Trade Secrets: Specialty Chemical Technology At Risk

Theft of trade secrets by foreign competitors or foreign governments is an increasing threat for U.S. businesses. “But our members face these sorts of challenges from a number of fronts, including our own government,” says Daniel Newton, senior manager of government relations at the Society of Chemical Manufacturers & Affiliates (SOCMA), a trade group of mostly small specialty chemical makers.

SOCMA is concerned about a proposed regulation by the Environmental Protection Agency (EPA) that would require companies to disclose the identities of chemicals that are the subject of health and safety studies submitted under the Toxic Substances Control Act (TSCA).

Manufacturers would be required to submit specific chemical names along with related health and safety information as part of EPA’s premanufacture review process, which all new chemicals must undergo.

Currently, companies are required to notify the agency if studies suggest that a substance poses a substantial health risk. But manufacturers can avoid disclosing the names of some chemicals under TSCA’s exemptions for confidential business information. The new proposed rule, which aims to give the public more data on chemicals in commerce, would sharply limit a company’s ability to claim that a chemical’s identity is a trade secret that merits protection.

EPA agrees that trade secrets must be kept confidential, says James J. Jones, acting head of the agency’s office of chemical safety and pollution prevention. But a generic description can be too broad.

“Chemical identity is part of a health and safety study,” says the White House Office of Information & Regulatory Affairs, which is reviewing the proposed rule. Restricting confidentiality claims “will increase transparency related to chemicals and microorganisms undergoing review prior to the commencement of manufacture, and is also likely to increase the availability to the general public of health and safety data on chemicals in commerce.”

But Newton says the precise name of a molecule is not an essential element of health and safety studies. “We believe the way to balance public right-to-know with adequate protection of trade secrets is to simply allow companies to use generic chemical names in lieu of specific ones.”

Information not claimed as confidential can be made available to interested parties in a number of ways, including through the Freedom of Information Act (FOIA). Most FOIA requests to EPA are made by companies, many of which are overseas, not curious members of the public, Newton points out.

“In many cases, the confidentiality of chemical identity is all a specialty chemical producer has to remain in business,” he remarks. “The highly specialized nature of the chemistry performed by our sector makes our members particularly vulnerable.”

For an idea to flourish, Newton says, it needs to be adequately protected. “We believe our government can do more in this regard.”