Unforeseen Impact of Chemical Rules Revealed in Energy Near Miss

The US narrowly avoided a major disruption in its energy supply this year after a federal chemical rule's impacts weren't recognized during its development, highlighting a challenge the country faces as the EPA issues more and stronger chemical regulations.

More than one-third of the nation's 92 commercial nuclear power reactors, which supply 20% of the nation's energy, would have faced possible shutdowns and other problems if the Environmental Protection Agency hadn't agreed earlier this month to let plants continue using wires and cables that contain a recently banned flamed retardant, according to multiple analyses.

Nearly all industries and federal agencies should learn from the incident, attorneys told Bloomberg Law.

At least 10 more chemical restrictions are scheduled for proposal by the end of this year. And the EPA will soon begin to release draft risk analyses to determine whether 23 additional chemicals found in consumer, commercial, and industrial goods should be restricted.

The chemicals the agency is regulating and analyzing have been used for decades to make so many different products that it's likely they’ll be in some critical applications, said Martha E. Marrapese, a partner specializing in chemical policies at Wiley Rein LLP.

It's the responsibility of industries and companies as well as the EPA to determine which downstream products will be affected, according to observers.

The earlier that critical uses are identified and the sooner the EPA gets certain details, the better, said Mark N. Duvall, a principal who leads Beveridge & Diamond PC's chemicals group.

An EPA Listserv, the federal Regulatory Agenda, and Federal Register are among the ways companies can track the agency's chemical actions.

Companies shouldn't wait for proposed or final rules to figure out if these apply to chemicals in their value and supply chains, the agency said in an emailed reply to questions.

Companies should understand which chemicals that the EPA is focused on are in their supply chains. They should work with the agency to better understand the chemicals uses, why they’re used, exposure scenarios, possible alternatives, and whether they’re essential, the agency said.

Information companies can provide the EPA to help it understand risks and how to address them includes:

The time needed to identify, certify, or otherwise "qualify" alternative chemicals and goods made with them is critical information companies should share with the agency, Duvall said in a legal alert describing lessons industries can learn from the nuclear situation.

RSCC Wire & Cable LLC, the principal supplier of the materials the nuclear industry has relied on for years, followed much of that advice.

It met with the EPA in 2018, before the agency proposed its rule to ban the flame retardant, decabromodiphenyl ether (decaBDE). And it met with the agency before the rule was finalized and afterward, according to Bloomberg Law's investigation.

Yet the EPA didn't identify the nuclear industry as potentially impacted by its 2019 proposed rule.

The Nuclear Energy Institute (NEI), which represents nuclear power plant operators, told the EPA in February 2023 that the industry hadn't been aware of and didn't participate in the decaBDE rulemaking until it recognized the ban's impacts.

The EPA's final 2021 rule set a Jan. 6, 2023, deadline for the nuclear industry's use of decaBDE-containing wires and cables to end.

Records from the Office of Management and Budget, which oversees and revises proposed and final rules before their release, show it slashed from five to two years the time the EPA's final rule intended to give nuclear wire and cable manufacturers to phase out decaBDE.

Five years would have been enough time.

By February this year, RSCC had decaBDE-free wires and cables proven to meet the Nuclear Regulatory Commission's requirements, said Duvall, who began advising the company just before the nation's potential energy disruption became critical.

Neither NRC's requirements nor related standards require decaBDE. But the equipment has to work in extreme heat, radiation, steam, and chemical exposure conditions, which decaBDE has done, nuclear equipment manufacturers told the EPA in January.

Equipment manufacturers need time to make sure the products they make for nuclear plants work with the new wires and cables, NEI told the EPA.

RSCC, however, had stopped all shipment and production of decaBDE-containing wires and cables by Jan. 6 to comply with the EPA's deadline, Duvall said.

Other companies that used decaBDE-based wires and cables to make nuclear power plant equipment had to both stop using the wires and cables, and shipping equipment with it without violating the EPA's rule, he said.

The EPA defined the production of equipment with the wires and cables as "processing" decaBDE and subject to the rule, Duvall said. The rule also barred distribution of decaBDE.

Those definitions are part of the problem, Duvall said.

"EPA has done a terrible job of informing industry of its definition of processing," he said. A chemical rule may apply to companies throughout the supply chain without their knowledge, because of the agency's sometimes "opaque" use of words like manufacturing and processing, he said.

Supply chains could be tripped up by the EPA's coming rules because they increasingly apply to chemicals in articles, he said. Cars, computers, cellphones, pipes, and gaskets are types of "articles."

Other regulatory details that could trip companies up include limits on the amount of a chemical that workers can be exposed to, said David B. Fischer, counsel at Keller and Heckman LLP.

If a chemical's production or the way it's used can't comply with the EPA's workplace limits or otherwise sufficiently reduce the unreasonable risk, the Toxic Substances Control Act can require the EPA to prohibit it, said Fischer who served as deputy assistant administrator for chemical safety and pollution prevention during the Trump administration.

"We are very concerned that EPA's approach to risk management to date risks catching industries, businesses, small businesses, and even consumers by surprise," said Kimberly Wise White, vice president for regulatory and scientific affairs with the American Chemistry Council, which represents chemical manufacturers.

The EPA needs to take more, and earlier, action to ensure companies that use chemicals understand which applications pose an unreasonable risk and will be regulated, she said. That insight will allow companies to give the EPA information it needs before it proposes a regulation, she said.

Industry shares that responsibility, White said. ACC recently hosted a webinar to help industries understand how a rule the EPA has proposed for a solvent, methylene chloride, could affect them, she said.

The EPA will host a June 7 webinar to discuss that proposed rule.

Critical uses of some chemicals, however, still may be found late in the rulemaking process or after a rule is finalized, said Marrapese from Wiley Rein.

A section in the 2016 amendments to TSCA allows the agency to exempt specific ways chemicals are used as part of a specific chemical's rule or in a separate regulation, she said.

Industry, however, must prove it's making a good faith effort to meet the EPA's objectives, Marrapese said.

"EPA would be disinclined to do a separate rule just for you, because you took too long to figure out what was happening," Fischer said.

A larger cultural change also is needed among the federal government, attorneys, and industries, according to the attorneys.

"TSCA is by and large a small corner of environmental law, and environmental law is just one of many things that trade associations and company government affairs offices have to keep track of," Duvall said.

Air and water permits, for example, are routine requirements companies know to take care of, Fischer said. But, if they don't think long term and invest in chemical risk evaluations and regulations, they’re missing the boat, he said.

The EPA is doing a better job reaching out to diverse affected parties, and some industries are reaching out to the agency, Marrapese said. But chemical policy awareness and participation need to be worked into the environmental, social, and corporate governance strategies, she said.

To contact the reporter on this story: Pat Rizzuto in Washington at [email protected]

To contact the editors responsible for this story: Zachary Sherwood at [email protected]; JoVona Taylor at [email protected]

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