The National Law Forum

On June 1, 2018, the U.S. Environmental Protection Agency (EPA) announced that it took “three important steps” intended to ensure chemical safety under the Frank R. Lautenberg Chemical Safety for the 21st Century Act (Lautenberg Act), which amended the Toxic Substances Control Act (TSCA).  EPA released the following for public comment:  (1) the first ten problem formulation documents, (2) EPA’s systemic review approach document, and (3) a significant new use rule (SNUR) proposal enabling EPA to prevent new uses of asbestos, “the first such action on asbestos ever proposed.”  As noted below, the due dates for public comments on the documents will be available when EPA publishes them in the Federal Register.

Problem Formulation Documents

On December 19, 2016, EPA published a list of the first ten chemicals selected for review under the Lautenberg Act — asbestos, 1-bromopropane (1-BP), carbon tetrachloride, 1,4-dioxane, cyclic aliphatic bromide cluster (HBCD), methylene chloride, n-methylpyrrolidone (NMP), perchloroethylene, C.I. Pigment Violet 29, and trichloroethylene (TCE).  In June 2017, EPA published the scope of the risk evaluations to be conducted for these first ten chemical substances, including the hazards, exposures, conditions of use, and potentially exposed or susceptible subpopulations (PESS) that EPA expects to consider.  In May, EPA published a response to comments document (Response to Comments) that addresses cross-cutting comments submitted in response to the scope documents for these ten chemical substances.  It addresses comments that may be applicable to issues impacting all ten chemicals.  EPA notes that the responses in the document represent its “preliminary reactions to some of the comments received, as the Agency has not reached final decisions on the approaches to the 10 risk evaluations.”

EPA describes the problem formulation documents released on June 1, 2018, as “an important interim step prior to completing and publishing the final risk evaluations by December 2019.”  The problem formulation documents clarify the chemical uses that EPA expects to evaluate and describe how EPA expects to conduct the evaluations.  Comments on the problem formulation documents will be due in 45 days upon publication in the Federal Register.

Each of the problem formulation documents notes that TSCA Section 6(b)(4)(D) requires EPA to publish the scope of the risk evaluation to be conducted, including the hazards, exposures, conditions of use and PESS that the Administrator expects to consider.  Each of EPA’s scope documents published in June 2017 explains that because there was insufficient time for EPA to provide an opportunity for comment, as EPA intends to do for future scope documents, EPA is publishing and taking public comment on the problem formulation documents to refine the current scope, as an additional interim step prior to publication of the draft risk evaluations.  Comments received on the problem formulation documents will inform development of the draft risk evaluation.

Asbestos

According to the problem formulation document for asbestos, EPA has identified the ongoing use of chrysotile asbestos in:  industrial processes in the chlor-alkali industry; asbestos sheet gaskets for use in equipment used in the manufacture of titanium dioxide; and asbestos brake blocks in oilfield equipment and aftermarket asbestos brake linings.  In addition, certain asbestos-containing products can be imported into the U.S., but the amounts are not known.  These products are mostly used in industrial processes (e.g., cement products) but could also be used by consumers, and include woven products and automotive brakes and linings.  EPA is excluding legacy uses, associated disposals, and legacy disposals from the problem formulation and risk evaluation, as it did in the scope document.  EPA states that it is excluding these activities “because EPA generally interprets the mandates under section TSCA § 6(a)-(b) to conduct risk evaluations and any corresponding risk management to focus on uses for which the manufacture, processing or distribution is intended, known to be occurring, or reasonably foreseen, rather than reaching back to evaluate the risks associated with legacy uses, associated disposal, and legacy disposal, and interprets the definition of conditions of use in that context.”

In previous Integrated Risk Information System (IRIS) assessments, EPA identified asbestos as a carcinogen causing both lung cancer and mesothelioma from inhalation exposures and derived a unit risk to address both cancers.  According to the problem formulation, “[g]iven the well-established carcinogenicity of asbestos for lung cancer and mesothelioma, EPA decided to limit the scope of its systematic review to these two specific cancers with the goal of updating, or reaffirming, the existing cancer unit risk.”  EPA will evaluate the inhalation hazards based on the specific exposure scenarios identified for workers, consumers, and the general population where applicable.

EPA has created a web page regarding its risk evaluation of asbestos.  Materials are available there and in Docket EPA-HQ-OPPT-2016-0736.

1-BP

The problem formulation document for 1-BP states that 1-BP is primarily used as a solvent cleaner in vapor and immersion degreasing operations to clean optics, electronics, and metals, but it has also been reported to be used as an alternative to ozone-depleting substances and chlorinated solvents, as a solvent vehicle in industries using spray adhesives such as foam cushion manufacturing, and in the dry cleaning industry.  Information from the 2016 Chemical Data Reporting (CDR) for 1-BP indicates the reported production volume is 25.9 million pounds per year (manufacture and import).  According to EPA, exposures to workers, consumers, and/or the general population may occur from industrial, commercial, or consumer uses of 1-BP and industrial releases to air, water, or land.  Workers and occupational non-users (ONU) (i.e., workers who do not directly handle the chemical but perform work in an area where the chemical is used) may be exposed to 1-BP during a variety of conditions of use such as manufacturing, processing, distribution, repackaging, spray adhesives, dry cleaning (including spot cleaning), and degreasing (vapor, cold cleaning, and aerosol).  Consumers and bystanders (non-product users that are incidentally exposed to the product) may be exposed to 1-BP from various consumer uses such as aerosol and spray adhesives, aerosol spot removers, and aerosol cleaning and degreasing products.  For 1-BP, EPA states that it considers workers, ONUs, consumers, bystanders, and certain other groups of individuals who may experience greater exposures than the general population due to proximity to conditions of use to be PESS.  Exposures to the general population may occur from industrial and/or commercial uses; industrial releases to air, water, or land; and other conditions of use.  EPA will evaluate whether groups of individuals within the general population may be exposed via pathways that are distinct from the general population due to unique characteristics (e.g., life stage, behaviors, activities, or duration) that increase exposure and whether groups of individuals have heightened susceptibility and should, therefore, be considered PESS for purposes of the risk evaluation.

EPA plans to analyze further inhalation exposures to vapors and mists for workers and ONUs and dermal exposures for skin contact with liquids in occluded situations for workers in the risk evaluation.  EPA plans to analyze further inhalation exposures to vapors and mists for consumers and bystanders and dermal exposures for skin contact with liquids in the risk evaluation.  According to the problem formulation, for environmental release pathways, EPA does not plan to analyze further surface water exposure to aquatic invertebrates and aquatic plants in the risk evaluation.

EPA has created a web page regarding its risk evaluation of 1-BP.  Materials are available there and in Docket EPA-HQ-OPPT-2016-0741.

Carbon Tetrachloride

According to the problem formulation document for carbon tetrachloride, currently it is used as a feedstock in the production of hydrochlorofluorocarbons (HCFC), hydrofluorocarbons (HFC), and hydrofluoroolefins (HFO).  EPA has identified information on the regulated use of carbon tetrachloride as a process agent in the manufacturing of petrochemicals-derived and agricultural products and other chlorinated compounds such as chlorinated paraffins, chlorinated rubber, and others that may be used downstream in the formulation of solvents for degreasing and cleaning, adhesives, sealants, paints, coatings, rubber, cement, and asphalt formulations.  The use of carbon tetrachloride for non-feedstock uses (i.e., process agent, laboratory chemical) is regulated in accordance with the Montreal Protocol.

Recent data on environmental releases from the Toxics Release Inventory (TRI) indicate that approximately 153,000 pounds of carbon tetrachloride were released to the environment in 2015.  Most of the reported environmental releases for carbon tetrachloride were air emissions (fugitive and point source air emissions).

EPA states that exposure may occur through inhalation and oral and dermal pathways “due to carbon tetrachloride’s widespread presence in a variety of environmental media such as air, drinking water, groundwater, and surface water.”  Exposures to the general population may occur from industrial, and/or commercial uses; industrial releases to air, water, or land; and other conditions of use.  Workers and ONUs may be exposed to carbon tetrachloride during a variety of conditions of use, such as manufacturing, processing, and industrial and commercial uses, including manufacturing of refrigerants and other chlorinated compounds.  According to EPA, it expects that the highest exposures to carbon tetrachloride generally involve workers in industrial and commercial settings.  EPA considers workers and ONUs to be PESS.  EPA will evaluate whether groups of individuals may be exposed via pathways that are distinct due to unique characteristics that increase exposure and whether groups of individuals have heightened susceptibility and should, therefore, be considered PESS for purposes of the risk evaluation.

EPA has created a web page regarding its risk evaluation of carbon tetrachloride.  Materials are available there and in Docket EPA-HQ-OPPT-2016-0733.

1,4-Dioxane

The problem formulation document for 1,4-dioxane states that it is currently used in industrial processes and for industrial and commercial uses.  Industrial processing uses include use as a processing aid and in functional fluids in open and closed systems.  1,4-Dioxane has uses as a laboratory chemical reagent, in adhesives and sealants, and several other identified uses.  Historically, 90 percent of 1,4-dioxane produced was used as a stabilizer in chlorinated solvents such as 1,1,1-trichloroethane (TCA).  Use of 1,4-dioxane has decreased since TCA was phased out by the Montreal Protocol in 1996.

The most recent data on environmental releases, according to TRI, indicate that approximately 675,000 pounds of 1,4-dioxane were released to the environment in 2015.  Releases are reported to all types of environmental media:  air, water, and land.  The environmental fate of 1,4-dioxane is characterized by partitioning to the atmosphere, surface water, and groundwater, and degradation by atmospheric oxidation or biodegradation.  It is expected to be moderately persistent in the environment and has a low bioaccumulation potential.

Workers and ONUs may be exposed to 1,4-dioxane during industrial and commercial conditions of use such as manufacturing, processing, distribution, use, and disposal.  EPA plans to analyze further inhalation exposures to vapors and mists for workers and ONUs and dermal exposures for skin contact with liquids in occluded situations for workers in the risk evaluation.  For environmental release pathways, EPA plans to include surface water exposure to aquatic vertebrates, invertebrates, and aquatic plants, exposure to sediment organisms, and exposure to 1,4-dioxane in land-applied biosolids in the risk evaluation.

EPA has created a web page regarding its risk evaluation of 1,4-dioxane.  Materials are available there and in Docket EPA-HQ-OPPT-2016-0723.

HBCD

According to the problem formulation document for HBCD, its primary use is as a flame retardant in expanded polystyrene (EPS) foam and extruded polystyrene (XPS) foam in the building and construction industry for thermal insulation boards and foam insulation panels.  HBCD also has limited use in replacement parts for automobiles.  Past uses of HBCD have included use in HIPS (high impact polystyrene) and textiles.  EPA states that information gathered from research, industry, and consumer product organizations, however, led it to conclude that those past uses are not ongoing; there is no longer manufacture, processing, or distribution of HBCD for HIPS or textiles; therefore, those uses are not included in the scope of the risk evaluation of HBCD.

With the listing of HBCD as a persistent organic pollutant under the Stockholm Convention in 2013, industry began to phase out the manufacture and use of HBCD.  In recent years, domestic manufacture of HBCD has ceased.  Some HBCD was imported in 2017, and EPA states that it believes that a small amount of import may be ongoing.  Use of stockpiles and exportation from the U.S. was completed at the end of 2017.  EPA concluded that the import and processing of HBCD for use in EPS and XPS in buildings may be ongoing.

According to EPA, the conditions of use of EPS and XPS building insulation are within the scope of the evaluation and are anticipated to continue to contribute to exposures in indoor environments.  In indoor environments, there may also be exposures resulting from legacy uses of HBCD in articles (textiles, electronics, and electrical products) containing HBCD.  EPA expects these exposures to decline over time as use of these articles is phased out.  The time scales for this are dependent on the age of the products, their useful service lives, and time lines for replacement.

While EPA expects environmental exposures to decline as the importing and processing of HBCD are phased out, based on past production volumes (millions of pounds per year) and the only recent cessation of domestic manufacturing, EPA states that “reductions in environmental concentrations will occur gradually over a period of time for this persistent and bioaccumulative compound.”

According to EPA, exposures to workers, consumers, and/or the general population may occur from industrial, commercial, and consumer uses of HBCD and releases to air, water, or land.  Workers and ONUs may be exposed to HBCD during conditions of use such as import, processing, distribution, repackaging, and recycling.  Consumers and bystanders may also be exposed to HBCD via inhalation of particulates, dermal contact with HBCD in articles, and oral exposure via ingestion of settled dust.  Exposures to the general population may occur from industrial releases related to the import, processing, distribution, and use of HBCD.  For HBCD, EPA considers workers, ONUs, consumers, bystanders, and certain other groups of individuals who may experience greater exposures than the general population due to proximity to conditions of use to be PESS.  EPA states that it will evaluate whether groups of individuals within the general population may be exposed via pathways that are distinct from the general population due to unique characteristics that increase exposure and whether groups of individuals have heightened susceptibility and should, therefore, be considered PESS subpopulations for purposes of the risk evaluation.

For aquatic ecological receptors, EPA states that it expects sediment-dwelling benthic species to be exposed to HBCD.  Exposures to pelagic species are also expected from HBCD present in surface water.  Trophic magnification may result in greater exposure following bioaccumulation.  According to EPA, it expects that aquatic and terrestrial species will be exposed to HBCD through the dietary exposure pathway.  EPA will consider which aquatic and terrestrial species are related via the food chain.

EPA has created a web page regarding its risk evaluation of HBCD.  Materials are available there and in Docket EPA-HQ-OPPT-2016-0735.

Methylene Chloride

The problem formulation document for methylene chloride states that methylene chloride, also known as dichloromethane and DCM, “is a volatile and high production volume (HPV) chemical that is used as a solvent in a wide range of industrial, commercial and consumer applications.”  In 2015, more than 260 million pounds of methylene chloride was reported to be manufactured (including imported) in the U.S.  The primary uses for methylene chloride are paint stripping and removal (30 percent), adhesives (22 percent), pharmaceuticals (11 percent), metal cleaning (eight percent), aerosols (eight percent), chemical processing (eight percent), flexible polyurethane foam (five percent), and miscellaneous (eight percent).

Exposures may occur to workers, ONUs, consumers, bystanders, and the general population through inhalation, dermal, and oral pathways.  Workers and ONUs may be exposed to methylene chloride during a variety of conditions of use, such as manufacturing, processing, and industrial and commercial uses, including uses in paint removal, adhesives, and degreasing.  EPA states that it expects that the highest exposures to methylene chloride generally involve workers in industrial and commercial settings.  Methylene chloride can be found in numerous products and can, therefore, result in exposures to commercial and consumer users in indoor or outdoor environments.  For methylene chloride, EPA considers workers, ONUs, consumers, bystanders, and certain other groups of individuals who may experience greater exposures than the general population due to proximity to conditions of use to be PESS.  Exposures to the general population may occur from industrial and/or commercial uses; industrial releases to air, water, or land; and other conditions of use.  EPA will evaluate whether groups of individuals within the general population may be exposed via pathways that are distinct from the general population due to unique characteristics that increase exposure and whether groups of individuals have heightened susceptibility and should, therefore, be considered PESS for purposes of the risk evaluation.  EPA plans to analyze further inhalation exposures to vapors and mists for workers and ONUs and dermal exposures for skin contact with liquids in occluded situations for workers in the risk evaluation.  EPA plans also to analyze further inhalation exposures to vapors and mists for consumers and bystanders and dermal exposures for skin contact with liquids in the risk evaluation.  For environmental release pathways, EPA plans to analyze further surface water exposure to aquatic invertebrates and aquatic plants in the risk evaluation.

EPA has created a web page regarding its risk evaluation of methylene chloride.  Materials are available there and in Docket EPA-HQ-OPPT-2016-0742.

NMP

The problem formulation document for NMP states that it is an HPV chemical that is widely used during the manufacture and production of polymers, pharmaceuticals, agrichemicals, and petroleum products.  In 2015, more than 160 million pounds of NMP was reported to be manufactured (including imported) in the U.S.  According to a recent EPA market report, the primary uses for NMP include petrochemical processing, engineering plastic coatings, electronics, pharmaceutical and agrichemical manufacturing, and solvent cleaning.

Exposures may occur to workers and ONUs, consumers, bystanders, and members of the general population.  Workers and ONUs may be exposed to NMP during various conditions of use (e.g., manufacturing, processing, and industrial/commercial uses).  General population exposures may result from industrial and/or commercial uses; industrial releases to air, water, or land; and other conditions of use.  EPA states that it expects the highest exposures will generally involve workers in industrial and commercial settings.  EPA notes that NMP occurs in numerous consumer products, however, and can result in exposures outside the occupational setting.  EPA considers workers, ONUs, consumers, bystanders, and certain other groups of individuals who may experience greater exposures than the general population to be PESS.  During the risk evaluation, EPA expects to analyze further inhalation exposures to NMP vapor and mist (for workers, ONUs, consumers, and bystanders).  EPA also expects to analyze dermal exposures from direct contact with NMP-containing liquids (for workers and consumers) and indirect exposure from vapor-through-skin contact (for workers, ONUs, consumers, and bystanders).

EPA has created a web page regarding its risk evaluation of NMP.  Materials are available there and in Docket EPA-HQ-OPPT-2016-0743.

Perchloroethylene

According to the problem formulation document for perchloroethylene, perchloroethylene is an HPV solvent.  According to the 2016 CDR, more than 324 million pounds of perchloroethylene were manufactured (including imported) in the U.S. in 2015.  Perchloroethylene is primarily used to produce fluorinated compounds, such as HFCs and HCFCs (65 percent) followed by dry cleaning (15 percent) and vapor degreasing solvents (ten percent).  Other uses can be quite varied, including:  adhesives; degreasing; brake cleaner; laboratories; lubricants; mold cleaners, releases, and protectants; oil refining; sealants; stainless steel polish; tire buffers and cleaners; and vandal mark removers.

Exposures may occur to workers, ONUs, consumers, bystanders, and the general population through inhalation, dermal, and oral pathways.  Workers and ONUs may be exposed to perchloroethylene during a variety of conditions of use, such as manufacturing, processing, and industrial and commercial uses, including uses in degreasing and adhesives.  EPA states that it expects that the highest exposures to perchloroethylene generally involve workers in industrial and commercial settings.  Perchloroethylene can be found in numerous products and can, therefore, result in exposures to commercial and consumer users in indoor or outdoor environments.  For perchloroethylene, EPA considers workers, ONUs, consumers, bystanders, and certain other groups of individuals who may experience greater exposures than the general population due to proximity to conditions of use to be PESS.  Exposures to the general population may occur from industrial and/or commercial uses; industrial releases to air, water, or land; and other conditions of use.  EPA states that it will evaluate whether groups of individuals within the general population may be exposed via pathways that are distinct from the general population due to unique characteristics that increase exposure and whether groups of individuals have heightened susceptibility and should, therefore, be considered PESS for purposes of the risk evaluation.  EPA plans to analyze further inhalation exposures to vapors and mists for workers and ONUs and dermal exposures for skin contact with liquids in occluded situations for workers in the risk evaluation.  For environmental release pathways, EPA plans to analyze further surface water exposure to aquatic vertebrates, invertebrates, and aquatic plants and exposure to sediment-dwelling organisms.

EPA has created a web page regarding its risk evaluation of perchloroethylene.  Materials are available there and in Docket EPA-HQ-OPPT-2016-0732.

C.I. Pigment Violet 29

The problem formulation document for C.I. Pigment Violet 29 states that it is an organic pigment found in the following uses:  (1) colorant primarily in paints and coatings, plastics, and rubber products, and merchant ink for commercial printing; (2) intermediate to create or adjust the color of other perylene pigments; (3) formulation, mixture, or reaction product; and (4) consumer watercolor and artistic color.

According to EPA, analysis of manufacturing conditions, uses, and engineering controls of C.I. Pigment Violet 29 indicates that releases from manufacturing, processing, distribution, use, and disposal are expected to be limited.  Physical-chemical characteristics (i.e., low vapor pressure, low water solubility, high sorption to organic matter, high molecular weight, high Log Kow) indicate exposures would be limited if C.I. Pigment Violet 29 is released to the environment.

EPA states that based on limited releases, low potential for environmental and human exposures, and a low toxicity profile for mammals and aquatic species, it concludes that further analysis of these exposure pathways to workers, consumers, the general population, and environmental receptors is not warranted for C.I. Pigment Violet 29.

EPA has created a web page regarding its risk evaluation of C.I. Pigment Violet 29.  Materials are available there and in Docket EPA-HQ-OPPT-2016-0725.

TCE

According to the problem formulation document for TCE, TCE is a volatile organic liquid that is classified as a human carcinogen.  In the 2014 TCE risk assessment, EPA assessed inhalation risks from TCE in vapor and aerosol degreasing, spot cleaning at dry cleaning facilities, and arts and craft uses, and also completed four supplemental analyses.  Based on these analyses, EPA notes that it published two proposed rules to address the risks presented by TCE use in vapor degreasing and in commercial and consumer aerosol degreasing and for spot cleaning at dry cleaning facilities.

Information on domestic manufacture, processing, use, and disposal of TCE is available to EPA through CDR and TRI.  In 2015, approximately 172 million pounds of TCE was manufactured or imported in the U.S.  An estimated 83.6 percent of TCE’s annual production volume is used as an intermediate in the manufacture of HFC-134a — an alternative to the refrigerant CFC-12.  Another 14.7 percent of TCE production volume is used as a degreasing solvent, leaving approximately 1.7 percent for other uses, including consumer uses.  Based on 2015 TRI data, most reported environmental releases of TCE are to air, with much lower volumes disposed to land or released to water.  According to EPA, TCE is expected to be moderately persistent in the environment and has a low bioaccumulation potential.

Exposure may occur through inhalation, oral, and dermal pathways, due to TCE’s widespread presence in a variety of environmental media.  Exposures to the general population may occur from industrial and/or commercial uses; industrial releases to air, water, or land; and other conditions of use.  Workers and ONUs may be exposed to TCE during a variety of conditions of use, such as manufacturing, processing, and industrial and commercial uses, including uses in paint and coatings, adhesives, and degreasing.  EPA states that it expects that the highest exposures to TCE generally involve workers in industrial and commercial settings.  TCE can be found in numerous products and can, therefore, result in exposures to commercial and consumer users in indoor or outdoor environments.  For TCE, EPA considers workers, ONUs, consumers, bystanders, and certain other groups of individuals who may experience greater exposures than the general population due to proximity to conditions of use to be PESS.  EPA will evaluate whether groups of individuals within the general population may be exposed via pathways that are distinct from the general population due to unique characteristics that increase exposure and whether groups of individuals have heightened susceptibility and should, therefore, be considered PESS for purposes of the risk evaluation.  For environmental release pathways, EPA plans to analyze further surface water exposure to aquatic species (i.e., aquatic plants) in the risk evaluation.

EPA has created a web page regarding its risk evaluation of TCE.  Materials are available there and in Docket EPA-HQ-OPPT-2016-0737.

Systemic Review Approach Document

EPA states that its systematic review approach document will guide its selection and review of studies in addition to providing the public with continued transparency regarding how EPA plans to evaluate scientific information.  The internal guidance document sets out general principles to guide EPA’s application of systematic review in the risk evaluation process for the first ten chemicals, as well as future evaluations.  Comments on the systematic review approach document will be due in 45 days upon publication in the Federal Register.

The Office of Pollution Prevention and Toxics (OPPT) plans to implement a structured process of identifying, evaluating, and integrating evidence for both the hazard and exposure assessments developed during the TSCA risk evaluation process.  As OPPT expects that new approaches and/or methods will be developed to address specific assessment needs for the relatively large and diverse chemical space under TSCA, OPPT intends to document the progress of implementing systematic review in the draft risk evaluations and through revisions of this document and publication of supplemental documents.

The systematic review approach document provides only the general expectations for evidence synthesis and integration.  Additional details on the approach for the evidence synthesis and integration will be included with the publication of the draft TSCA risk evaluations.  EPA states that “[‌u]ltimately, the goal is to establish an efficient systematic review process that generates high-quality, fit-for-purpose risk evaluations that rely on the best available science and the weight of the scientific evidence within the context of TSCA.”

EPA intends the information and procedures set forth in the document to be a technical resource to those conducting TSCA risk evaluations for existing chemicals.  EPA notes that non-mandatory language such as “should” provides recommendations and does not impose any legally binding requirements.  Similarly, “statements about what EPA expects or intends to do reflect general principles to guide EPA’s activities and not judgments or determinations as to what EPA will do in any particular case.”  According to EPA, the document is not necessarily applicable to risk assessments developed to support other EPA statutes or programs.  EPA expects to make changes to the living document at any time and, therefore, may periodically revise the document.

EPA described its initial work on systematic review in the supplemental files for each TSCA scope document, which included the Strategy for Conducting Literature Searches and the Bibliography for each chemical.  EPA has posted its Response to Commentsreceived on these supplemental documents.

Proposed Asbestos SNUR

For asbestos, EPA will propose a SNUR for certain uses of asbestos (including asbestos-containing goods) that would require manufacturers and importers to receive EPA approval before starting or resuming manufacturing and importing or processing of asbestos.  This review process would provide EPA with the opportunity to evaluate the intended use of asbestos and, when necessary, take action to prohibit or limit the use.  EPA has published a pre-publication version of the Federal Register notice.  Comments on the proposed SNUR will be due in 60 days upon publication in the Federal Register.

The notice states that the proposed significant new use of asbestos (including as part of an article) is manufacturing (including importing) or processing for certain uses identified by EPA as no longer ongoing.  According to the notice, EPA has found no information indicating that the following uses are ongoing, and therefore, the following uses are subject to the proposed SNUR:  adhesives, sealants, and roof and non-roof coatings; arc chutes; beater-add gaskets; extruded sealant tape and other tape; filler for acetylene cylinders; high-grade electrical paper; millboard; missile liner; pipeline wrap; reinforced plastics; roofing felt; separators in fuel cells and batteries; vinyl-asbestos floor tile; and any other building material (other than cement).

Persons subject to the SNUR would be required to notify EPA at least 90 days before commencing any manufacturing (including importing) or processing of asbestos (including as part of an article) for a significant new use.  The required notification initiates EPA’s evaluation of the conditions of use associated with the intended use within the applicable review period.  Manufacturing (including importing) and processing (including as part of an article) for the significant new use may not commence until EPA has conducted a review of the notice, made an appropriate determination on the notice, and taken such actions as are required in association with that determination.

Commentary

In EPA’s cross-cutting Response to Comments, EPA makes a number of key points that apply across all ten problem formulation documents and that we expect will inform future TSCA existing chemicals risk evaluation work.  EPA acknowledges that the ten scoping documents were not as detailed as expected, largely due to the very short timeframe available to complete each.  As such, EPA is refining the scope of each in the problem formulation documents.  EPA expects future scoping documents to be more robust, necessitating less revisions of the scope in future problem formulation documents.

EPA responds to comments related to conditions of use by reiterating that it will generally not consider misuse and off-label uses or “legacy” uses as conditions of use.  EPA points to the legislative history and the statutory language to support its view that conditions of use are “intended, known to be occurring, or reasonably foreseen to occur (i.e., is prospective or on-going).”  EPA also states that it will consider exposures from legacy uses on a case-by-case basis.  For example, EPA is excluding past use as a fuel additive from the conditions of use evaluated in the 1,4-dioxane risk evaluation.  1,4-Dioxane was used as a fuel additive in the past and EPA only found evidence that it was phased out from that use and no evidence of on-going use as a fuel additive.  Similarly, EPA found no current consumer uses of 1,4-dioxane, so is excluding consumer exposures from the risk evaluation.  While these uses will not be considered in the risk evaluation, EPA may opt to issue a SNUR banning such uses absent submission of a significant new use notice (SNUN) and EPA taking the necessary action under TSCA Section 5(e) or 5(f).  According to EPA, it can better focus its effort on active uses and protect against unreasonable risk in other potential uses during a review of a potential new use just as if 1,4-dioxane were a new chemical.Some stakeholders argue that EPA is not permitted to omit such a use from its risk evaluation, and that promulgating a SNUR prohibiting a use that is not on-going, but is otherwise reasonably foreseeable, effectively makes that use not reasonably foreseeable. The SNUR would prohibit that use just as a TSCA Section 6 risk management might.  In this way, EPA can effectively limit its risk evaluation and simultaneously be fully protective against future uses that were outside the scope of the risk evaluation.  This strikes us as an effective way for EPA efficiently to manage potential risks without undue effort evaluating speculative uses.

EPA also reiterated its view that it may exclude risks that are appropriately and adequately regulated under other authorities administered by either EPA or other Departments or Agencies.  Along the same vein, EPA responds to a comment related to ozone depletion potential (ODP) by pointing out that ODP is evaluated and effectively managed under the Clean Air Act.  In the 1,4-dioxane problem formulation document, EPA states that it views commercial and industrial air emissions of 1,4-dioxane as adequately managed as a Hazardous Air Pollutant under the Clean Air Act and will exclude risk to the general population from such emissions from the TSCA risk evaluation.  Similarly, because 1,4-dioxane concentrations are already being monitored under the Safe Drinking Water Act, EPA will exclude general population exposures via drinking water from its risk evaluation.  On the other hand, because EPA has yet to develop an ambient water quality standard for 1,4-dioxane under CWA 304(a), EPA will include risk to aquatic life in its risk evaluation.  EPA also stated that it may exclude presence as an impurity from the scope of the risk evaluation if EPA has a basis to foresee that the risk from the impurity would be de minimis or otherwise insignificant.

EPA states that it will describe whether aggregate or sentinel exposures were considered and will include its explanation in the risk evaluation.  In conducting an aggregate exposure, EPA may include exposures from non-TSCA uses.  For example, in the 1,4-dioxane problem formulation, EPA included uses that are regulated under the Federal Food, Drug, and Cosmetic Act (FFDCA).  EPA also intends to evaluate uses of 1,4-dioxane that might otherwise be eligible for the TSCA Research and Development (R&D) exemption.  EPA will also include potential exposure to 1,4-dioxane from volatilization that might occur during showering or bathing.

In referring to the scope of the risk evaluation, EPA uses some language that may be somewhat confusing.  For example, in Section 2.5.3.1 of the 1,4-dioxane problem formulation document, EPA states that there are “no environmental release and waste pathways for the environment or general population that EPA plans to include and further analyze in the risk evaluation.”  Given that EPA specifically states that it will evaluate general population and environmental effects elsewhere in the document, we interpret the statement in Section 2.5.3.1 to mean that there are no additionalpathways that EPA intends to include.  Similarly, in Section 2.5.3.2, EPA states that “[t]he pathways that EPA plans to include in the risk evaluation but not further analyze are ambient water exposures to aquatic vertebrates, invertebrates and aquatic plants, sediment and land-applied biosolids.”  Although EPA states that it does not intend to “further analyze” such exposures, EPA must mean that it is satisfied that the conceptual model that has already been identified is sufficient for the risk evaluation.

EPA does a good job in striking an excellent balance between the evaluation of all possible hazards and exposures to health and the environment and those for which (1) there is not otherwise adequate control; and (2) that are reasonably likely to occur above negligible levels.  In this way, EPA will make the most efficient use of its effort and limited resources under TSCA to protect health and the environment and avoid extensive time and resources to collect and analyze information that will be, at best, of marginal use in informing a risk decision.  EPA seeks input from stakeholders on all ten risk evaluations.

This article was written by Lynn L. Bergeson of Bergeson & Campbell, P.C.

To date, 34 states (including D.C.) have adopted Medicaid expansion. Of the remaining 17 states, some are considering expanding Medicaid. States with recent activity relating to Medicaid expansion include Florida, Idaho, Maine, Missouri, Nebraska, New Hampshire, North Carolina, Utah, and Virginia.  Last week, Virginia became the latest state to expand Medicaid and also tied a Medicaid work requirement to the expansion. California is also exploring expanding Medicaid to undocumented adults.

Below we have highlighted recent state grassroots, legislative, and executive action to expand Medicaid.

Approved Medicaid Expansion:

Maine

On November 7, 2017, Maine became the 33^rd state (including D.C.) to expand Medicaid and the first state to do so through a citizen’s initiative. The State legislature has previously voted on Medicaid expansion on five occasions. However, Governor LePage has repeatedly vetoed legislation expanding Medicaid.

Maine Question 2 requires the State to provide Medicaid through the State’s MaineCare for the new expansion population. The provision expands Medicaid to persons under the age of 65 with incomes equal to or below 138% FPL. The Maine Department of Health and Human Services has 90 days after the effective date to submit a State Plan Amendment to the HHS. The Governor has failed to meet the April 3rd State Plan Amendment submission deadline. On April 30, the Maine Equal Justice Partners filed suit against the State claiming, “The failure to expand Medicaid is harming low-income Mainers who by law should be eligible to receive Medicaid insurance this year.” On Thursday May 24, 2018, Kennebec County Superior Court Justice Michaela Murphy said, “Governor Paul LePage’s administration has a duty to enforce a voter-passed law.” According to local news, Judge Murphy did not indicate when she would issue a ruling.

Virginia

Introduced March 21, 2018, HB 5001 and 5002 expand Medicaid eligibility to 138% FPL. The Virginia Department of Medical Assistance is required to submit an amendment to the Medicaid State Plan and 1115 waiver to CMS no later than 45 days upon the passage of the bills from the Senate. Further, the proposed legislation establishes the Training, Education, Employment, and Opportunity Program (TEEOP). TEEOP will be required for all able-bodied working-age adults enrolled in the Medicaid program, ages 19 through 54. TEEOP requirements will gradually escalate, beginning at 20 hours per month, three months after enrollment, and increasing to 80 hours per month, 12 months after enrollment. With the exception of defined exemptions, enrollees shall be ineligible to receive Medicaid benefits if, during any three months of the plan year, they fail to meet the required engagement hours.

On April 17, 2018, HB 5001 and 5002 passed the House and was referred to the Senate. On May 30, 2018, HB 5001 and 5002 passed the Senate with substitute, a 23-Y, 17-N vote. Four Republicans crossed party lines to vote with the Democrats. Later that day (May 30, 2018) the House passed the Senate-passed version. Governor Northam is expected to sign the bills. Virginia will be the 2^nd state under the Trump Administration to expand Medicaid. (Virginia is the 34^th state to expand Medicaid.)

Considering Medicaid Expansion:

Idaho

Advocates are currently collecting signatures for an initiative that would place a Medicaid expansion measure on the November Ballot. According to a local grassroots advocacy group, Reclaim Idaho, the group turned over more than 60,000 valid signatures to the State Clerk by the May 1, 2018 deadline. On Thursday May 24, 2018, officials confirmed the proposal passed the signature threshold needed. However, officials stated further review is required before the initiative may be included on the November ballot.

Reclaim Idaho cites that 62,000 Idaho residents currently do not qualify for Medicaid or exchange subsidies. The state’s gubernatorial primary was May 15, 2018, with incumbent Governor Little winning the Republican ticket, and running against Democratic winner, Paulette Jordan, in November. The ballot initiative received mixed reviews from candidates; however, Lt. Governor Little recently stated that he would “adhere to the will of the voters.”

Nebraska

Led by The Fairness Project, Nebraska health care associations and advocacy groups are currently collecting signatures for an initiative that would place the Medicaid expansion measure on the November Ballot. Advocacy groups have until July 6, 2018, to submit the required 85,000 valid signatures. Governor Ricketts strongly opposes the initiative, stating, “Expanding Medicaid in Nebraska is a risky proposition for taxpayers not only because of the expense but also because we cannot trust the federal government’s long-term financial commitment to state programs.”

New Hampshire

New Hampshire’s current version of Medicaid Expansion, the New Hampshire Premium Assistance Program, is set to exhaust at the end of the 2018 fiscal year. SB 313 passed the House Committee on Health, Human Services and Elderly Affairs, with an adopted amendment May 3, 2018; the legislation is currently in the House Finance Committee. On May 10, 2018, the Senate approved SB 313, 16-6. If signed into law, the legislation replaces the New Hampshire Health Protection Program, establishing the Granite Advantage Health Care Program. Under the program, eligible individuals will choose coverage offered by one of the Medicaid contracted managed care organizations.

Additionally, the legislation establishes the Granite Workforce Pilot Program. The pilot program will utilize federal funds available from the TANF program for the purpose of job placement. Granite Workforce eligibility is contingent upon income, not to exceed 138% FPL; parents, or noncustodial parents, ages 18 through 64 with a child 18 and under in the household; and childless adults at least 18 years of age and under 25. New eligible adults the Department of Health and Human Services is required to apply for necessary waivers and state plan amendments to implement the 5-year demonstration program beginning January 1, 2019.

North Carolina

“H.B. 662- Carolina Cares” was introduced April 6, 2017, and referred to the Committee on Health Care Reform; it was last amended April 17, 2017. This bill, “Carolina Cares,” governs the components of the Carolina Cares program, outlined in the State’s 1115 waiver amendment submitted November 20, 2017. Under the proposed legislation, the population covered by the Carolina Cares program includes residents not eligible for Medicaid under the current Medicaid program criteria, individuals with a modified gross adjusted income not exceeding 133% FPL, residents not entitled to Medicare Part A or B, and residents between the ages of 19 and 64. Failure to complete premium contributions within 60 days of the due date will result in termination from the program, absent proof of any accepted exemptions.

Utah

Governor Herbert signed H.B. 472 March 27, 2018. The legislation expands Medicaid coverage to include those at or below 100% FPL and not eligible for enrollment in the Medicaid program, with the exception of the Primary Care Network Program. The Department of Health is required to submit a Waiver request to HHS by January 1, 2019. CMS to date has not approved waivers that provide the enhanced match rate unless a state implements the full expansion of 138% FPL. Under H.B. 472 a trigger clause is included that would scale back or sunset Medicaid expansion if the 90% enhanced federal match rates is reduced. The State further maintains the ability to cease new enrollment if the projected expansion costs exceeds the state appropriations for the fiscal year. Additionally, the HB 472 includes a work requirement provision for the new expansion population. (This is in addition to the 1115 waiver amendment Utah has submitted to CMS to include Medicaid work requirements for the non-expansion Medicaid population.)

In the 2018 November primary, Utah residents may vote to expand Medicaid to the ACA’s full FPL. The measures would require the State to provide Medicaid to persons under the age of 65 and with incomes below 138% FPL. To finance the State’s portion of the costs associated with expanding Medicaid, the initiative increases the sales tax to 4.85%, currently set at 4.7%. The advocacy group, Utah Decides Healthcare, submitted more than 165,000 valid signatures before the April 6^th deadline. Utah requires roughly 113,000 valid signatures for the inclusion of ballot initiatives.

The State’s Lieutenant Governor announced on May 29, 2018 that there are enough signatures to include the measure on the upcoming November election ballot. As of May 30, 2018, the initiative surpassed the 147,280 valid signatures needed in 26 of the 29 state Senate Districts.

Failed Medicaid Expansion:

Florida

SJR 1136 and HJR 911, Expansion of Medicaid Coverage, were introduced to the Florida House and Senate December 6, 2017. After referral and introduction within respective health subcommittees, SJR 1136 and HJR 911 were indefinitely postponed and withdrawn from consideration March 10, 2018.

Missouri

At the state legislative level, two bills (SB 713 and SB 731) that would expand Medicaid were under consideration. Introduced January 16, 2018, SB 713 would require the state to expand Medicaid to persons under the age of 65 and with incomes equal to or below 138% FPL by January 2019. After referral to the Committee on Seniors, Families, and Children, the proposed legislation ultimately failed on May 18, 2018. During this same period, SB 731 included the same Medicaid expansion language as SB 713; however, the legislation would require the measure to be included on the November 2018 ballot. The legislation failed in committee the same day at SB 713.

Separately, a citizen led initiative, The Missouri Medicaid Expansion Initiative, was filed September 6, 2017. The initiative received signature clearance in October; however, at the time of the May 6, 2018 deadline, signatures for the initiatives had not been filed.

Medicaid Expansion to Undocumented:

California

The California state legislature is considering two sister bills, SB 974 and AB 2965. The proposed bills expand the full scope of Medi-Cal benefits to undocumented adults over the age of 19 who, with the exception of their immigration status, would otherwise be eligible for Medicaid benefits. These individuals would be required to enroll into Medi-Cal manage care health plans. In addition, individuals will be required to pay copayments and premium contributions, to the extent required of otherwise eligible Medi-Cal recipients who are similarly situated.

The Legislature’s Analyst Office (LAO) estimates the total net state cost of expanding coverage is approximately $3 billion for 2018-2019. Approximately 3 million individuals living in California remain uninsured. The same report details nearly 60% of those uninsured lack legal status; of this population, approximately 1.2 million individuals would qualify for benefits through Medi-Cal. Governor Brown has not committed to either proposal, despite approval of SB 4 in 2015; the enacted legislation expands the full scope of Medi-Cal benefits to individuals under 19 years of age whom do not have, or are unable to establish , satisfactory immigration status. Governor Brown is set to leave office later this year.

This article was written by Katie Weider of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

A class action lawsuit was filed on May 3^rd against Ripple Labs Inc.—a fintech startup that controls the third-largest cryptocurrency in the world—and its CEO Brad Garlinghouse, alleging that Ripple sold unregistered, non-exempt securities in violation of federal and California state securities laws.

In their complaint, Plaintiffs characterized the sale of XRP (Ripple’s native token) as “a scheme by Defendants to raise hundreds of millions of dollars through the unregistered sale of XRP” and “what is essentially a never-ending initial coin offering (ICO).” In addition to attorney fees, costs of the suit, and punitive damages, the plaintiffs also request a declaration from the court that the sale of XRP is an unregistered securities sale and to enjoin defendants from further violating securities laws.

Plaintiffs alleged facts that correspond to the elements of the Howey test for determining whether an instrument qualifies as an “investment contract,” and thus, as security, under the federal securities laws. Specifically, the complaint states that XRP purchasers (1) made an investment of money, (2) in a common enterprise, (3) with a reasonable expectation of profits (4) derived predominantly from the essential managerial or entrepreneurial efforts of others.

This lawsuit comes in the wake of heightened SEC scrutiny of cryptoasset token issuances. As we’ve noted, SEC Chairman Jay Clayton has said in recent months that he has not seen a single token issued through an ICO that is not a security.

Ripple’s prominent position within the blockchain ecosystem, the relationship between XRP tokens and Ripple’s enterprise software, and the manner in which their tokens are distributed could form the basis for tremendously impactful judicial precedent with respect to ICOs.

We will continue to monitor developments in this area.

This article was written by Divya Taneja of Proskauer Rose LLP

A California jury recently awarded Apple $538.6 million in total damages for patent infringement by Samsung. This is the latest development in the patent battle between smartphone industry titans that began in 2011 and took another step towards completion.  The verdict arrived after five days of deliberations and seven months after Judge Koh ordered a second trial to determine appropriate damages in light of the U.S. Supreme Court decision in December of 2016.  The jury attributed $533.3 million for the infringement of Apple’s design patents and $5.3 million for infringement of Apple’s utility patents.

As we have covered here before, Apple originally filed this patent infringement action in the U.S. District Court for the Northern District of California in 2011, alleging that Samsung’s smartphones infringed three of Apple’s design patents, D593,087, D618,677, and D604,305. The design patents cover a black rectangular front face with rounded corners, a rectangular front face with rounded corners and a raised rim, and a grid of 16 colorful icons on a black screen.  Judge Koh presided over the dispute. The jury found that Samsung infringed all three design patents, and the district court entered final judgment awarding $399 million for the infringement. The Federal Circuit upheld the lower court’s judgment on the amount of damages for infringement of the design patents, and Samsung filed a petition for certiorari to the Supreme Court.

The Supreme Court reversed, explaining that, within the meaning of a 35 U.S.C. § 289 damages inquiry, the phrase “article of manufacture” need not be limited to the end product sold to the consumer, but may be a smaller component of that product. Samsung Elecs. Co. v. Apple Inc., 137 S. Ct. 429 (2016). The Supreme Court set aside the $399 million damage award, which represented the entire profit from the sale of the infringing Samsung smartphones.  Samsung argued that had the jury been able to consider components of a smartphone as the article of manufacture the resulting damage award would have been smaller.  As it turned out, Samsung was wrong.  When the jury considered the components of the smartphone, it found that Samsung owes Apple even more – $140 million more.

In the instructions to the jury, Judge Koh adopted a four-factor test to determine damages, essentially adopting the Solicitor General’s test and rejecting Samsung’s simpler two-step test.  The four factor test instructed jurors to consider the following:

1. The scope of the design claimed in Apple’s patent, including the drawing and written description;

2. The relative prominence of the design within the product as a whole;

3. Whether the design is conceptually distinct from the product as a whole; and

4. The physical relationship between the patented design and the rest of the product, including whether the design pertains to a component that a user or seller can physically separate from the product as a whole, and whether the design is embodied in a component that is manufactured separately from the rest of the product, or if the component can be sold separately.

Apple sought about $1 billion in damages – what a 2012 jury awarded them for Samsung’s infringement of these design patents.  Samsung, on the other hand, argued that it should pay only $28 million.  The amount of damages awarded suggests that the jury believed the design patents covered more than mere components of the smartphone and also shows that design patents can be an important part of a patent portfolio.

This article was written by Michael C. Newman and Patrick T. Driscoll of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Addressing an important contract-formation issue that has divided federal courts, the U.S. District Court for the Western District of Pennsylvania recently denied a company’s motion to compel arbitration because the consumer was not given “reasonable notice” of the arbitration clause.

The court in Jones v. Samsung Electronics America, Inc. declined to enforce the arbitration clause because it was located in the “Manufacturer’s Warranty” section of a 64-page “Important Information Booklet” contained in the phone’s sales box. None of the Booklet’s section headings referred to arbitration.

In Jones, the plaintiff, Brittany Jones, filed a class action against Samsung after her cell phone allegedly exploded and caught fire. Samsung moved to compel arbitration, relying in part on the U.S. Court of Appeals for the Seventh Circuit’s 1997 decision in Hill v. Gateway 2000, Inc., which enforced an arbitration clause contained in the shipping box that stated purchasers had 30 days to return the computer if they did not want to arbitrate.

According to the Seventh Circuit, “[a] contract need not be read to be effective.” Ms. Jones said she was unaware of the arbitration clause and its 30-day opt-out period at the time she bought the phone because the arbitration clause was inconspicuous and contained in a section of the Booklet dealing with warranties. She relied on the U.S. Court of Appeals for the Ninth Circuit’s 2017 decision in Norcia v. Samsung Telecommunications America, Inc., which held that Samsung’s arbitration clause was ineffective because the plaintiff did not receive adequate notice of its existence.

After reviewing these decisions and precedent of the U.S. Court of Appeals for the Third Circuit, the Jones court concluded that “[p]urchasers may be bound by what they have not read, but they may not be bound by what they cannot find, or what has been (negligently or by connivance) buried in the verbal underbrush.”

The court emphasized that the arbitration agreement was never cited in the Booklet’s section headings and was “tucked away in the section misleadingly titled ‘Manufacturer’s Warranty.'” According to the court, “[i]f Samsung had actually desired to make its customers aware of the Arbitration Agreement, it would have been simple to bring the point home more clearly.”

The Jones court found the Seventh Circuit’s Gateway decision was no longer the leading authority in this area, having been eclipsed by more recent decisions that “focus not on whether consumers had read waiver language, but on whether they received reasonable notice of the existence of the language.”

Jones illustrates that even the best-drafted arbitration clause will not be enforced if the court perceives it to have been presented in a manner that would make it unlikely consumers would actually notice it.

This article was written by Alan S. Kaplinsky and Mark J. Levin of Ballard Spahr LLP

Colorado has enacted groundbreaking privacy and cybersecurity legislation that will require covered entities to implement and maintain reasonable security procedures, dispose of documents containing confidential information properly, ensure that confidential information is protected when transferred to third parties, and notify affected individuals of data breaches in the shortest time frame in the country. The new law—which becomes effective on September 1, 2018—was spearheaded by the Colorado Attorney General’s office, which is charged with enforcing its requirements. As a result of the legislation, covered entities should consider implementing written information security programs, third party vendor management controls, and incident response plans to best position themselves against potential enforcement actions and civil litigation in the future.

Data Security Requirements

For the first time, covered entities that maintain, own, or license “personal identifying information” (PII) of a Colorado resident are required to implement and maintain reasonable security procedures and practices that are “appropriate to the nature of the personal identifying information and the nature and size of the business and its operations.”

The law defines PII broadly to include a social security number; personal identification number; password; passcode; official state or government-issued driver’s license or identification card number; government passport number; biometric data; employer, student, or military identification number; or financial transaction device (as defined in C.R.S. § 18-5-701(3)).

Covered entities also must take measures to protect PII when transferring it to third parties. Unless a covered entity agrees to provide its own security protection for the information it discloses to a third-party service provider, the covered entity “shall require” the third-party service provider to implement and maintain reasonable security procedures and practices that are appropriate to the nature of the PII disclosed and reasonably designed to help protect the PII from unauthorized access, use, modification, disclosure, or destruction. A “third-party service provider” is defined as an entity that “has been contracted to maintain, store, or process personal information on behalf of a covered entity.”

The law also requires covered entities that maintain electronic or paper documents that contain PII to develop a written policy for the destruction of such documents when they are no longer needed.

The Attorney General’s office is authorized to enforce these new requirements and may bring an action in law or equity to ensure compliance or recover direct economic damages resulting from a violation.

As a consequence of these new requirements, covered entities should consider developing and implementing written information security programs that include appropriate administrative, technical and physical safeguards for the types of PII that they maintain, own or license.

Changes to Colorado’s Breach Notification Law

The new law strengthens and expands Colorado’s data breach notification law. Perhaps the most significant change is that covered entities now must notify affected individuals within 30 days after determining that a security breach occurred that resulted in, or is likely to result in, misuse of personal information. Colorado’s 30-day deadline is the shortest of any state. Florida also has a 30-day deadline but allows for an additional 15 days under certain circumstances.

The new law drastically expands the types of information that will trigger a breach notification obligation if compromised. Specifically, the law defines “personal information” to mean a Colorado resident’s first name or first initial and last name in combination with any of the following data elements: social security number; student, military or passport identification number; driver’s license number or identification card number; medical information; health insurance identification number; or biometric data. The definition also includes a Colorado resident’s username or e-mail address in combination with a password or security questions and answers that would permit access to an online account or a Colorado resident’s account number or credit or debit card number in combination with any required security code, access code, or password that would permit access to that account. However, a covered entity does not need to provide notice if the information was encrypted unless the encryption key also was compromised.

Importantly, the law does not create exemptions for entities subject to reporting requirements under the Gramm-Leach-Bliley Act or HIPAA. Rather, if there is a conflict between the 30-day time period for providing notice under Colorado law and a time period in another federal or state law, the law with the shortest time frame for providing notice controls.

The law also specifies what type of information must be included in the notice, such as a description of the PII involved in the breach, the date or estimated date of the breach, and contact information for the Federal Trade Commission and credit reporting agencies. If the breach involves the compromise of login information, a covered entity also is required to notify individuals to change their login information for that account and any other account that uses the same login information.

A covered entity must notify the Colorado Attorney General’s office if it provides notice to 500 or more Colorado residents, and it must notify credit reporting agencies if it is provides notice to more than 1,000 residents.

If a third-party servicer provider experiences a data breach, it must notify the covered entity “in the most expedient time possible, and without unreasonable delay.”

As with the new data security requirements, the Attorney General’s office is charged with enforcing violations of the notification requirements. However, a covered entity that maintains its own notification procedures as part of an information security policy that is consistent with the new law is in compliance with the law’s requirements if the covered entity follows those procedures. Therefore, to ensure compliance, covered entities should consider developing and implementing incident response plans that are consistent with the new law.

Finally, the law adds new provisions that create similar obligations for government entities.

This article was written by David M. Stauss and Gregory Szewczyk of Ballard Spahr LLP

The Eleventh Circuit recently examined two insurance coverage cases involving the applicability of the pollution exclusion.  In one case it held that sewage was not a pollutant, but in the other case it held that storm water was a pollutant.  These cases provide guidance to policyholders who may face a pollution exclusion argument from their carrier in the Eleventh Circuit.

In the case Evanston Insurance Company v. J&J Cable Construction, LLC, the Eleventh Circuit held that damage caused by a sewage leak was not barred by the pollution exclusion. (Case No. 17-11188, April 20, 2018).  The court looked to a prior Alabama case that distinguished industrial waste from residential sewage.  However, the Eleventh Circuit reached the opposite conclusion in the caseCentro Development Corp. v. Central Mutual Insurance Company (Case No. 17-13489, April 27, 2018).  There, the Eleventh Circuit found that storm water was a pollutant excluded by the policy’s pollution exclusion.  The court looked to a Georgia Supreme Court case that held that a pollutant did not have to be specifically named in the policy in order for the exclusion to apply, as was the case in the Central Mutual policy.

These decisions serve as a good reminder that the Eleventh Circuit will look to precedent from the state law that governs the coverage dispute.  In addition, whether a pollutant is tied to industrial waste may be a determining factor for the application of the pollution exclusion in the Eleventh Circuit.

This article was written by Kara Cleary of Barnes & Thornburg LLP