By Laurie Holmes, senior director, Environmental Policy, Motor & Equipment Manufacturers Association (MEMA)
President Biden’s administration has made strong public commitments prioritizing policies that aim to improve environmental and health concerns. The administration’s Paris Climate Accord goals to significantly reduce greenhouse gases (GHG) by 50% – 52% by 2030 have received most of the media’s attention. However, the administration also has its sights on significant chemical restrictions and increased chemical reporting and disclosure for the vehicle industry – including the aftermarket. Consequently, the aftermarket industry could not only see California’s Proposition 65 — a California law that requires businesses to provide warnings to consumers if they could be exposed to certain chemicals at certain levels — become more burdensome, but we may also see increased federal and state chemical restrictions posing enormous challenges for the industry.
The aftermarket sector should be aware of the opportunities and challenges ahead posed by emerging chemical issues. Now more than ever, it is important for aftermarket suppliers to collaborate with their supply chain and customers to tackle these issues. Aftermarket companies must improve the lines of communications, and demonstrate how your company operates responsibly and is committed to environmental stewardship. This year’s AAPEX is the place where we can start these conversations and make these connections.
Potential Upcoming Changes to California’s Proposition 65
As most of us in the aftermarket industry know, California’s Proposition 65 is already incredibly burdensome. In January 2021, California released a proposal to amend the Proposition 65 regulation by placing limitations on when Proposition 65 short-form warnings can be used and updating short-form warning requirements. Proposition 65 regulation requires that consumers be provided with a “clear and reasonable warning” of exposures to certain chemicals (now totaling more than 900) determined by California to cause cancer, birth defects, or other reproductive harm. Manufacturers, distributors, and retailers who fail to provide such a warning are at risk for enforcement lawsuits which place the burden of proof on the defendant business to demonstrate compliance.
Key changes to the short-form warnings include:
- Requiring that short-form warnings now name at least one Proposition 65 listed chemical;
- Restricting the use of short-form warnings to products with no more than 5 square inches of label space and where the full package cannot accommodate the full Proposition 65 warning;
- Eliminating the ability of Internet and catalog postings to rely on short-form warnings; and
- One year transition period.
This proposal is particularly concerning since changes to the California Proposition 65 short-form does not provide any greater protection to the consumer. In comments and testimony before California earlier this year, business associations, including the California Chamber of Commerce and MEMA, strongly urged California to withdraw the Proposition 65 short-form warnings amendments.
Industry is awaiting California’s decision on whether it will finalize the Proposition 65 short-form warning amendments. If finalized as proposed, the requirements would be extraordinarily difficult, expensive and burdensome after companies just spent significant resources to implement Proposition 65 warning changes in 2018. Importantly, the proposal highlights unique challenges for aftermarket supplier companies who have complex supply chains and can manufacture hundreds of products that make pinpointing specific chemicals for labels and communicating that through the supply chain, extremely challenging.
Chemical Regulation Challenges at the Federal Level
Meanwhile, in Washington, DC, it is no secret the environmental community — non-governmental organizations (NGOs) — is making its mark on U.S. policy including the regulation of chemicals. An Executive Order issued by President Biden in January highlighted rules the administration wanted to reconsider, rulemakings previously finalized by the Trump administration. Many of those rulemakings were chemical management rules including a wide range of chemicals used in automotive components.
The U.S. EPA is focused on seeing through strong chemical regulations, taking another look at rulemakings and re-examining and re-interpreting broad exemptions provided to automotive suppliers including the aftermarket industry. Even if your company has never had to deal with federal chemical regulation before, your company could be facing chemical bans soon.
The Toxic Substances Control Act of 1976 (TSCA) provided EPA with authority to require reporting, record-keeping and testing requirements, and restrictions relating to chemical substances and/or mixtures. On June 22, 2016, President Obama signed the Frank R. Lautenberg Chemical Safety for the 21st Century Act, which updates TSCA. The business community, including the auto industry, supported reformed TSCA as it would help provide regulatory certainty and mitigate the 50-state patchwork of chemical regulations.
Within that TSCA update were several legislative provisions of great importance to the auto industry. Congress limited EPA’s authority to regulate substances used in the manufacture of replacement parts and in articles. EPA can only regulate chemicals in replacement parts only if EPA finds that such replacement parts contribute significantly to the risk identified in a risk evaluation.
Prior to President Trump leaving the White House, the EPA released a final rule that prohibited the use of decaBDE and PIP (3:1) (both flame retardants) in articles effective May 2021 and March 2021 respectively. The rule, however, provided separate, narrow exemptions for the use in automobiles and automotive parts. However, in March, the Biden administration issued a “No Action Assurance” to certain entities subject to the TSCA rule prohibiting use of articles containing PIP (3:1). The agency also issued a request for comment asking for additional information as the agency evaluates whether to walk back the exemptions provided for the auto industry.
The aftermarket industry should be aware that EPA is now re-evaluating broad exemptions provided to the auto industry replacement parts, and aware that EPA may impose strict deadlines on chemical phase outs. Limiting the chemicals the industry can use within tight timeframes could cause an enormous impact to the aftermarket industry. Will EPA be willing to accept the industry’s short-term need to continue the use of certain chemicals while providing appropriate timelines for substitutes to be identified? Will EPA recognize the challenges the aftermarket supplier industry has with phasing out chemicals within a limited timeframe given its complex supply chain? If this happens, could Congress step in? If strict restrictions and phase outs are implemented from EPA, this will magnify the importance of strengthening the ability and speed to which the industry is able to communicate on which chemicals are being used.
Challenges & Opportunities with New Chemical Regulations
What does this all mean for aftermarket suppliers? These two cases are only a sign of what’s to come on the regulatory front from both coasts. President Biden has now placed individuals in key positions throughout the administration. This summer and throughout the rest of the year, we will watch the President and his agencies finalize stricter chemical restrictions and we will likely see these examples increase.
Increased chemical regulations will pose both challenges and opportunities for the aftermarket industry. It is important for aftermarket companies to communicate and demonstrate their commitment to communicating effectively, staying on top of government requirements and how your company operates responsibly. Now more than ever it is important for aftermarket suppliers to collaborate with their supply chain and customers to communicate and tackle these issues. This year’s AAPEX is the place where we can start these conversations and make these connections. For more information, visit the Attendee and Exhibitor portals on the AAPEX website, aapexshow.com.