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November 4, 2005: 

The Honorable James M. Jeffords: 
Ranking Minority Member: 
Committee on Environment and Public Works: 
United States Senate: 

The Honorable Frank R. Lautenberg: 
United States Senate: 

The Honorable Patrick Leahy: 
United States Senate: 

Subject: Chemical Regulation: Approaches in the United States, Canada, 
and the European Union. 

Chemicals are used to produce items widely used throughout society, 
including consumer products such as cleansers, paints, plastics, and 
fuels, as well as industrial solvents and additives. While chemicals 
play an important role in everyday life, some may be harmful to human 
health and the environment. Some chemicals, such as lead and mercury, 
are highly toxic at certain doses and need to be regulated because of 
health and safety concerns. In 1976, the Congress passed the Toxic 
Substances Control Act (TSCA) in part to authorize the Environmental 
Protection Agency (EPA) to regulate chemicals that pose an unreasonable 
risk to human health or the environment.[Footnote 1] TSCA addresses 
chemicals that are manufactured, imported, processed, distributed in 
commerce, used, or disposed of in the United States and authorizes EPA 
to assess chemicals before they enter commerce (new chemicals) and 
review those already in commerce (existing chemicals). TSCA excludes 
certain chemical substances, including among other things pesticides 
that are regulated under the Federal Insecticide, Fungicide, and 
Rodenticide Act (FIFRA); and food; food additives; drugs; cosmetics or 
devices that are regulated under the Federal Food, Drug and Cosmetic 
Act (FFDCA). 

For existing chemicals, TSCA authorizes, but does not specifically 
require, EPA to review the risks of chemicals included in TSCA's 
inventory of existing chemicals. Using its authority under TSCA, EPA 
has required testing for less than 200 of the over 62,000 chemicals 
that were already in commerce when EPA began reviewing chemicals in 
1979. Since then, upon receiving notice of commencement that the 
company has begun manufacturing a chemical, EPA has added another 
20,000 chemicals to its inventory after reviewing them under its new 
chemical review program. If EPA finds that a reasonable basis exists to 
conclude that a chemical presents or will present an unreasonable risk 
to human health or the environment, TSCA generally requires EPA to 
impose regulatory requirements. When doing so, EPA must apply the least 
burdensome regulatory requirement to adequately protect against a 
chemical's risk.[Footnote 2] EPA can promulgate a rule that bans or 
restricts the chemical's production, processing, distribution in 
commerce, disposal or use, or that requires warning labels be placed on 
the chemical. Canada and the European Union also maintain inventories 
of existing chemicals. 

TSCA generally requires chemical companies to notify EPA at least 90 
days before beginning production, manufacture, or import of a new 
chemical--or before manufacturing or processing a chemical for a use 
that EPA has determined by rule is a significant new use--by submitting 
a premanufacture notice.[Footnote 3] Such notices are to provide 
information on the chemical's identity, production process, anticipated 
production volume, intended uses, potential exposure and release 
levels, disposal, and byproducts. A premanufacture notice is required 
for all levels of production or import. In addition, companies are 
required to provide EPA any test data that they possess or control 
related to the chemical's effect on health or the environment and a 
description of any other data concerning the chemical's environmental 
or health effects known to or reasonably ascertainable by the 
companies. EPA has these 90 days to review the chemical information in 
the premanufacture notice and identify the chemical's potential risks. 
On the basis of this review, EPA makes a decision to (1) take no 
action; (2) after making certain findings under TSCA, require controls 
on the use, manufacture, processing, distribution in commerce, or 
disposal of the chemical pending development of test data; or (3) ban 
or otherwise regulate the chemical pending the receipt and evaluation 
of test studies performed by the chemical's manufacturer. As of June 
2005, EPA's reviews resulted in some action being taken to reduce the 
risks of over 3,500 of the 32,000 new chemicals that companies had 
submitted for review.[Footnote 4] 

Under Canadian Environmental Protection Act (CEPA) regulations, 
companies must submit certain information and test data to the 
government when production or importation volumes reach certain levels. 
Under CEPA, the Ministers of Health and the Environment must assess the 
information provided on a new chemical to determine whether it is toxic 
or capable of becoming toxic. Canada defines new chemicals as those 
that are not on Canada's Domestic Substances List--a list of all known 
chemicals that (1) were in commercial use in Canada between January 1, 
1984, and December 31, 1986; (2) were manufactured in or imported into 
Canada by any person in a quantity of 100 kilograms or more in any 
calendar year during that period; or that (3) have subsequently been 
fully assessed under CEPA. According to Canadian officials, a new 
chemical is generally added to the existing chemicals inventory only 
after a certain level of production or importation has been reached and 
specified testing for that level has been performed without conditions 
being placed on the chemical's manufacture or importation. 

The European Union's current chemical control legislation[Footnote 5] 
generally requires chemical companies to notify a member state 
regulatory agency once the marketing level of a new chemical reaches 10 
kilograms.[Footnote 6] The European Union maintains a new chemicals 
inventory--separate from the one for existing chemicals--and the 
chemicals in this inventory are subject to additional testing by the 
chemical company and review by the authorities when the annual amount 
marketed reaches certain levels.[Footnote 7] Furthermore, the European 
Union is currently considering revising its chemical control 
legislation through proposed legislation known as Registration, 
Evaluation, Authorisation, and Restriction of Chemicals (REACH) that 
would largely eliminate the distinction between new and existing 
chemicals and would require chemical companies to submit certain basic 
information on chemicals produced over certain volumes.[Footnote 8] 

In this context, you asked that we provide comparative information on 
the following chemical control laws: TSCA, CEPA, the current European 
Union legislation, and REACH as proposed. Specifically, you asked that 
we provide information on the approaches of (1) controlling chemical 
risks, (2) reviewing existing chemicals used in commerce, (3) assessing 
new chemicals, and (4) handling confidential business information. The 
laws and regulations discussed in this letter are sometimes augmented 
by various other mechanisms for controlling chemicals. For example, in 
the United States, this includes programs implemented under other 
environmental laws such as the Clean Air Act; the Clean Water Act; the 
Federal Food, Drug, and Cosmetic Act; and the Federal Insecticide, 
Fungicide, and Rodenticide Act, as well as programs in which the 
chemical industry voluntarily participates. Details on some of these 
other chemical control mechanisms are discussed in our June 2005 report 
on options that exist to control harmful chemicals.[Footnote 9] For 
purposes of this report, we have focused on TSCA, CEPA, and current and 
proposed European Union chemical control legislation. It is important 
to note that the manner in which new and existing chemicals are defined 
under these pieces of legislation varies and, as EPA notes in its 
comments, may make for some imperfect comparisons. To the extent 
possible, we have attempted to highlight such differences when 
comparing various legislative provisions. 

To respond to your request, we reviewed EPA's policies and guidelines 
on the chemical review and control programs for new and existing 
chemicals. We also obtained information from and discussed chemical 
laws with chemical control agency representatives of Canada and the 
European Union. These efforts were augmented by interviews with EPA 
officials. We performed our work between July 2005 and October 2005 in 
accordance with generally accepted government auditing standards. 

In summary, TSCA authorizes EPA to take a number of control actions 
with regard to new chemicals or uses of chemicals that EPA has 
determined by rule are significant new uses. To control existing 
chemicals under TSCA, EPA must present substantial evidence that a 
reasonable basis exists to conclude that the chemical presents or will 
present an unreasonable risk to human health or the environment. The 
United States Court of Appeals for the Fifth Circuit has stated that 
EPA must consider the costs of any proposed action in evaluating what 
risks are unreasonable.[Footnote 10] EPA must also apply the least 
burdensome regulatory requirement. In contrast, under Canadian and 
European Union legislation the costs of various controls are to be 
considered in deciding the particular control action to be taken, but 
these costs are not factors in determining whether to control a 
chemical. 

Under TSCA, EPA is not required to systematically prioritize existing 
chemicals for purposes of determining their risks, although EPA relies 
upon mechanisms such as voluntary testing programs and advice from 
federal advisory groups to help ensure that it gives priority to the 
chemicals posing the greatest risks. Both CEPA and the proposed REACH 
legislation contain requirements for systematically prioritizing and 
reviewing existing chemicals. 

For new chemicals, TSCA requires that chemical companies submit for 
EPA's review any data already in their possession on the chemicals' 
health and ecological effects, potential exposures and on their 
physical chemical properties, with the premanufacture notice (PMN) 
generally required before chemical companies may manufacture the 
chemicals.[Footnote 11] Chemical companies generally do not have such 
data at the time they submit the PMN for the chemicals and are not 
required to develop the data unless EPA promulgates a test rule. Under 
REACH, chemical companies would be required to develop and submit data 
on the physical properties and health and ecological effects of new 
chemicals with the initial notification and, subsequently before the 
chemicals reach certain levels of production. 

Regarding the protection of confidential business information that is 
provided to the regulatory agencies, TSCA, CEPA, and the European Union 
current and proposed legislation have provisions for protecting such 
information from inappropriate disclosures, although the specifics of 
the protection varies. One of the objectives of the proposed REACH 
legislation is to make information on chemicals more widely available 
to the public. 

Approaches to Controlling Chemical Risks: 

TSCA authorizes EPA to take a number of control actions with regard to 
new chemicals.[Footnote 12] If EPA determines that there is 
insufficient information available to permit a reasoned evaluation of 
the health and environmental effects of a chemical and that (1) in 
absence of such information, the chemical may present an unreasonable 
risk of injury to health or the environment or (2) it is or will be 
produced in substantial quantities and (a) it either enters or may 
reasonably be anticipated to enter the environment in substantial 
quantities or (b) there is or may be significant or substantial human 
exposure to the chemical, then EPA can issue a proposed order or seek a 
court injunction to prohibit or limit the manufacture, processing, 
distribution in commerce, use, or disposal of the chemical. In 
addition, if EPA finds that there is a reasonable basis to conclude 
that a new chemical may pose an unreasonable risk before it can protect 
against such risks by otherwise regulating the chemical under TSCA, EPA 
can (1) issue a proposed rule, effective immediately, to require the 
chemical to be marked with adequate warnings or instructions, to 
restrict its use, or to ban or limit the production of the chemical or 
(2) seek a court injunction or issue a proposed order to prohibit the 
manufacture, processing, or distribution of the chemical. 

In addition, under TSCA, EPA generally must apply regulatory 
requirements--banning or restricting the chemical's production, 
processing, distribution in commerce, disposal or use, or requiring a 
warning label--to chemicals for which EPA finds a reasonable basis 
exists to conclude that the chemical presents or will present an 
unreasonable risk to human health or the environment. EPA must choose 
the least burdensome requirement that will adequately protect against 
the risk. As we noted in our earlier report,[Footnote 13] this presents 
a high evidentiary burden for EPA in regulating chemicals. When 
reviewing EPA's asbestos rule, the United States Court of Appeals for 
the Fifth Circuit stated that in evaluating what risks are unreasonable 
EPA must consider the costs of any proposed actions. Moreover, the 
court noted that TSCA's requirement that EPA impose the least 
burdensome regulation reinforces the view that EPA must balance the 
costs of its regulations against their benefits. EPA must also consider 
and publish a statement regarding the effects of the chemical on health 
and the environment and the magnitude of human and environmental 
exposure; the benefits of the chemical for various uses and the 
availability of substitutes for those uses; and the reasonably 
ascertainable consequences of the rule, after consideration of the 
effect on the national economy, small businesses, technological 
innovation, the environment, and public health. If another law would 
sufficiently eliminate or reduce the risk of injury to health or the 
environment, then EPA may not promulgate a TSCA rule unless it finds 
that it is in the public interest to do so, considering all relevant 
aspects of the risk, a comparison of the estimated costs of compliance 
under TSCA and the other law, and the relative efficiency of actions 
under TSCA and the other law to protect against risk of injury. 

Under CEPA, regulators are authorized to control chemicals that are (1) 
determined to be toxic on the basis of a screening assessment and (2) 
where the Ministers of Health and the Environment have made certain 
determinations.[Footnote 14] A chemical may not be regulated under CEPA 
to the extent that it is regulated by or under another act that, in the 
opinion of the Governor in Council, provides sufficient protection to 
the environment and human health. In general, the costs and benefits of 
control actions are not factors in determining the risk posed by a 
chemical nor are they determinative of whether any control action 
should be taken. Rather, they may be factors in deciding what control 
action to take. Moreover, Canadian regulators are not required to 
choose the "least burdensome" regulatory requirements. 

Under current chemical control legislation in the European Union, 
member states take the lead on assessing the risks of chemicals. For 
existing chemicals, once a health and environmental risk assessment is 
completed, the lead member state makes a draft risk assessment, 
including risk reduction measures, which is submitted to a committee 
established by the existing chemicals regulation that has 
representatives of all member states and the Commission. The committee 
decides if more information is needed and what types of risk reduction 
measures are needed. Between 1993 and October 2003 only 140 high volume 
existing chemicals had been singled out for risk assessment and a 
limited number have completed the process. According to the European 
Commission, decisions on further testing of substances can only be 
taken via a lengthy committee procedure and can only be requested from 
industry after authorities have proven that a substance may present a 
serious risk. 

The proposed REACH legislation would generally require chemical 
companies to register all chemicals produced or imported in quantities 
over 1,000 kilograms (2,204.6 pounds) per manufacturer or importer per 
year. For certain uses of registered chemicals of very high concern, 
chemical companies are required to seek authorization for those uses. 
These chemicals of very high concern are those that are carcinogenic, 
mutagenic, or toxic for reproduction; persistent, bioaccumulative and 
toxic or very persistent and very bioaccumulative; and those that cause 
serious and irreversible effects to humans or the environment, such as 
endocrine disrupters. Companies using such chemicals or placing them on 
the market would need to apply for an authorization for each use of the 
chemical, and an authorization would be granted if the risk to human 
health or the environment from the use of the substance is adequately 
controlled. Even if the risks cannot be adequately controlled, a time- 
limited authorization could also be granted if it was shown that the 
socioeconomic benefits outweigh the risks and if there were no suitable 
alternative substances or technologies. In this case, it is recommended 
that the applicant submit a plan to develop alternative substances or 
technologies. Downstream users could use a substance for an authorized 
use provided that they obtained the substance from a company to which 
an authorization has been granted and that they meet the conditions of 
that authorization. Such downstream users also would be required to 
notify the chemical control agency that they are using an authorized 
substance. 

Approaches to Reviewing Existing Chemicals: 

TSCA, CEPA, and the current European Union chemical control legislation 
generally do not require chemical companies to develop test data for 
existing chemicals, unless the regulatory agencies first make certain 
findings and take regulatory action. Unlike CEPA, which provides for 
the systematic categorization and review of existing chemicals, TSCA 
does not require EPA to prioritize and review existing chemicals. 

For existing chemicals, REACH would require chemical companies subject 
to registration requirements that import or manufacture above a certain 
quantity to provide test data to regulatory authorities on the 
chemical's physical properties, and ecological and health effects. Both 
the current European Union legislation and REACH provide for (1) the 
regulatory agencies' prioritization of existing chemicals for 
assessment and (2) chemical companies' notification to regulatory 
agencies of new uses of existing chemicals (under current legislation 
if manufactured or imported at a level of 10,000 kilograms (22,046 
pounds) or more per year) so that regulators may assess the potential 
risk of the new use of the chemical. 

Existing chemicals are defined differently under each country's 
chemical control legislation. In the United States, existing chemicals 
are defined as those chemicals on the TSCA Inventory.[Footnote 15] In 
Canada, existing chemicals are those chemicals on the Domestic 
Substances List, including chemicals that--between January 1, 1984, and 
December 31, 1986--were in commercial use in Canada, used for 
commercial manufacturing practices, or manufactured or imported into 
Canada in a quantity of 100 kilograms or more in any calendar year. The 
list is regularly amended to include additional substances that have 
been notified and assessed under the new substances provisions of CEPA. 
Current European Union legislation defines existing chemicals as those 
listed on the European Inventory of Existing Commercial Chemical 
Substances (EINECS)--those chemicals deemed to be in the community 
market on September 18, 1981. The proposed REACH would largely 
eliminate the distinction between existing and new chemicals. Table 1 
provides additional information on the treatment of existing chemicals 
in the United States, Canada, and the European Union. 

Table 1: Regulation of Existing Chemicals in the United States, Canada, 
European Union: 

[See PDF for image] 

Source: GAO analysis of selected legislation. 

[A] For existing chemicals, we are defining basic physical chemical 
properties as including properties identified on the Organization for 
Economic Co-operation and Development's (OECD) Screening Information 
Data Set (SIDS), such as melting point, boiling point, relative 
density, vapor pressure, partition co-efficient: n-Octanol/Water, and 
water solubility. The octanol-water partition coefficient is the ratio 
of the concentration of a chemical in octanol and in water at 
equilibrium and at a specified temperature. This test is used in many 
environmental studies to help determine the fate of chemicals in the 
environment. 

[B] EPA in cooperation with industry, environmental groups, and other 
interested parties launched the High Production Volume Challenge 
Program to voluntarily gather information and ensure that a minimum set 
of basic data on approximately 2,800 high-production volume chemicals-
-those produced at 1 million pounds or more per year--would be 
available to EPA. Chemical companies were invited to voluntarily 
sponsor these chemicals and submit data summaries of existing 
information along with a test plan that proposes a strategy to fill 
data gaps for either an individual chemical or for a category of 
chemicals. EPA intends to use these data to prioritize these chemicals 
for additional review and testing. 

[C] Council Regulation (EEC) No 793/93 requires chemical companies to 
update this information if they obtain new data on physico-chemical 
properties, toxicological, or ecotoxicological effects where it is 
likely to be relevant to the evaluation of the risk posed by the 
chemical. 

[D] The OECD SIDS is the minimum amount of data required for making an 
initial hazard assessment of High Production Volume chemicals agreed 
upon by OECD. 

[E] However, if the company obtains information that reasonably 
supports the conclusion that the chemical presents a substantial risk 
to human health or the environment, TSCA requires that the company 
immediately notify EPA about this information. 

[F] The Ministers of Health and Environment are to categorize chemicals 
on the Domestic Substances List to identify those that (1) may present 
to individuals in Canada the greatest potential for exposure or (2) are 
persistent or bioaccumulative in accordance with the regulations and 
inherently toxic to human beings or to nonhuman organisms. Once 
categorization has been completed, the Ministers shall conduct 
screening assessments for such chemicals to determine whether they are 
toxic or capable of becoming toxic. 

[G] According to a European Union official--under REACH--as originally 
proposed all registrations of chemicals including a plan for animal 
testing, will be evaluated. Furthermore, for other registered 
substances, member states could use these criteria to include chemicals 
they believe present a risk to health or the environment in a plan for 
evaluation. The European Parliament Committee on the Environment, 
Public Health and Food Safety recently proposed an amendment to REACH, 
yet to be confirmed by the European Parliament in plenary session, that 
instead proposes giving the European Chemicals Agency the task of 
compiling the list and giving the agency a greater role in the decision 
making procedure for chemical evaluation. 

[H] In 2003, EPA amended its TSCA Inventory Update Rule (IUR), which is 
primarily used to gather certain information on chemicals produced at 
more than a basic threshold volume in the year reported. Among other 
things, EPA raised the basic production volume reporting threshold from 
10,000 to 25,000 pounds; required chemical companies producing or 
importing chemicals at a site at or above this threshold to report the 
number of workers reasonably likely to be exposed to the chemical at 
each site; and added a reporting threshold of 300,000 pounds per site 
at or above which chemical companies must report readily obtainable 
exposure-related use and processing information. 

[I] According to EPA, the United States has considerable experience 
utilizing tools and incentives to facilitate the entry into market 
safer chemicals or use of safer processes as demonstrated with the 
Green Chemistry and Design for the Environment Programs and the 
utilization by industry of the P2 Framework tools prior to submitting 
new chemicals for consideration. In addition, section 6602 (b) of the 
Pollution Prevention Act of 1990 states that it is the policy of the 
United States that "pollution should be prevented or reduced at the 
source whenever feasible." The act required EPA to establish an office 
to carry out the functions of the EPA Administrator under the act, 
including the development and implementation of a strategy to promote 
source reduction. The act also requires many owners and operators of 
manufacturing facilities to report annually on source reduction and 
recycling activities. 

[J] According to a European Union official, while a pollution 
prevention plan is not required under European Union chemical 
legislation, it is obligatory under the Integrated Pollution Prevention 
and Control Directive. 

[End of table] 

Approaches to Reviewing New Chemicals: 

The United States, Canadian, and European Union regulatory authorities 
review the risks of new chemicals, although they do so at different 
times. For example, TSCA requires chemical companies to notify EPA 
before beginning manufacture of new chemicals, while CEPA and both 
current European Union legislation and the proposed REACH require 
chemical companies to notify regulatory authorities only after the new 
chemical has reached certain levels of manufacture or importation. In 
addition, depending on production volumes, Canada and the European 
Union require chemical companies to develop and submit data to the 
government on the physical chemical properties, as well as basic 
toxicological and health effects data, for new chemicals along with 
their notifications or registrations. In contrast, TSCA only requires 
chemical companies to submit data already in their possession on the 
physical properties and on the chemicals' health and ecological effects 
and exposures. Companies generally do not have such data at the time 
new chemicals are submitted for EPA's review, and TSCA does not require 
them to develop test data unless EPA promulgates a test rule. In the 
absence of test data obtained from chemical companies, the burden of 
developing data to assess the risks of new chemicals primarily falls on 
EPA, which uses scientific models to predict a new chemical's 
properties and toxicity based on comparisons with other chemicals of 
similar molecular structures that have previously been tested.[Footnote 
16] EPA also takes into account the information that chemical companies 
provide on the anticipated potential uses and estimated exposures of 
the new chemicals. 

Canadian chemical control laws and those in effect and proposed in the 
European Union require, to varying degrees, that chemical companies 
develop and submit for review test data on the physical chemical 
properties and toxicological characteristics and health effects of 
exposures to new chemicals. The testing required depends on the 
importation or production volume of the chemical. 

New chemicals are defined differently under each country's chemical 
control legislation. In the United States, new chemicals are defined as 
those not on the TSCA Inventory. In Canada, new chemicals are those not 
on Canada's Domestic Substances List. [Footnote 17] Current European 
Union legislation defines new chemicals as those not listed on EINECS. 
The proposed REACH would largely eliminate the distinction between 
existing and new chemicals. Table 2 provides information on the 
treatment of new chemicals in the United States, Canada, and the 
European Union. 

Table 2: Regulation of New Chemicals in the United States, Canada, 
European Union: 

[See PDF for image] 

Source: GAO analysis of selected legislation. 

[A] Such data could include any of the information required in the 
Screening Information Data Set (SIDS), which is the minimum amount of 
data required for making an initial hazard assessment of High 
Production Volume Chemicals agreed upon by the Organization for 
Economic Co-operation and Development (OECD). CEPA, Current European 
Union legislation and the proposed REACH legislation all require at 
least six physical chemical properties identified in the SIDS, 
including melting point, boiling point, relative density, vapor 
pressure, partition co-efficient: n-Octanol/Water, and water 
solubility--CEPA only requires this be reported in the water solubility 
is 10-6 g/L or greater--for new chemicals produced over certain 
volumes. The remaining two properties dissociation constant and 
oxidation reduction potential are required by some legislation, but not 
all. Oxidation-reduction potential is not required under CEPA, and 
current European Union legislation and REACH do not require 
dissociation constant. 

[B] Testing is not required for new chemicals unless the EPA 
promulgates a test rule, but companies must submit (1) any test data in 
the possession or control of the company related to the chemicals 
effect on health or the environment and (2) a description of any other 
data concerning the environmental and health affects that is known or 
reasonably ascertainable by the company. Companies must also inform EPA 
if they obtain information, which reasonably supports the conclusion 
that a chemical presents a substantial risk of injury to health or the 
environment. 

[C] For chemicals listed on the Non-Domestic Substances List (NDSL), 
the threshold is 10,000 kilograms (22,046 pounds) in a calendar year. 

[D] SIDS is the minimum amount of data required for making an initial 
hazard assessment of High Production Volume Chemicals agreed upon by 
OECD. CEPA, current European Union legislation and proposed REACH all 
require at least three toxicological properties, including acute 
toxicity, repeated dose toxicity, and genetic toxicity for new 
chemicals produced over certain volumes. Current European Union 
legislation and proposed REACH also require reproductive toxicity once 
reporting thresholds have been met. 

[E] Testing is not required for new chemicals unless the EPA 
promulgates a test rule, but companies must submit (1) any test data in 
the possession or control of the company related to the chemicals 
effect on health or the environment and (2) a description of any other 
data concerning the environmental and health affects that is known or 
reasonably ascertainable by the company. Companies must also inform EPA 
if they obtain information that reasonably supports the conclusion that 
a chemical presents a substantial risk of injury to health or the 
environment. 

[F] For chemicals listed on the NDSL, the threshold is 10,000 kilograms 
(22,046 pounds) in a calendar year. 

[End of table] 

Approaches to Confidential Business Information: 

TSCA, CEPA, current European Union legislation, and REACH all provide 
for chemical companies to claim certain information as confidential, 
but they vary in their treatment of such information. For example, TSCA 
does not allow EPA to share confidential business information with 
foreign governments in efforts toward developing and harmonizing 
methods for assessing chemical hazards. CEPA, however, provides for the 
sharing of confidential information with foreign governments under 
agreements or arrangements where the foreign government keeps the 
information confidential. REACH contains similar provisions, also 
allowing for disclosure to international organizations under agreements 
where they protect confidential information. 

EPA's ability to make publicly available the information that it 
collects under TSCA is limited. EPA is required under the act to 
protect trade secrets and privileged or confidential commercial or 
financial information against unauthorized disclosures, and this 
information generally cannot be shared with others, such as state 
health and environmental officials and foreign governments.[Footnote 
18] Other federal agencies and federal contractors can obtain access to 
this confidential business information in order to carry out their 
responsibilities. TSCA does not treat health and safety data as 
confidential and EPA can also disclose other information that it 
determines is necessary to disclose in order to protect health or the 
environment from an unreasonable risk. 

In Canada, information that companies request to be treated as 
confidential is not to be disclosed, except in certain circumstances. 
The Canadian Minister of the Environment may disclose certain 
information upon giving 24 hours notice to the company, if (1) the 
disclosure is in the interest of public health, public safety or the 
protection of the environment and (2) the public interest in the 
disclosure (a) outweighs in importance any material financial loss or 
prejudice to the competitive position of the person who provided the 
information or on whose behalf it was provided and (b) any damage to 
the privacy, reputation, or human dignity of any individual that may 
result from disclosure. 

European Union legislation also allows chemical companies to make 
confidentiality claims. In the European Union, a company may indicate 
that information is commercially sensitive and that disclosure may be 
harmful to the company industrially and commercially and, therefore, 
that the company wishes to keep the information secret from all persons 
other than the competent authorities and the European Commission. 
Secrecy, however, does not apply to the trade name of the substance, 
certain physicochemical data concerning the substance, possible ways of 
rendering the substance harmless, the interpretation of the 
toxicological and ecotoxicological tests and the name of the body 
responsible for the tests, and certain recommended methods and 
precautions and emergency measures. The authority receiving the 
information is to decide on its own responsibility what information is 
covered by commercial and industrial secrecy. The chemical company can 
go to court and appeal the authority's decision. 

Under REACH, as originally proposed, one of the objectives of the new 
system for the management of industrial chemicals would be to make 
information on chemicals more widely available. According to a European 
Union official, the proposed legislation has precise provisions on the 
issue of disclosure of information. Certain information will always be 
regarded as available to the public, where other information is always 
confidential, even if a producer does not make the claim. For the 
remaining information categories, chemical companies may claim 
confidentiality. Whenever a request for access to documents held by the 
proposed European Chemicals Agency is made, the agency would be 
required to inform the registrant of the chemical or other party 
concerned of the request. That party would have 30 days to submit a 
declaration identifying information that it wishes to remain 
confidential because the information is considered commercially 
sensitive and disclosing it might harm the party commercially. The 
agency would consider the information and decide whether to accept the 
declaration. The party could appeal this decision. The following 
information would be among the types of information that would not be 
treated as confidential: the trade name(s) of the substance; 
physicochemical data on the substance and on pathways and environmental 
fate; the result of each toxicological and ecotoxicological study; if 
essential to classification and labeling, the degree of purity of the 
substance and the identity of impurities and/or additives that are 
known to be dangerous; guidance on safe use; and information contained 
in the safety data sheet (except for the name of the company or other 
information accepted as confidential in REACH). Recent amendments to 
REACH proposed by the European Parliament Committee on the Environment, 
Public Health, and Food Safety, still to be confirmed by the European 
Parliament in plenary session, would reintroduce provisions of current 
European Union legislation requiring industry to justify 
confidentiality. The European Chemicals Agency would only have to 
inform parties other than the registrant of a request where 
appropriate. 

The following information would be treated as confidential, even if the 
company did not claim it as confidential: details of the full 
composition of a preparation, the precise use, function, or application 
of a substance or preparation, the precise tonnage of the substance or 
preparation manufactured or placed on the market, and links between a 
manufacturer or importer and its downstream users. However, in 
exceptional cases where there are immediate risks to human health, 
safety, or the environment, REACH would authorize the proposed European 
Chemicals Agency to disclose this information. 

Scope and Methodology: 

This report describes the approaches the United States, Canada and the 
European Union have taken in regulating chemicals in commerce. In 
addressing these issues, we obtained information on EPA's 
implementation of TSCA and the chemical control programs of Canada and 
the European Union. To understand other chemical control regulation, we 
collected documentation and interviewed individuals knowledgeable about 
(1) the Toxic Substances Control Act and (2) foreign chemical control 
laws or proposed legislation: (a) the Canadian Environmental Protection 
Act, 1999 and (b) the European Union's chemical control legislation and 
proposed Registration, Evaluation, Authorisation and Restriction of 
Chemicals. The European Union and Canada were chosen because they have 
recently taken action to revise their chemical legislation. In 1999, 
Canada revised its chemical control law and in 2003, the European Union 
proposed a new regulation. The European Union and Canada were also 
selected because they have characteristics that are similar to those of 
the United States: Canada and the European Union member countries are 
industrialized nations and have extensive experience with the review 
and control of chemical substances. In addition, Canada and the 
European Union produce a considerable amount of chemicals. Furthermore, 
EPA officials and chemical industry representatives recommended these 
countries for comparison with TSCA. Our descriptions of Canadian and 
European Union legislation are based on our review of the laws, 
technical literature, government documents describing their chemical 
control programs, and follow-up discussions with government officials. 
Given the time frames available to complete our work, we relied 
primarily upon work previously performed for our report issued in June 
2005, as supplemented by additional interviews and document review. 

Our review was performed between July 2005 and October 2005 in 
accordance with generally accepted government auditing standards. 

Agency Comments and Our Evaluation: 

EPA provided comments on the information included in a draft of our 
report on November 1, 2005. EPA said that our report (1) attempts to 
compare functions that are fundamentally different due to varying 
definitions of "new" and "existing" chemicals under TSCA, CEPA, and the 
European Union legislation; (2) does not reflect the range of 
regulatory options that exist for existing and new chemicals, focusing 
almost exclusively on sections 4 and 6 of TSCA; (3) should offer the 
same level of information across the four regulatory approaches of 
TSCA, CEPA, EU current legislation, and proposed REACH; and (4) should 
address enforcement activities. 

We agree that it is important to note the differing definitions of 
"new" and "existing" chemicals under TSCA, CEPA, and the European Union 
legislation in comparing these laws. Where possible, we have attempted 
to highlight the impact of such differences when comparing various 
legislative provisions. We added additional language to the beginning 
of the report to draw attention to this point. Despite the different 
definitions of new and existing chemicals, we believe that it is 
possible to draw some useful comparisons between the legislative 
provisions and chemical control functions under those provisions. 

Likewise, we agree with EPA's comment that our draft report would 
benefit from a more complete discussion of regulatory tools available 
under TSCA. In response to EPA's comments, we have added a discussion 
of section 5(e) and section 5(f) of TSCA to the final report. We have 
also added references to EPA's utilization of modeling tools and to our 
June 2005 report that more fully discusses actions that EPA has taken 
under TSCA. Moreover, as we stated in our draft report and as this 
final report states, the laws and regulations discussed in this letter 
are sometimes augmented by various other mechanisms for controlling 
chemicals, such as programs under other environmental laws and 
voluntary programs. Again, we refer readers to our June 2005 report for 
more information. 

With regard to EPA's comments regarding additional points that the 
report should address, we agree that such additional information could 
be useful, but given time constraints we were not able to add this 
information into this report. Given the short period available to 
complete our work, we agreed with the requesters of our report to 
primarily rely upon the work we had previously performed regarding TSCA 
and the other countries, as supplemented by appropriate and necessary 
follow-up work. We have generally attempted, given the information 
available to us, to present a similar amount of detail for the United 
States, Canadian, and European Union legislation. In some cases, the 
amount of detail presented in this report varies because some laws 
contain more detail than others. With regard to EPA's suggestion that 
the report would benefit from a discussion of enforcement activities, 
we did not perform the work that would enable us to address enforcement 
activities in this report. Such activities, however, are an important 
part of our ongoing work in the area of chemical regulation in the 
United States, Canada, and the European Union. 

EPA's comments are reproduced in the enclosure. 

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to the congressional committees with jurisdiction over EPA and its 
activities; the Administrator, EPA; and the Director, Office of 
Management and Budget. We also will make copies available to others 
upon request. In addition, the report will be available at no charge on 
the GAO Web site at http://www.gao.gov. 

If you have any questions about this report, please contact me at (202) 
512-3841 or stephensonj@gao.gov. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. Ed Kratzer, Assistant Director; David Bennett; 
John Delicath; Aaron Kaminsky; and Amy Webbink made key contributions 
to this report. 

Signed by: 

John B. Stephenson: 

Director, Natural Resources and Environment: 

Enclosure: 

Enclosure: Comments from the Environmental Protection Agency: 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY: 
OFFICE OF PREVENTION, PESTICIDES AND TOXIC SUBSTANCES: 
WASHINGTON, D.C. 20460: 

NOV 1 2005: 

Mr. John Stephenson: 
Director: 
Natural Resources and Environment: 
Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Stephenson: 

Thank you for the opportunity to review and comment on the proposed 
draft Government Accountability Office (GAO) report entitled "Chemical 
Regulation: Approaches in the United States, Canada, and the European 
Union" (GAO-06-217R). The Report provides comparative information on 
the United States (U.S.) Toxic Substances Control Act (TSCA), the 
Canadian Environmental Protection Act (CEPA), the European Union's (EU) 
current and proposed chemical control legislation in relation to the 
approaches of (1) controlling chemical risks, (2) reviewing existing 
chemicals used in commerce, (3) assessing new chemicals not yet in 
commerce, and (4) handling confidential business information. 

Chemicals are an integral part of modern society which provide benefits 
and may present risks. TSCA recognizes that the benefits of chemicals 
to society and their risks must be taken into account in considering 
whether and what regulatory controls are appropriate in a given 
circumstance. EPA is proud of the progress we have made in protecting 
human health and the environment. To date, TSCA authority has provided 
the Agency the ability to review more than 40,000 new chemicals prior 
to introduction into the marketplace and we have restricted or 
otherwise regulated over 1,600 of these chemicals while a similar 
number have been withdrawn by the manufacturer, often in the face of 
EPA action. TSCA provides a wide array of tools available to protect 
against risks and facilitate the assessment of risks. These tools, 
[discussed in your June 2005 Report on the Agency's chemical regulation 
efforts (GAO 05-458)] include, among an array of other regulatory and 
non-regulatory approaches, TSCA section 5(e) which allows EPA to 
regulate based on risk or exposure concerns "pending the development of 
information" that is needed to assess the chemical's risks, and TSCA 
section 5(a)(2) significant new use rules that require persons to 
notify EPA in advance of manufacture, import, or processing for a 
designated new use so that EPA can assess and regulate the use if 
appropriate before it begins. The Agency utilizes a variety of tools 
including modeling such as the Structural Activity Relationship (SAR), 
voluntary and innovative approaches, and information gathering and 
dissemination to ensure that we have the ability to make informed 
decisions prior to chemical production at any level and to -facilitate 
the entry into the market of safer chemicals and substitutes. 

The Agency also works to target chemical data development, information 
collection and risk management on chemicals already in commerce, 
including aggressively obtaining data on a key set of chemicals on the 
TSCA Inventory. EPA's "numerous control actions" noted in your June 
2005 detailed report on the Agency's chemical regulation efforts (GAO 
05-458) speak to the range of approaches applied by the Agency in the 
chemical review program. 

In this reply to GAO's request for comment, EPA has focused its 
comments on information as it relates to descriptions of the U.S. 
authorities and certain critical distinctions among the various 
authorities compared. While EPA appreciates the observations and 
comparisons, there are a few comments for your consideration. - 
Technical comments are provided in the enclosed attachment. 

The Report attempts to compare functions that are fundamentally 
different -due to variations in definitions applied to "new" versus 
"existing" chemicals under each government's chemical control 
legislation. In the U.S., a key concept is "commerce" or "commercial 
purposes." Under TSCA, a "new chemical substance" means any chemical 
substance that is not included in the chemical substance list compiled 
and published under TSCA section 8(b), i.e., it not on the TSCA 
Inventory and generally has not been manufactured or processed for 
commercial purposes in the United States since three years before the 
passage of TSCA. Conversely, an "existing chemical" is generally one 
that is on the TSCA Inventory and is or has been (since the 
establishment of the Inventory) in commerce. As both Canada and the EU 
approaches are somewhat different as to what delineates a "new" versus 
"existing" chemical, the comparisons are often awkward and in some 
cases not appropriate. The definitions are fundamental to understanding 
the approaches and establish key differences not accounted for in the 
Report and more specifically in the two comparison tables. While the 
footnotes attempt to correct the problem, the questions in the table 
which are the focus of the points under consideration are often not 
aligned with the U.S. definitions and, therefore, approaches. For 
example, in the new chemicals table, the third question asks about an 
annual requirement for the disclosure of production quantities of new 
chemicals. . Given the U.S. definition of new chemicals (generally not 
in commerce), the answer is an automatic no without regard to the fact 
that these substances would be considered an "existing" chemical if in 
production. One approach to deal with this is to use language such as 
"new chemicals or, in the case of the U.S., former new chemicals." This 
point should be explained the first time it appears.  

The Report does not reflect the range of regulatory options for new and 
existing chemicals, instead focusing on the most restrictive of the 
TSCA options, setting-up an awkward and inappropriate comparison with 
the other governments' authorities. With regard to TSCA authority, the 
Report focuses almost exclusively on sections 4 and 6, which suggests 
that they are the only mechanisms available to facilitate the 
development of data and reduction of risks in the statute. As reflected 
in your earlier detailed report GAO 05-458, this is clearly not the 
case and therefore sets the stage for an inaccurate comparison with the 
other governments' authorities. In addition, it should be noted, the 
framework of options in the U.S. for controlling chemical risks 
identified under the authorities of TSCA is larger than this one 
statute. This point is also generally true for Canadian and EU systems. 

The Report does not offer the same level of information across the four 
regulatory approaches of TSCA, CEPA, EU current chemical legislation 
and proposed REACH. A more complete description of the parameters at 
play in CEPA and the EU current and proposed authorities would offer a 
more balanced observation. For example, on page 7, the first paragraph 
describes the EU assessment process. In the last sentence there is 
reference to a determination if more information is needed and risk 
reduction measure decisions. While with the U.S. description there is 
more specific detailed information on "findings" that trigger these 
actions, there is no discussion with regards to the findings or factors 
that are considered within the EU before regulating a chemical. It 
seems appropriate that the CEPA and EU legislative authorities be given 
similar treatment as the U.S. authority so that more fully-informed 
comparisons can be made. 

In addition, the Report does not address enforcement, an important 
component of any chemical regulation scheme. The U.S. has specific 
enforcement authorities to support chemical review and control 
regulations. The Report would benefit from a discussion of the various 
enforcement capabilities across the various schemes of U.S., Canada and 
the EU compared in the document. 

Thank you for this opportunity to review and comment on the report GAO-
06-217R, "Chemical Regulation: Approaches in the United States, Canada, 
and the European Union. " We look forward to continuing to work with. 
the General Accountability Office and Congress on our efforts to ensure 
chemical safety and protection of human health and the environment. 

Sincerely, 

Signed for: 

Charles M. Auer: 
Director: 
Office of Pollution Prevention and Toxics: 

Attachment: 

(360615): 

FOOTNOTES 

[1] Pub. L. No. 94-469, 40 Stat. 2003 (1976) (codified at 15 U.S.C.  
2601-2692). 

[2] 15 U.S.C.  2605. Unlike Canadian and European Union legislation, 
which subject chemical companies to notification requirements only 
after manufacturing has begun, and production or marketing of the 
chemical reaches a certain level, TSCA requires a premanufacture 
notice. 

[3] 15 U.S.C.  2604. 

[4] These chemicals reviewed do not include EPA's review of the 
chemicals manufactured by companies that EPA exempted from the 
premanufacture notice requirements: 717 Test Marketing Exemption 
Applications; 7,888 Low Volume Exemptions; 35 Low Release/Low Exposure 
Exemptions; and 2,530 Polymer Exemptions. EPA may exempt a chemical 
company from the premanufacture notice requirement, upon application 
from the company showing to EPA's satisfaction that the chemical will 
not present any unreasonable risk of injury to human health or the 
environment. 

[5] The current European Union chemical legislation consists of four 
major pieces of legislation with adaptations to technical progress over 
the years: Council Directive 67/548/EEC: "Classification, Packaging and 
Labeling of Dangerous Substances," Council Directive 76/769/EEC: 
"Marketing and Restrictions," Council Regulation 793/93: "Existing 
Substances Evaluation," and Council Directive 88/379/EEC, as replaced 
by 99/45/EC: "Preparations" as well as a number of other directives. In 
general, a European Union directive is a binding collective decision 
made by the member states, acting through their national Government 
Ministers in the Council of the European Union and the Parliament. 

[6] According to a European Union official, the competent authority 
acts on behalf of all member states and informs these agencies of the 
notification. Normally, the applicant must wait 60 days for a reaction 
to this notification before marketing a chemical. The amount of test 
data required, increases with the volume marketed. 

[7] New chemicals are identified as those not listed on the European 
Inventory of Existing Commercial Chemical Substances (EINECS), a list 
of approximately 100,000 chemicals deemed to be on the European 
Community market on September 18, 1981. 

[8] The European Union is currently considering a proposal known as 
REACH. COM 2003 0644 (03), Proposal for a Regulation of the European 
Parliament and of the Council concerning the Registration, Evaluation, 
Authorisation and Restriction of Chemicals (REACH), establishing a 
European Chemicals Agency and amending Directive 1999/45/EC and 
Regulation (EC) {on Persistent Organic Pollutants} Proposal for a 
Directive of the European Parliament and of the Council amending 
Council Directive 67/548/EEC in order to adapt it to Regulation (EC) of 
the European Parliament and of the Council concerning the registration, 
evaluation, authorisation, and restriction of chemicals. A European 
Union representative estimates that the earliest possible adoption of 
REACH is the end of 2006 with the first registrations arriving in 2010. 

[9] GAO, Chemical Regulation: Options Exist to Improve EPA's Ability to 
Assess Health Risks and Manage Its Chemical Review Program, GAO-05-458 
(Washington, D.C.: June 13, 2005). 

[10] Corrosion Proof Fittings v. EPA, 947 F.2d 1201 (5th Cir. 1991). 

[11] Premanufacture notices are also generally required for new uses of 
an existing chemical if EPA promulgates a rule determining that the use 
of the chemical constitutes a significant new use. 

[12] EPA could also take these actions for a use of a chemical that EPA 
has determined by rule is a significant new use. 

[13] GAO-05-458. 

[14] The Ministers must be satisfied that (a) the chemical may have a 
long-term harmful effect on the environment and is (i) persistent and 
bioaccumulative in accordance with the regulations, and (ii) inherently 
toxic to human beings or non-human organisms, as determined by 
laboratory or other studies, and (b) the presence of the chemical in 
the environment results primarily from human activity. A substance is 
toxic if it is entering or may enter the environment in a quantity or 
concentration or under conditions that (a) have or may have an 
immediate or long-term harmful effect on the environment or its 
biological diversity; (b) constitute or may constitute a danger to the 
environment on which life depends; or (c) constitute or may constitute 
a danger in Canada to human life or health. 

[15] This includes the initial TSCA Inventory as well as those new 
chemicals which commenced manufacturing and thus were added to the 
Inventory. 

[16] For additional information on EPA's use of models, see our report 
GAO-05-458. 

[17] New chemicals that are accepted as being in commercial use 
internationally are listed on the Non-Domestic Substances List--which 
is based on the TSCA Inventory--and are subject to lesser requirements. 
Unless otherwise noted below, we are referring to new chemicals that 
are not on the Non-Domestic Substances List. 

[18] 15 U.S.C.  2613.