California ARB Survey Raises Questions On Confidentiality, Future Regs

Industry has concerns about the confidentiality of submissions to the California Air Resources Board under an expanded product survey and about the survey’s potential impact on future state regulations. Firms that sold personal-care products in California starting in 2013 must provide sales and formulation data by March 2, though CARB may be flexible about deadlines.

Personal care product firms subject to the California Air Resources Board’s survey of chemically formulated consumer and commercial products sold in the state since 2013 are concerned about business information confidentiality and trade secret protection.

While previous versions of the survey were limited to products emitting volatile organic compounds, CARB expanded the probe’s scope, requiring companies to submit sales and product formulation data regardless of a product’s VOC emissions.

Pam Busiek, president and CEO at trade group Independent Cosmetic Manufacturers and Distributors, notes confidentiality always has been important to the cosmetics industry and is one of the biggest concerns about the CARB survey. She suggests the survey has “overreaching” aspects.

“Everyone wants a business advantage, a competitive edge on the commerce side to build their business,” she said in an interview. “You don’t want to just open up the world to everything you do.”

“If [confidential information] were to fall into the wrong hands, unintentionally – I think that’s where the fear lies and that’s why people are trying to be so cautious, though everyone does want to comply,” Busiek added.

While companies subject to CARB’s survey for the first time are wary of the requirements, Busiek acknowledged that in Europe, trade secrets apparently have not been compromised markedly by increased information reporting under the Registration, Evaluation, Authorization and Restriction of Chemicals program and others implemented in recent years.

Angela Diesch, an attorney with Kronick Moskovitz Tiedemann & Girard, suggests that fears regarding the potential release of trade secrets, including formulation details, may indeed be unfounded.

“Compelled disclosure to a government agency generally does not destroy the status of a trade secret as long as certain requirements are met,” Diesch said in an interview.

CARB conducted the survey before on a smaller scale, so “it’s not the first time this type of data has been shared,” she said, adding, “I don’t see the trade secret issues as being that problematic.”

Fodder For Future Regs?

According to its website, CARB will use information collected from the survey to update emissions inventories and help it develop California's new State Implementation Plan, which will guide California in meeting federal air quality standards.

CARB says information on low- and no-VOC products is important as it is “often used to support proposed lower VOC limits.”

Diesch sees such proposals as real possibilities, speculating that compiled survey information “will assist CARB in determining the feasibility of further regulation, including potentially reducing consumer-product emissions.”

Collaboration between CARB and other state agencies, in terms of data and information sharing, is also possible, she said.

Further regulation in California would compound what has become a priority concern among personal care companies, particularly small and medium-sized entities – namely, the mounting costs and burdens associated with state regulation.

Busiek noted the challenges are “not just in manufacturing and distribution, but really how to comply and how to track what’s happening at the state level.”

Industry Seeks Deadline ‘Generosity’

ICMAD is working closely with CARB to facilitate the survey’s completion and industry compliance, inviting agency staffers to participate in a recent webinar on the initiative. Representatives from the board also will speak at ICMAD’s Cosmetic Technical Regulatory Forum Feb. 5, Busiek said.

She noted CARB’s willingness to support and assist ICMAD, but questioned the survey’s intent and practicality.

“I do sense it’s a burden and it seems very overreaching to get that much information that really doesn’t have anything to do with air control or what goes into the air,” she said. “What they’re asking is robust, no doubt.”

Moreover, the survey “was made aware to us very late in the game,” she said, adding: “I just think that we need some generosity on time to comply.”

The deadline for the survey’s completion is March 2 for products sold in California in 2013, and Nov. 1, 2015 and Nov. 1, 2016 for products sold in 2014 and 2015, respectively.

ICMAD is seeking deadline extensions or a phase-in schedule for 2013 product reporting to ensure its members have time to gather and submit their data.

“We’ve really tried to partner with [CARB] effectively so that we can help our members and small businesses comply. I think they’re very open to working with that,” Busiek said.

ICMAD has not received an answer to its extension request, but she said “my sense is that it’s positive and the outlook is optimistic. I do sense that they will work with small business on a case-by-case scenario to [promote] compliance. I’ve been met with nothing but friendliness and willingness to be supportive.”

Diesch does not think CARB will extend the formal deadline for completing the survey, but suggested the board could be sympathetic and offer some flexibility to companies that are making an effort to comply but cannot finalize their submission by March 2.

According to the attorney, a lot of companies still are unaware of CARB’s updated reporting requirements.

Such businesses are in a difficult spot, as the data generation is time-consuming, she said. The survey requires manufacturers to submit formulations for all SKUs they have on the market, in addition to information including sales data.

“All these companies have the data, it’s just a matter of putting it into the format that’s necessary for uploading it into the CARB’s online system,” she explained. “What I’ve heard from some companies is that they just don’t have the bandwidth, they don’t have the manpower, so they have to hire outside people to handle it for them.”

CARB Clarifications

In a document recently posted to CARB’s website, the board addresses questions asked during 2014 webinars on the survey, providing clarification on a number of topics impacting cosmetics.

CARB notes professional-use personal care products – which are not required to list ingredients on product packaging – are still subject to the survey.

Cosmetic product samples also must be reported, even if they are distributed free and not offered for sale, according to the board.

Cosmetic gift sets could make for especially onerous reporting, as sales figures might have to be provided for products in two contexts – as packaged with other items and as sold separately. CARB gives the example of a lotion in a gift set that is also sold individually. The manufacturer would be expected to report sales for the lotion when sold as part of the gift set, as well as sales for the lotion independent of the gift set.

For formulation reporting purposes, the products can be grouped and submitted once.

“Because the lotion has the same formulation in the gift set and independently, if all other grouping criteria are met, then formulation for the lotion can be reported once, and one label would need to be provided,” CARB explains.