heating natural clays are not exempt; the heating process is intended to induce chemical reactions, not remove water;

• Mining of coal is exempt; heating of coal to produce light oils or other chemical substances must be reported;

• In electrostatic separation, small particles are removed from a liquid or gas stream; this process is essentially analogous to filtration or gravitational separation, and thus within the scope of the exemption; and

• While using water to remove a substance from an ore is a “natural” means of extraction and thus within the exemption, use of a solvent does not fall within the exemption.

In the context of the TSCA definitions of manufacture and processing, this exclusion operates as an exception to EPA’s position that “extraction by any means” is manufacturing that triggers IURA reporting. Only certain forms of extraction activity – those not covered by the exemption for naturally occurring substances – can trigger reporting. Thus mining companies should engage in a two-step analysis to define what activities trigger reporting:

• At what point in its operations does manufacturing cease and processing begin? Manufacturing steps trigger reporting; processing steps do not.

• For those operations that qualify as manufacturing, which operations are exempt from reporting under the naturally occurring substance exemption?

39 40 CFR §710.46(a)(3) cross-references 40CFR §710.4(b). 40 This exemption also covers naturally occurring substances “extracted from air by any means.” 41 68 Fed. Reg. 878 (January 7, 2003). 42 EPA, “Draft Instructions for Reporting for the 2006 Partial Updating of the TSCA Chemical Inventory Database,” (April 2003).

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In some cases, this analysis will lead to the conclusion that no IURA report is required for the mining site. This may be particularly true for coal operations, which EPA has not addressed specifically in the IURA. It should be noted that the IURA applies to all chemical compounds in the matrix of material handled during the extraction, beneficiation and mineral processing phases. For TSCA purposes, ore is a mixture of naturally-occurring chemical compounds. If a step in the mining process (i.e., extraction, beneficiation, mineral processing) should form a new chemical compound in, or from, that mixture, that new chemical compound will be treated as a TSCA “manufactured substance” whether or not formation of the substance was intended and whether or not that compound is formed in the “valuable” portion of the minerals matrix. For example, if a physical separation step (e.g., in the beneficiation phase) caused the formation of a new compound in the gangue or waste portion of an ore matrix, that new compound would have been “manufactured” under TSCA. The company would not necessarily need to report that substance in the IURA, but the rationale for non-reporting could not be based on the TSCA definition of “manufacturing” (i.e., it could not be argued that the formation of the new substance did not constitute TSCA “manufacturing”.) Rather, the rationale for not reporting would have to be based on some other aspect of the TSCA reporting requirements. In this regard, it is worth noting that the IURA imposes reporting on parties who manufacture Inventory substances “for commercial purposes.”43 This limitation follows directly from the statutory requirement indicating that the term “manufacture” for purposes of the TSCA Inventory and the PMN program means manufacture “for commercial purposes”.44 The TSCA statute and regulations, however, have defined this term so broadly that it does not exclude many categories of activities. EPA’s definition of “manufacture for commercial purposes” indicates that the term means

to manufacture, produce, or import with the purpose of obtaining an immediate or eventual commercial advantage, and includes, for example, the manufacture or import of any amount of a chemical substance or mixture: (1) for commercial distribution, including for test marketing, or (2) for use by the manufacturer, including use for product research and development, or as an intermediate.45

43 40 CFR §710.48(a). 44 See Section 5(i) and Section 8(f) of TSCA. 45 40 CFR §710.3.

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The meaning of “commercial distribution” in this context is guided by the statutory definitions of “distribution in commerce” and “commerce” in Section 3 of TSCA, which are broadly drawn. The term “distribution in commerce” means

to sell, or sale of, the substance, mixture or article in commerce; to introduce or deliver for introduction into commerce, or the introduction or delivery for introduction into commerce of, the substance, mixture or article; or to hold, or the holding of, the substance, mixture or article after its introduction into commerce.

The term “commerce” is equally broad, encompassing principles commonly used to define the federal government’s Constitutional power over interstate commerce. TSCA defines the term to mean

trade, traffic, transportation or other commerce (A) between a place in a State and any place outside of such State, or (B) which affects trade, traffic, transportation, or commerce described in clause (A).

Taken as a whole, these definitions are likely to cover most activities conducted by mining and mineral processing companies.46 At the same time, EPA has acknowledged that the “commercial purposes” limitation in its statutory authority affects the kinds of substances that it would cover in the TSCA Inventory and the PMN program. Specifically, EPA has created exemptions for “byproducts” and “impurities”, which will be discussed later in this document, to exclude materials that are not manufactured with a commercial intent. As EPA noted in the preamble to its final rule setting the rules for the initial TSCA Inventory,

The August 2 proposal and these final regulations (§710.2(g)) have redefined “byproduct” to include only those chemical substances produced without separate commercial intent during the manufacture or processing of other chemical substances or mixtures. The legislative history of TSCA makes clear that these secondary chemical substances are not to be subject to the inventory and premanufacture notification requirements because they are not manufactured for commercial purposes per se. S. Rep. No. 94-698, 94th Cong. 2d Sess. 19 (1976). Accordingly, section 710.4(d)(2) of these regulations excludes these substances from these requirements.47

Thus EPA has implemented the “commercial purposes” limitation on TSCA’s jurisdiction through exemptions, like the byproduct exemption, that limit the range of materials subject to reporting. 46 In other contexts, notably Section 6 of TSCA, EPA has suggested that materials developed in pure academic research might not be within its jurisdiction. 47 42 Fed. Reg. 64587 (December 23, 1977).

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B. Application of TSCA definition of “ chemical substances” Before a substance can be required to meet any IURA obligation, it must be a “chemical substance” under TSCA. For certain materials in the mining and mineral processing industry, this jurisdictional limitation is particularly important. Under Section 3 of TSCA, the term “chemical substance” means “any organic or inorganic substance of a particular molecular identity including (i) any combination of such substances occurring in whole or in part as a result of a chemical reaction or occurring in nature and (ii) any element or uncombined radical.” This statutory definition includes several exemptions, two of which may be important for the mining and mineral processing industry:

• Any pesticide (as defined in the Federal Insecticide, Fungicide and Rodenticide Act) when manufactured, processed or distributed in commerce for use as a pesticide; and

• Any source material, special nuclear material or byproduct material (as such terms are defined in the Atomic Energy Act of 1954 and regulations issued under such Act.)

The pesticide exclusion may be relevant for those sites that have acid production plants on site that may manufacture a material (e.g., sulfuric acid) that is sold as a pesticide. The volume of acid production that qualifies as a pesticide would not be a “chemical substance” under TSCA and thus would not be included in IURA reporting. 48 Similarly a material that would be classified by the Nuclear Regulatory Commission as a source, special nuclear or byproduct material would not be a chemical substance under TSCA and thus would not be within the scope of the IURA. Extraction of uranium ore would not typically fall within the jurisdic tion of the Atomic Energy Act and thus could theoretically fall within TSCA jurisdiction. As discussed above, uranium extraction would not trigger IURA reporting because of the exclusion for naturally occurring substances. C. “Manufactured” chemical substances that need not be reported Once a company determines what activities will be considered “manufacturing” under the IURA, it must then examine the materials it manufactures in more detail to determine what portion of those materials must be reported. As a general matter, the ore matrices and other materials in the mining process would be viewed as “mixtures” under TSCA. Mixtures are not subject to reporting. Instead, the individual chemical components of each mixture should be examined to define what chemical compounds are subject to reporting.

48 The volume of acid that was manufactured for non-pesticidal use would be counted against the 25,000 pound threshold for determining the applicability of the IURA to that acid.

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The IURA carries forward from past TSCA rules a series of exclusions that narrow considerably the range of compounds that must be reported.49 Mining and mineral processing companies should carefully examine the exclusions contained in 40 CFR §710.50 to determine what portion of the material handled in their operations will require IURA reporting. The regulations contain two exclusions that are unlikely to have broad applicability. A substance manufactured in small quantities for research and development is excluded from reporting under 40 CFR §710.50(a). In addition, a substance imported as part of an article is excluded from reporting under 40 CFR §710.50(b).50 Of much greater significance for mining and mineral processing companies is 40 CFR §710.50(c), which incorporates by reference a set of exclusions from the new chemical program regulations. These exclusions, found at 40 CFR §720.30 (g) and (h), are likely to have a significant impact in defining the universe of substances that must be reported under the IURA. The following exemptions should be considered carefully: 1. Impurities and byproducts - (§720.30 (g), (h)(1) and (h)(2) Impurities and byproducts, which are excluded from IURA reporting, are closely related regulatory concepts and thus should be analyzed together.51 An “impurity” is defined to mean “ a chemical substance which is unintentionally present with another chemical substance.” A “byproduct” is defined to mean “a chemical substance produced without a separate commercial intent during the manufacture, processing, use or disposal of another chemical substance or mixture.” In an ore matrix, a large portion of the chemical substances in that matrix can be classified as impurities or byproducts. The distinction between the two categories becomes important as non-essential material is removed from extracted ore. An “unintentional” component of a chemical mixture remains an impurity as long as it remains in a mixture with the chemical substances that are the object of commercial manufacture. A non-essential material that is removed from the primary manufacturing process (e.g., a waste stream) becomes a byproduct.

49 These exclusions, which are drawn from the original rules for the IUR and the TSCA Inventory as well as the new chemical program, have been in place for many years. 50 This exemption may have more relevance to the customers of mining and mineral processing companies. For example, importation of metal compounds in an automobile part that has been manufactured to specifications for a particular vehicle would not be reported. At the same time, importation of a metal compound in a metal ingot or pellet that will be melted and extruded to form an article after it arrives in the U.S. would not be exempted under this provision. In the context of the TSCA imp ort regulations, EPA has indicated that metal sheet and wire are viewed as articles even though they are subsequently rolled, drawn thinner or cut. See EPA, “Toxic Substances Control Act: a Guide for Chemical Importers/Exporters” (April 1991), at 17. 51 The definitions of both terms are found in 40 CFR §720.3.

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The regulations include an explicit exemption for any byproduct that is not used for commercial purposes. Byproducts that have limited commercial purposes are also exempt. Specifically, a public or private organization may (1) burn the byproduct as a fuel; (2) dispose of the byproduct as a waste, including in a landfill or for enriching soil; or (3) extract component commercial substances from the byproduct for commercial purposes. In the latter case, the exemption applies to the byproduct from which another commercial chemical substance is extracted. The reporting status of the extracted chemical substance would have to be separately analyzed. These provisions are likely to have broad applicability to mining and mineral processing operations. Under these provisions, most forms of waste material can be excluded from consideration for IURA reporting. Likewise the impurities found in metal extracts would not be reportable under the IURA. The latter exclusions for byproducts could also apply to a variety of the materials contained in a matrix subject to leach processes. 2. Incidental chemical reaction - §720.30(h)(3), (4) and (5) In the course of use of a chemical substance, it is expected that chemical reactions will occur. From the beginnings of the TSCA program, EPA has not regulated the “new” substances that might occur when a chemical substance or mixture is used for its intended purpose. Thus the regulations exclude a chemical substance that might be formed incidental to the following scenarios:

• Exposure of another chemical substance, mixture or article to environmental factors such as air, moisture, microbial organisms, or sunlight;

• Storage or disposal of another chemical substance, mixture or article; or • Use of another chemical substance, mixture or article (such as an adhesive, paint,

miscellaneous cleanser, fuel additive, water softening and treatment agent, photographic film, battery, match or safety flare.)52

For the mining industry these exclusions should eliminate theoretical reporting scenarios where a “new” chemical substance is formed due to the action of natural processes on stored material. 3. Article manufacturing - §720.30(h)(6) Chemical substances formed in reactions that can occur in the formation of an article destined for the marketplace without further chemical change are also exempt from reporting. The examples of this scenario provided in the regulations include use of a curable plastic or rubber molding compound, ink, drying oils, metal finishing compounds, adhesives or paints. While this exclusion is unlikely to be applicable to conventiona l mining and mineral processing operations, the exclusion could be relevant to customers who manufacture 52 This exclusion does not apply if the substance that results from the “use” scenario is being manufactured or imported for distribution in commerce or for use as an intermediate.

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metal articles. Chemical substances formed in reactions that occur in conjunction with the manufacturing of that article may not trigger IURA reporting. 4. Addition of physical-chemical properties - §720.30 (h)(7) The regulatory exclusion in 40 CFR §720.30(h)(7) has been quite significant for the organic chemical industry. Under this provision reporting is not required for chemical substances that are formed when a chemical agent is added to a mixture solely to impart a particular physiochemical characteristic and that agent functions as intended. While the exemption applies to the addition of any physiochemical property, the regulation specifically identifies several agents that might be added to a mixture:

• Stabilizer; • Colorant; • Odorant; • Antioxidant; • Filler; • Solvent; • Carrier; • Surfactant; • Plasticizer; • Corrosion inhibitor; • Antifoamer or defoamer; • Dispersant; • Precipitation inhibitor; • Binder; • Emulsifier or de-emulsifier; • Dewatering agent; • Agglomeration agent; • Adhesion promoter; • Flow modifier; • pH neutralizer; • Sequesterant; • Coagulant; • Flocculant; • Fire retardant; • Lubricant; • Chelating agent; or • Quality control agent.

Mining and mineral processing companies should examine their operations to consider whether these types of agents, or analogous agents, are employed in their processes. Where these types of agents are added, any chemical substance resulting from a reaction with the added agent would not be reportable under the IURA.

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Various chemical agents (e.g., flocculant, agglomeration agent) used to facilitate physical separation technologies could well fit within this exclusion. In addition, this section would exempt substances formed when a solvent added to a mixture performs as intended. Arguably this would mean that the first compound formed in a chemical separation process, which relied upon a solvent, would not be subject to reporting. Substances formed in subsequent steps (e.g., separation of the target mineral from the solvent) may not, however, qualify for this exemption. 5. Non-isolated intermediates - §720.30 (h)(8) In the organic chemical manufacturing process, it is common for a chemical reaction to proceed through several stages leading to end products that are commercially significant. Where these stages of the reaction process occur within the same reaction chamber producing intermediates of short duration, EPA does not intend to regulate the various intermediate chemicals generated in these processes. The exclusion for non- isolated intermediates was created for this purpose. A “non-isolated intermediate” is defined to mean “any intermediate that is not intentionally removed from the equipment in which it is manufactured, including the reaction vessel in which it is manufactured, equipment which is ancillary to the reaction vessel, and any equipment through which the chemical substance passes during a continuous flow process, but not including tanks or other vessels in which the substance is stored after its manufacture.”53 This scenario of a multi-stage chemical reaction process may not be as common in mining and mineral processing as in organic chemical production, but there will be processes where it can occur. At a minimum, this exclusion simplifies the analysis for defining the chemicals that require IURA reports. Companies do not need to probe the sequence of chemical reactions that might occur in a particular operation. What is important for reporting purposes is the chemical makeup of a mixture as it leaves a continuous processing operation moving toward storage or transportation points, where the mixture is an end product or at least an isolated intermediate.

How Should Companies Determine What Substances Are Reportable? Each company will need to assess its own processes in light of the TSCA definition of “manufacturing” and in light of the specific exemptions described above. The exemption for naturally occurring substances is an important aspect of this analysis for mining and mineral processing operations. To some extent, the critical question that each company must define is the point in its process when processed materials leave the protection of this exemption. Materials handled in purely physical separation processes, including those involving electrolytic methods or the addition and removal

53 40 CFR §720.3. Once a processing operation is complete and a mixture is placed into some form of storage or transportation, the compounds in the mixture become “isolated” and thus may become subject to reporting.

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of water, are not reportable. Thermal processing (other than measures to remove water) and processing that involves the addition of chemicals should be evaluated carefully because the substances formed in such steps may not be covered by the naturally occurring chemicals exemption. For some of the initial stages of chemical processing, other exemptions, such as 40 CFR §720.30 (h)(7), can still obviate the need for reporting. Throughout the stages of processing, a company should be clearly defining what it views as impurities and byproducts, since such substances are not reportable. A company should also assess its processes to determine what steps are sufficiently closed and continuous that the exemption for non-isolated intermediates would be applicable. A company should also define when “processing” begins because processing of a particular substance does not trigger IURA reporting. As examples, steps in which a mineral substance is being shaped into an article or is being mixed with other materials to form a commercially significant product are likely to be considered processing, rather than manufacturing, under TSCA.

D. Defining the chemical substances for purposes of reporting After considering the issues described above, a company may conclude that some portion of its activities requires IURA reporting. At that point, the company must begin to assemble the information about its materials in a format that adheres to the chemical-based system of TSCA. In particular, the company must identify the specific chemical names of the compounds that have been manufactured. The company can then check that list against EPA’s Master Inventory File that constitutes the TSCA Inventory. The “public” version of the Master Inventory File can be viewed through several avenues. The most developed service for determining what is on the TSCA Inventory is the service provided by the Chemical Abstract Service (CAS), a division of the American Chemistry Society. CAS is the entity that assigns the “CAS Number” to a chemical. EPA relies heavily on CAS for the identification of chemicals on the TSCA Inventory, and EPA staff tend to use CAS’s services to determine whether a chemical is on the TSCA Inventory. Parties can contact CAS by phone (800-631-1884 or 614-447-3870; http://www.cas.org) to determine whether a particular chemical is on the TSCA Inventory. CAS will conduct a search over the phone for a fee. In addition CAS provides a more elaborate product, through its STN system, that offers a compact disk (CD) version of the TSCA Inventory as part of a set of 13 national regulatory inventories from around the world. CAS provides a new CD version of these inventories every six months. The initial cost of this product (which includes software licenses for four users) is around $2600. Annual renewals are priced around $1700.

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A less expensive version of Inventory information can be obtained from the National Technical Information Service (800-553-6847 or 703-605-6000; http://www.ntis.gov). This set of CDs, updated every six months, covers a few other chemical files from other EPA programs. The cost of this product is approximately $330. The third option, which is free, is an on-line database maintained by Cornell University at http://msds.pdc.cornell.edu/. EPA cautions that this system is useful but may not be as reliable as the other services. Through one of these routes, a company should be able to identify a chemical name and a corresponding identification number for each chemical it manufactures. The preferred chemical number to use is the CAS Number. Where a chemical substance is on the confidential portion of the TSCA Inventory, EPA will have assigned an “Accession Number” to the substance, which can be used in lieu of a CAS Number.54 In some cases the only identification number will be a PMN case number. The IURA allows parties to use that number when a CAS Number or Accession Number is unavailable. As indicated earlier in this paper, the materials that the mining industry will typically be handling would be viewed as chemical “mixtures” under TSCA. A company will need to examine those mixtures carefully to separate out initially the materials that are categorically exempt (e.g., impurities) and then to define the distinct chemical substances that have been “manufactured” at the site under the control of the company. E. Protecting CBI Since much of the data collected by the IURA relates directly to a company’s annual business performance, companies may need to maintain the confidentiality of the data. EPA recognizes the need to protect CBI but would like to maximize public availability of the IURA data. As a result, the regulations place additional burdens of proof on data submitters to justify certain CBI claims. The general rules that apply to CBI protection at EPA are found at 40 CFR Part 2.55 Companies submitting information to EPA must invoke the provisions of these regulations by asserting a CBI claim. As with other EPA programs, the IURA Form U will facilitate this process by providing a check box next to each data element of the form that allows the submitter to assert that the data element is CBI. It is essential for a

54 Complications can arise when a chemical substance of interest is contained on the confidential portion of the TSCA Inventory. In that case, the specific chemical name will not be on the Inventory. Instead an Accession Number will be listed in the CAS system and a “generic” name will be associated with that Numb er. Companies may find it difficult to sort through the generic names to determine whether a specific compound is on the Inventory. EPA will need to provide further guidance on this topic. 55 These general rules have been issued under the broad federal statutes that address public access to governmental information, such as the Freedom of Information Act, as well as the specific provisions in EPA statutes that address public access to information.

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submitter to check the appropriate boxes to protect its CBI data. EPA is free to disclose any data that has not been subject to such a CBI claim. Once a CBI claim has been asserted, EPA provides for protection of the information against public disclosure.56 EPA may, however, decide to challenge a CBI claim when it has a program interest in disclosure of the data. In addition, EPA must evaluate the merits of a CBI claim when it receives a request for disclosure of information under the Freedom of Information Act (FOIA) from a party outside the Agency. In either of those cases, EPA will make a preliminary decision on whether the CBI claim is justified. In order to accept a CBI claim, EPA will need to make the following findings:

• The business has properly asserted its CBI claim and has not taken action to waive or withdraw the claim:

• The business has taken reasonable measures to protect the confidentiality of the information, and that it intends to continue to take such measures;

• The information is not, and has not been, reasonably obtainable through legitimate means by non-governmental parties (other than discovery in litigation where a special need has been established);

• No statute mandates disclosure of the information; and • Either:

o Disclosure of the information is likely to cause substantial harm to the business’s competitive position; or

o The information is voluntarily submitted and its disclosure would impair the Government’s ability to obtain necessary information in the future.

Once EPA has made its preliminary determination, it will notify the submitter of the information as well as any submitters of FOIA requests that might have prompted the inquiry. Depending on the result, the submitter or the FOIA requester may file an appeal with the EPA Office of General Counsel. This office makes the final administrative determination on the legitimacy of the CBI claim. If EPA rejects the CBI claim, the data submitter will be notified. EPA will not release the information for a fixed number of days (30 days under TSCA) after this notification, which provides the submitter with a limited opportunity to seek a court injunction to prevent disclosure of the data. Part 2 also contains special rules that apply to each of the EPA statutes. The provisions for TSCA, found at 40 CFR §2.306, primarily explain the mandatory disclosure provisions in Section 14 of TSCA. Under the statute, a CBI claim may not be maintained for:

• Health and safety data;

56 The Office of Pollution Prevention and Toxics, which will be keeping the IURA data, has established some of the most rigorous procedures in EPA for protecting CBI documents from disclosure or loss. This office has recently updated its TSCA CBI Protection Manual. See 69 Fed. Reg. 20007 (April 15, 2004).

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• Information relevant to a proceeding (including a rulemaking);57 and • Information that EPA determines must be disclosed to protect against

unreasonable risk of injury to health or the environment.58

The types of information contained in IURA reporting have not generally been treated as health and safety data under TSCA. Historically EPA has not invoked the other exceptions to disclose IUR information. The IURA has added important modifications to the general framework for protecting CBI data in three areas: (1) Chemical identification; (2) Plant site identity; and (3) Chemical production volume. To justify confidentiality of the chemical identity of an IURA reportable chemical substance, companies are obligated to provide “up-front substantiation” of the claim. In this regard, IURA submitters are facing the same obligations that apply to the submitter of a new chemical PMN once the chemical begins commercial manufacture. The concept of “up-front substantiation” imposes a greater burden on the CBI claimant to explain and document why the chemical identity of the IURA chemical substance must be held confidential. The submitter must provide a written explanation of its claim that answers a set of questions specified in 40 CFR §710.58(b). The questions address the following topics:

• How disclosure harms the company’s competitive position; • How long confidentiality is needed; • The patent and licensing history of the chemical; • Competitor knowledge of the chemical; • Disclosure of information about the chemical in technical publications; • Measures taken to prevent disclosure; • Extent of disclosure to business partners; • Distribution of the substance off-site; • The ability to discover the substance by chemical analysis; and • Purposes of the manufacture of the substance.

The substantiation documentation must be submitted along with the IURA Form U. If the substantiation is not included with the formal submission, EPA will not honor the CBI claim. Thus, it is prudent to confirm that EPA has received the substantiation documentation after the Form U is filed. EPA also requires upfront substantiation to protect the identity of the reporting sites. Substantiation of this claim must also be submitted along with the Form U. In this case, the substantiation documentation must address the following topics:

57 If EPA wants to disclose CBI data in a proceeding, it must preserve the confidentiality of the data to the extent practicable without impairing the proceeding. 58 The statute also contains special provisions allowing disclosure of information to other federal agencies and to EPA contractors.

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• Possible linkage between the site and a reportable chemical in other federal, state or local reporting programs;

• How a competitor could use the information to harm business interests; and • How substantial those harms would be.

EPA recognizes that public disclosure of the production volumes of particular chemicals raises more substantial CBI concerns. At the same time, the Agency would like to publish information about production volumes, at least in broad ranges. As a result, the IURA requires CBI claimants to consider whether public reporting of production volumes in certain broad ranges would sufficiently mask the information to protect CBI.59 The range categories are quite broad (e.g., 1,000,000 to 10,000,000 pounds). If the range categories are sufficiently protective, EPA will report out information in those categories if it becomes necessary to do so. EPA does not require a company to provide any special documentation, as discussed above, to justify a conclusion that the range categories are insufficient to protect the CBI claim on production volume. Note, however, that EPA has proposed to eliminate CBI status for production volume ranges. The agency would continue to accept claims of confidentiality for specific production volumes.60 F. Considerations for imports61 Importation of a chemical substance into the U.S. is considered “manufacture” of that substance under TSCA. As a result, the importation of a chemical substance triggers an IURA report, as long as the other triggers for reporting are met.62 As a threshold matter, companies will need to determine who is the importer of a particular chemical substance. The regulations define the term “importer” to mean

any person who imports any chemical substance or any chemical substance as part of a mixture or article into the customs territory of the U.S. and includes: (1) The person primarily liable for the payment of any duties on the merchandise, or (2) An authorized agent acting on his/her behalf (as defined in 19 CFR §1.11).63

In recognition that this broad definition does not answer the question of who should report when multiple parties are part of an import transaction, the regulations include

59 40 CFR §710.52(c)(3)(v). 60 70 Fed.Reg. 3658, 3663 (January 26, 2005). 61 For general guidance on import requirements under TSCA, as administered by EPA and the U.S. Customs Service, see EPA, “Toxic Substances Control Act: a Guide for Chemical Importers/Exporters,” EPA 560/1-91-001 (April 1991). 62 As noted earlier, EPA has proposed to reinstitute a previous IUR requirement to report manufactured and imported production volumes separately. See fn 10, page 5, supra. 63 40 CFR §710.3.

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special provisions addressing who may file IURA reports for a company and what site is relevant for determining reporting obligations. In 40 CFR §710.48(b), the regulations indicate that the relevant site is the “operating site within the person’s organization which is directly responsible for importing the substance and which controls the import transaction.” This provision specifies that the import site may be the organization’s headquarters in the U.S. In many cases the U.S. headquarters of a company would be the party that “controls the import transaction.” EPA has also indicated in 40 CFR §710.55(b) that where two or more persons are involved in an import transaction for a company and they fall within the broad definition of “importer” under the regulations, the parties may determine who will file the IURA report. EPA provides this flexibility to avoid the scenario where two or more parties might file reports for the same import. In those situations where the headquarters office of a company is designated as the importer of a chemical substance, the “site” for purposes of IURA reporting is the headquarters office, rather than some other operating facility where the chemical substance might be sent. As a result, there will be situations where more limited information will be provided in the IURA report. For example, no workers at the headquarters office would be exposed to the chemical substance, so the estimated number of workers likely to be exposed would be zero. EPA is aware that the flexibility provided to exporters in the regulations creates some anomalies in the reporting but agrees that the regulations as written yield those results. EPA has indicated that these results were not intended, and the Agency intends to initiate further rulemaking to change the IURA before the 2006 reporting cycle.64

Reporting for 2010 (General Framework for Partial Exemptions) As indicated earlier, the IURA phases in the reporting obligations for inorganics by deferring until the next reporting cycle (i.e., reporting year 2009 submitted in 2010)65 the more extensive reporting on downstream exposure to chemical substances that is found in 40 CFR §710.52(c)(4). There are many unanswered question about what specific information EPA will be expecting in the reports on downstream exposure. Hopefully by the time mining and mineral processing companies must report on downstream uses in 2010, many of these questions will be answered in conjunction with the first round of IURA reporting. At this time, it is reasonable for the mining and mineral processing industry to consider whether reporting of downstream exposures will be necessary in light of the “partial 64 See Weber letter to The Fertilizer Institute (May 23, 2003). EPA’s January 26, 2005, proposed changes to the IUR do not appear to address this particular issue. 65 Or, as recently proposed, reporting year 2010 submitted in 2011. 70 Fed.Reg. 3658, 3660 (January 26, 2005).

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exemption” process specified in the regulations. In particular, companies may decide to petition EPA to add certain chemical substances associated with mining and mineral processing operations to the list of partially exempt substances for which the information contained in 40 CFR §710.52(c)(4) is not required in IURA reports. The process for making partial exemption determinations is found in 40 CFR §710.46(b)(2) of the regulations. The following is a summary of the partial exemption process and some of the factors that should be considered in developing petitions. A. Basis for Partial Exemptions To grant a petition for a partial exemption, EPA must decide that the type of information collected under 40 CFR §710.52(c)(4) for the chemical substance is of “low current interest”. While EPA evaluates the “totality of information available for the chemical substance” when making this determination, the following factors are identified in the regulations as relevant considerations:

• Has the chemical substance been manufactured at levels that triggered reporting on downstream exposure in past IUR collections (i.e., on-site manufacturing of greater than 300,000 pounds?)

• What are the physical and chemical properties of the chemical substance and what is the substance’s potential for persistence, bioaccumulation, health effects or environmental effects? These characteristics of the substance can be considered independently or together.

• What are the information needs of EPA, other federal agencies, tribes, states, local governments and the public related to the chemical substance?

• Is complementary risk screening information available for the chemical substance?

• Are the potential risks of the chemical substance being adequately managed by EPA or another agency or authority?

In its January 26, 2005, proposed rule amending various IUR provisions, EPA proposed to delete from this last consideration the phrase “by EPA or another agency or authority”, intending to clarify that “adequate management” is not restricted solely to federal authorities.66 B. Petition Process A petition to add a chemical substance to the list of partially exempt substances should articulate the basis for EPA to conclude that the downstream exposure information specified in 40 CFR §710.52(c)(4) is of low interest.67 Other than a requirement to identify the specific chemical identification number for the substance (e.g., the CAS Number), the regulations do not list specific information items that should be included in

66 70 Fed.Reg. 3658,3661. 67 EPA may also initiate amendments of the list of partially exempt chemicals on its own initiative.

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a petition. At the same time, the regulations indicate that petitioners should refer to the considerations for determining “low current interest” as outlined above.68 EPA reserves the right to request further information to assist in evaluation of a petition, but commits to a written response to a petition within 120 days of its receipt. If EPA agrees with a petition, the Agency will initiate rulemaking to modify the list of partially exempt substances. Submitters of partial exemption petitions must be aware of certain deadlines in the regulations. A petition to modify the list must be filed at least 12 months prior to the beginning of a reporting year for an IURA cycle. For example, this means that a petition to modify the list for the next round of IURA reporting would have to be filed by January 1, 2008, one year before the beginning of the 2009 reporting year.69 C. Factors to Consider in Developing a Partial Exemption Petition EPA has not yet made many decisions on petitions to add substances to the list of partially exempt chemical substances. Thus the primary indicators of what EPA will be looking for in such petitions must be drawn from Agency statements in the IURA rulemaking, including the basis for the rule’s initial list of partially exempt substances.70 As indicated above, EPA considers risk-related factors, such as health or environmental effects, in making decisions on partial exemptions. Yet throughout the rulemaking documents, EPA indicates that a partial exemption should not be seen as a determination about the risk of a chemical substance. For example, the preamble to the final rule states:

It is important to note that the inclusion of these chemical substances under this partial exemption is not based on the potential risks of the chemicals, but is based on the Agency’s current assessment of the need for collecting IURA processing and use information. 71

It is unclear how petitioners should reconcile these statements with the clear recognition in the rule that risk-related factors are relevant to a partial exemption. One possible explanation is that EPA is discouraging the use of the petition process as the venue for making exacting decisions about the risks of chemicals. As will be discussed below,

68 In its recent proposed rule EPA reaffirmed that it “will consider the totality of information available for the chemical substance in question.” The agency emphasized, however, that the burden rests squarely on the petitioner “to demonstrate why a given chemical substance should be considered of low current interest.” This burden includes providing specific citations to information in documents submitted in support of the petition. 70 Fed.Reg. 3658, 3661 (January 26, 2005). 69 Or, assuming the January 26, 2005, proposed rule is finalized as proposed, January 1, 2009, one year before the start of the 2010 reporting year. 70 EPA has indicated that it intends to develop a Standard Operating Procedure for the partial exemption process that explains the steps in the process and guides EPA personnel in making the determinations outlined in the regulations. See 68 Fed. Reg. 856 (January 7, 2003). 71 68 Fed. Reg. 855 (January 7, 2003).

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EPA has been looking to several inter-agency and inter-governmental processes to make decisions about the relative priority of particular chemicals for regulatory authorities. Those authorities clearly consider chemical risks in setting priorities, but not necessarily by a common set of criteria or through highly quantitative assessments. EPA may be trying to maintain full reporting for all IURA chemicals until those “partner” authorities have explicitly indicated a lack of interest in a particular chemical substance. Consistent with that interpretation, EPA has also indicated that it may modify the list of partially exempt substances over time. In particular, EPA has noted that interest in a particular substance may shift over time. Where EPA determines that there is “renewed” interest in a substance currently on the list, the Agency reserves the right to remove the exemption. 72 The factors listed in the regulations also suggest that EPA would be willing to accept arguments showing that the information collected by the IURA is duplicative of information collected by other EPA programs or other agencies. Certainly this view is reinforced for the mining and mineral processing industry by statements in the preamble indicating the Agency’s intent to take its burden-reduction responsibilities under the Paperwork Reduction Act seriously when looking at petitions addressing reporting for minerals.73 Yet in several documents generated in the rulemaking, EPA discusses other information collections by federal agencies and concludes that these collections are inadequate to provide the kinds of processing, use and exposure information required by the IURA. For example, the rulemaking record includes an analysis of why the information about inorganic substances found in the Toxic Release Inventory, the EPCRA Tier II Hazardous Chemical Inventory Report, the Bureau of Labor Statistics reports, the U.S. Geologic Survey (USGS) Mineral Commodity Summaries, the USGS Mineral Industry Surveys, the Census of Manufacturers and the U.S. Securities and Exchange Commission Form 10-K are inadequate substitutes for the IURA. 74 Those EPA rulemaking documents, which were generated to establish the need for the IURA, may be used to set a high burden for those arguing that the IURA is not needed for a particular substance in light of other information collections. The rule’s preamble also indicates that EPA has rejected categorical exemptions for substances that are being evaluated under other regulatory or voluntary programs. For example, EPA considered and rejected the proposal that chemical substances included in the Agency’s voluntary High Production Volume (HPV) Challenge Program as well as other similar programs conducted by the Organization for Economic Cooperation and Development (OECD) or the International Council of Chemical Associations, be exempt from the IURA. Those programs, which focus primarily on collecting screening data on 72 Id. 73 See discussion at 68 Fed. Reg. 873 (January 7, 2003). 74 EPA, “Inorganic Chemicals: Sources of Information Suggested by Commenters to the Proposed Inventory Update Rule Amendments,” (June 2000).

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chemical hazards, also allow for analysis of exposure information to determine the appropriateness of further action on a substance. Based on the statements outlined above, petitioners could conclude that EPA is establishing a high burden for a successful petition. At the same time, the Agency did include in the regulations an initial list of over 80 partially exempt substances. EPA’s explanation for exempting those substances is summarized in the rulemaking record.75 The Agency reviewed substances in the HPV Challenge Program, the European Union’s Existing Substances Regulation and a third list of chemicals identified during inter-agency review of the IURA. In all three situations, EPA identified substances for which EPA (and other chemical regulatory agencies) did not see a need for collecting screening data on the hazard of the chemical.76 The list that emerged from this process contains predominantly natural oils, fats, soaps, sugars, vitamins and building block elements (e.g., carbon, hydrogen, oxygen). These are substances that are well-understood and have not historically been linked to adverse human health or environmental effects. By any criteria, these substances would not be included on a list of potential chemicals of concern. A possible exception to that general rule would be a set of alkyl benzene substances on the list. EPA’s rationale for inclusion of these substances was that the Agency had received “detailed exposure information from manufacturers” and that the substances “had been screened in the OECD HPV SIDS Program.” For petitioners, the record supporting the current list of partially exempt substances does not ultimately provide clear guideposts for a successful petition. It appears unlikely, however, that a substance can be a candidate for an exemption as long as it is included in one of the major chemical screening programs, such as the HPV Challenge Program or the OECD Screening Information Data Set (SIDS) Program. Should the chemical be dropped from one of those programs, based on a qualitative screening or as a result of screening of the SIDS data for the substance, then the chances for a partial exemption improve substantially. In addition, EPA may look for further detailed information about exposure to the chemical before granting a petition.

75 EPA, “Methodology Used for the Initial Selection of Chemicals for the Inventory Update Rule Amendments (IURA) ‘Low Current Interest’ Partial Reporting Exemption,” (August 27, 2002). 76 In particular, EPA focused on the OECD Screening Information Data Set, a list of basic chemical tests to screen for human health and environmental hazards. This list, which enjoys broad international consensus, has been a centerpiece of the TSCA testing program for several years.