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CBI's Disclosure Threatens Specialty Chemical Industry's Competitiveness
9:38 AM MDT | April 10, 2012 | By LAWRENCE SLOAN
By Lawrence Sloan, President and CEO, Socma
There’s been a lot of talk lately about Confidential Business Information (CBI) and the Toxic Substances Control Act (TSCA). During my opening remarks at this year’s GlobalChem Conference, I highlighted industry concerns about broadly lifting restrictions. In addition, Jim Jones, Acting Assistant Administrator for the Office of Chemical Safety and Pollution Prevention at the Environmental Protection Agency (EPA), expressed in his speech an interest in finding some sort of middle ground that could balance the importance of maintaining trade secrets with public access to the identity of chemicals involved in health and safety studies.
In 2010, the EPA publicly announced its intent to request that industry revisit CBI claims for those chemicals no longer demanding protection. The agency has reviewed more than 1,100 CBI documents, and more than 550 have been made public. Socma has publicly stated, in both Congressional testimony and elsewhere that over-claiming of CBI by industry has been a problem. To assist EPA in its quest, we urged Socma members to limit future confidentiality claims where practical and to review older claims to assess if they were still warranted. As a first priority, we wanted to be part of the solution.
In the fall of the past year, however, EPA submitted a proposal to the Office of Management and Budget (OMB) that would eliminate CBI protections for filings regarding new chemicals (Pre-Manufacture Notices). Time out! Why? Because the specialized nature of the type of chemistry that Socma members perform is what makes this sector so unique and vital to the development of newer, greener, safer chemicals.
A measure such as this portends significant and potentially damaging implications for the entire chain of commerce from raw material supplier to consumer and should not be taken lightly.
Given the narrow applications for which specialty chemicals are used and the niche markets they serve, disclosure of chemical identity may be all it takes to give away a competitive advantage and reduce innovation in the U.S. In many cases, the confidentiality of chemical identity is all a specialty chemical producer has to remain in business. The incentive to develop new chemicals, including “green” chemicals that the EPA regularly promotes, largely disappears if manufacturers know there is a high risk that their novel idea will be revealed.
Disclosing chemical identity will primarily benefit our foreign competitors, who are hungry to mine U.S. intellectual property. The U.S. government has reportedly accused China of playing a role in the theft of trade secrets from DuPont regarding its technology to manufacture titanium dioxide (TiO2). Such cases would be far more commonplace if our government facilitated them, as through EPA’s proposed action.
The patent system is usually not a viable substitute for protecting CBI. It is impossible to patent a molecule that anyone else has ever made, even if they did so for a completely different purpose. That leaves only the possibility of patenting the manufacturing process itself, which is difficult at best and certainly time-consuming and expensive. Finally, patents are of no help in nations like China that do not meaningfully enforce them. As a result, most companies are required to protect chemical identity as a trade secret.
Finally, it is important to note that TSCA is not the only U.S. statute that governs the release of CBI, and under other laws, entities can gain access to CBI to assure their own protection or that of others. For example, the Occupational Safety and Health Administration’s hazard communication standard permits employees and labor unions to obtain access to the specific chemical identity subject to signing a confidentiality agreement. Similarly, downstream customers may obtain access to trade secret chemical identities from their suppliers by entering a confidentiality agreement. Another example is the Emergency Planning and Community Right to Know Act (EPCRA), under which a treating physician can get access to CBI without a previous confidentiality agreement.
Chemicals management in the U.S. does not require sweeping changes in order to meet today’s challenges. The regulatory system under current TSCA law could be made stronger and more effective by adopting appropriately tailored enhancements. This will help ensure America’s global competiveness and retain invaluable U.S. jobs, while meeting needs for access to health and safety data on chemicals used in consumer products.
Footnote: SOCMA launched ChemicalsInCommerce.com last year to dispel some of the common myths involving CBI and similar issues that have driven much of the TSCA reform discussions over the past several years. In order for the debate on TSCA modernization to be productive, the facts need to be clearly understood.