Predictions for EPA`s Office of Chemical Safety and Pollution Prevention, and Beyond

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Bergeson & Campbell, P.C.'s (B&C) thoughts are below on what may be headed our way in 2012 from the U.S. Environmental Protection Agency's (EPA) Office of Chemical Safety and Pollution Prevention (OCSPP). The 2012 Presidential Election cycle will influence any activity by either party or the Administration over the next year. We also offer a few thoughts on Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), the Food and Drug Administration (FDA), and Asian chemical regulatory developments.

Environmental issues are often used to make clear distinctions between the two parties, and this could lead to initiatives or pronouncements by either party intentionally driven to illustrate or exacerbate those differences. This will likely lead to some new initiatives and high profile decisions on the part of the Administration, along with continued (and sometimes blistering) criticism from Republicans in Congress, about the costs and impacts of environmental regulations on jobs and the economy. Regardless, 2012 will likely be an eventful year.

We invite you to review our website at www.lawbc.com. We have posted many substantive memoranda and access to webinars on a broad range of topics of interest to the chemical community. Some such memoranda and webinars are specifically noted below for your convenience. As always, we would be pleased to expand upon any topic noted below upon request.

Congress

The Prospects for TSCA Legislation

The future prospects for any new Toxic Substances Control Act (TSCA) legislation are dim as the calendar moves closer to the 2012 election. On April 14, 2011, Senator Frank R. Lautenberg (D-NJ), Chair of the Environment and Public Works Subcommittee on Superfund, Toxics, and Environmental Health, introduced the Safe Chemicals Act of 2011, which is intended to modernize TSCA to require chemical companies to demonstrate the safety of industrial chemicals and EPA to evaluate safety based on the best available science. The bill is co-sponsored by Senators Amy Klobuchar (D-MN), Charles Schumer (D-NY), and Barbara Boxer (D-CA). Lautenberg previously introduced TSCA reform legislation in the 111th Congress, the Safe Chemicals Act of 2010 (S. 3209).

In response to feedback from chemical industry leaders, public officials, scientists, doctors, academics, and non-profit organizations, Lautenberg states that he has made several changes to the bill to improve its chances of becoming the basis for reaching consensus among the affected constituencies. For example, according to Lautenberg, in response to overly broad chemical testing requirements, the updated bill establishes risk-based prioritization categories so that EPA can focus its resources on the highest-risk chemicals. Critics of the legislation continue to argue that the legislation, while improved, would still have huge and unnecessary implementation costs and adversely impact the ability of domestic chemical companies to innovate new products. A more detailed analysis of the legislation is available in our April 18, 2011, memorandum available online.

Since Senator Lautenberg introduced the legislation in April 2011, staff from his office and the office of Senator James Inhofe (R-OK), Ranking Member of the Senate Environment and Public Works Committee, co-hosted a number of meetings with chemical trade associations and industry, as well as separate meetings with environmental organizations. The first meeting, held on June 21, 2011, focused on chemical safety standards. Other meeting topics included data requirements and prioritization approaches. Senator Inhofe stated that he thought the meetings were very thoughtful and identified areas of common ground that warrant further discussion. The environmental groups and chemical industry representatives appear to have continued meetings to attempt to reach a consensus, but the content of such deliberations has been kept confidential and so it is not clear how far or near the opposing groups are in coming to any agreement (in whole or in part).

Most recently, on November 17, 2011, the Senate Environment and Public Works Committee and the Committee's Superfund, Toxics, and Environmental Health Subcommittee held a hearing on the legislation. While all Committee members continued to applaud and exhort the attempt at continued discussion and negotiation between the non-governmental organization (NGO) advocates and industry, some Democratic Senators, especially Senator Cardin (D-MD), were especially critical of the American Chemistry Council (ACC) and the lack of a concrete alternative proposal developed and supported by the chemical industry. Senator Lautenberg indicated that he intends to bring his legislation up for a Committee vote 'in the near future' and would hope that consensus can be reached -- with the implication that he will attempt to report his bill even if the industry has not agreed with the provisions in any pending legislation. More information regarding the hearing is available in our November 17, 2011, memorandum online.

The prospects of legislation actually becoming law are increasingly remote, given that any successful bill would essentially need consensus in the full Senate -- and must still overcome the lack of any legislative movement in the House of Representatives. At the same time, the tenor of the Senate hearing exhibited a bit more frustration on the part of Democrats with the lack of specific alternative language from the industry, language that would illustrate their idea of how to capture ACC's much-noted '10 Principles for Effective Chemicals Management' that have been discussed for more than two years. Whether this somewhat more caustic rhetoric on the part of some Committee members helps or hurts the chances of any eventual legislation is not clear, it may signal that during the coming election year the issue of chemical testing and regulation may become a more visible, or at least more vocal, issue.

One specific example of Congressional intervention in chemicals is the directive in the manager's report of the nine-bill omnibus appropriations package, H.R. 2055. In the manager's report, EPA is directed to contract with the National Academy of Sciences (NAS) to conduct up to three reviews of Integrated Risk Information System (IRIS) assessments that 'EPA seeks to make final.' One of these NAS reviews 'shall be a study of the cancer and non-cancer hazards from oral exposure to inorganic arsenic.' EPA is also directed to incorporate as necessary recommendations to improve IRIS based on the National Academies' National Research Council April review of the IRIS assessment of formaldehyde. Congressional intervention in IRIS assessments is a reflection of the strong and growing discontent with the quality of the assessments coming out of the IRIS office. While EPA's Office of Research and Development (ORD) has attempted to address Congressional and industry stakeholder concerns, many continue to believe the core problems plaguing the process continue and require far more extensive reform to rehabilitate the ailing program.

OCSPP Leadership and Election Year 2012

On October 25, 2011, OCSPP Assistant Administrator Stephen A. Owens announced his resignation from EPA. Since it is somewhat late in the President's first term, it is unclear if the Administration will be actively seeking to fill the OCSPP Assistant Administrator position with a new political appointee. In addition, the bitter partisan atmosphere on Capitol Hill has led to numerous holds on current nominees still awaiting Senate confirmation for many senior positions across many government agencies. OCSPP has a number of pressing issues, however, such as the National Pollutant Discharge Elimination System (NPDES) permits for pesticide use, endangered species litigation, the re-review of atrazine, and TSCA reform (or how to revitalize the toxics program if no new TSCA legislation is likely). Without senior political leadership in place, the fate of these issues may become even more unpredictable as election year considerations become only more important as November 2012 draws near. As a result, it is possible the Administration may attempt to place a nominee if only to indicate that the OCSPP issues remain a priority and will not be lost in the larger dynamics of the 2012 election.

Jim Jones, the current Deputy Assistant Administrator for the Office of Air and Radiation, was designated to serve as the new OCSPP Acting Assistant Administrator, beginning December 1, 2011. Jones is a very familiar presence in OCSPP, as he has been with EPA for over two decades, including serving four years as the Office of Pesticide Programs (OPP) Office Director (2003-2007) and four years as OCSPP Principal Deputy Assistant Administrator (2007-2011). His tenure also includes six months as OCSPP Acting Assistant Administrator in 2009. Also during 2011, Louise Wise was named as Principal Deputy Assistant Administrator of OCSPP, coming from EPA's Office of Policy.

Since Jones is very familiar with OCSPP and its operations, the transition to new leadership is expected to be straightforward. At the same time, EPA as a whole under the continued leadership of Administrator Jackson will now face an election year with intensely bitter rhetoric coming from both parties in Congress.

Election year 2012 will likely see environmental issues among the wedge issues continually discussed by both Democrats and Republicans to help energize their base voters and paint some clear distinctions between the candidates. The most attention will be focused on air pollution issues, not just climate change, with claims about the need for cleaner air as a health issue versus the adverse impact of expensive regulatory mandates.

Across all media programs, the Administration will continue to face intense criticism that stringent environmental requirements, both current and pending, are a severe hindrance to economic growth and employment. At the same time, some of the pending issues awaiting decisions during 2012 will present an opportunity for the Administration to address some of its core constituencies among labor, environmental, and minority advocacy groups.

The election itself will decide the fate of the larger debate, but in an election year, EPA will be driven to account for its accomplishments during the President's first term in each media program, and some issues might be pressed to further sharpen the partisan divide or otherwise appeal to certain constituencies. As a result, even in OCSPP, there may be a renewed emphasis on environmental justice issues, potential health impacts on children, the potential for chemicals and pesticides to cause endocrine disruption, the potential impacts of genetically modified organisms (GMO) or nano pesticides and chemicals, the need for developing green chemistry alternatives, and the like. What form these continued initiatives might take, or how strident the EPA tone may be at the time, will be partly driven by election year needs as November 2012 draws near.

A few other senior leadership changes in OCSPP and OPP during 2011 are noteworthy. The Office of Pollution Prevention and Toxics (OPPT) saw the departures of Jim Willis, Director, Chemical Control Division (CCD), and Bob Lee, Director, Economics, Exposure, and Technology Division (EETD), and the selection of Dr. Jeff Morris as Deputy Office Director for Programs. Jim went to the United Nations Environment Programme to head the Secretariat for the Stockholm Convention on Persistent Organic Pollutants (POP) and the Rotterdam Convention on Prior Informed Consent (PIC), while Bob retired from federal service. Dr. Maria Doa, formerly the Director of the National Program Chemicals Division (NPCD) in OPPT, was named the Director of CCD, while Neil Patel is Acting Director in EETD and Dr. Tala Henry is Acting Director in NPCD. Dr. Morris came from EPA's ORD where he was the national Program Director for nanotechnology.

Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA)/Food Quality Protection Act (FQPA)

2012 will likely see mostly a continuation of issues which have dominated EPA's pesticide program during 2011. Most notable are issues surrounding both the Clean Water Act (CWA) and Endangered Species Act (ESA). One 'new' issue, of a sort, that may take on more importance during 2012 is the cancellation notice EPA is expected to issue to prohibit and restrict certain rodenticide formulations. In a draft cancellation notice currently under administrative review, EPA proposes to cancel certain second-generation anticoagulant products sold to consumers, as well as other rodenticide products with packaging that EPA deems inadequate. Also, the Pesticide Registration Improvement Act (PRIA) will need to be reauthorized for EPA to continue to collect registration activity fees. Ordinarily, with support from the pesticide registrants, renewing PRIA would not be expected to be controversial. This year, however, it may encounter difficulties as anything to do with government revenues can become controversial and made more complex by overall budget issues on Capitol Hill. If PRIA is not renewed for whatever reasons, it could have a severe and adverse impact on the ability of the pesticide program to make timely decisions on pending registration applications.

2011 Achievements

A blow to PRIA would be especially ironic as EPA's pesticide program has achieved a reputation as more predictable and mostly compliant with the existing PRIA deadlines (issues remain, but EPA's performance is seen as better than the pre-PRIA era). In fiscal year (FY) 2011, EPA registered 20 new active ingredients, 209 new use registrations, and 98 emergency exemptions. Of the new active ingredients, 13 of the 20 were considered lower risk products. In reregistration, EPA opened 81 registration review dockets and completed 75 final registration review work plans. The program claims that altogether its work was based on over 10,000 discrete risk assessment decisions. Lastly, regarding end-use product reregistration, EPA states it has completed the reregistration of 16,953 products out of a total of 24,576.

CWA

On October 31, 2011, EPA issued an NPDES general permit to comply with what began as a January 2009 court decision that vacated an earlier EPA rule which had exempted pesticide users from needing a permit to apply pesticides in or near water bodies. This general permit covers only those states where EPA is the permitting authority, but the larger issue is the now effective requirement for water permits for many pesticide applications. This has been and remains controversial, with concerns about the ability of pesticide users to comply either in terms of getting permits in time or otherwise following any subsequent requirements, and now facing citizen suit provisions available under CWA (unlike any similar provisions in FIFRA).

In response, Congress is actively engaged in considering legislation that would generally remove the requirement for a water permit for FIFRA-compliant applications. The House has already approved such legislation (H.R. 872), and in the Senate, the bill is awaiting floor action. In particular, Senators Boxer (D-CA) and Cardin (D-MD) have blocked consideration of the bill. There were reports of a compromise that would have generally delayed these requirements until after the 2012 elections. That solution was blocked by Senator Roberts (R-KS), stating that the bill is through the House and that there was support by a bipartisan majority of Senators, with more than 60 Senators in favor, and that he hopes to still move the House-approved bill.

Meanwhile, EPA has also stated that it will provide compliance assistance for the first 120 days the permit is in effect (through the end of February) -- so that appears to be the window of opportunity for any legislative efforts to be completed before pesticide users will face any new water permit requirements.

ESA

Another on-going issue set surrounds continued and repeated litigation by various parties over EPA compliance with the ESA in its pesticide approvals. Litigation continues by environmental advocates and pesticide companies and users over ESA requirements and how to resolve disputes between EPA and the Services (the Fish and Wildlife Service at the Department of Interior and the National Marine Fisheries Service of the Commerce Department) over appropriate measures to protect species.

In particular, a 'mega' suit was filed in January 2011 by the Center for Biological Diversity alleging that EPA is out of ESA compliance on more than 300 pesticides on 214 endangered species (Center for Biological Diversity v. EPA, N.D. Cal., No. CV-11-0293, 1/20/11). This 'mega' suit is national in scope and could affect agricultural producers across virtually all crops in all major growing regions. If successful, one result, at a minimum, would be to consume significant regulatory resources in OPP currently devoted to other programmatic activities.

The prospects for any immediate breakthroughs on either the litigation or programmatic deadlock remain dim. The one new element added to the mix in 2011 was the initiation of a report by NAS to review scientific and technical issues behind the methodologies used to assess pesticides as part of the ESA review. The EPA position is that their registration support analysis is more reliable than much of the criticism or otherwise vague assessments they have received from the Services (the Services may have a different opinion). A major goal of the NAS study would be to better define, for all parties, what a reasonable assessment (or the components of assessments) should be, make recommendations which could lead to a more predictable pathway about how to conduct an ESA assessment, and offer comments on the current approach of EPA and the Services (including, for example, EPA's use of modeling as part of a registration decision, geospatial information, and the possible cumulative effects of pesticides). As the study design and committee selection has only begun in 2011, it is not clear how soon EPA or the Services might receive and implement recommendations to address significantly the current impasse between the agencies.

Rodenticide Cancellation

One new issue begun in 2011 that may see significant activity in 2012 is EPA's proposal to initiate cancellation proceedings against certain rodenticide products, including consumer products containing the second generation rodenticides brodifacoum and difethialone. In May 2008, EPA announced its intention to restrict certain rodenticide active ingredients due to concerns for non-target wildlife and risks to children, and stated that, as of June 2011, it would consider those products misbranded. That approach was challenged by Reckitt-Benckiser Inc., maker of D-Con products, insisting that EPA should instead issue a cancellation notice to implement its decision and not rely on the threat of considering such products misbranded. In a court challenge to determine the issue, the court agreed with Reckitt (Reckitt Benckiser Inc. v. EPA, D.C. Cir., No. 09-1314), and so EPA in 2011 initiated the cancellation process. In November 2011, EPA released it draft Notice of Intent to Cancel, and began three days of meetings by the Scientific Advisory Panel (SAP) as required by the cancellation procedures outlined in FIFRA. The next step will be for EPA to issue its Notice of Intent to Cancel, which will then initiate a potentially long and laborious evidentiary hearing concerning affected products before an Administrative Law Judge. In such a hearing, all evidence admitted into the record is typically sponsored by a witness subject to cross-examination, and affected parties may obtain pre-hearing discovery. It seems likely that EPA will issue its notice sometime in 2012. It is less clear how much programmatic attention will have to be devoted to any proceedings during the next year as the situation unfolds.

Budget Concerns/PRIA

Gridlock in Congress could lead to difficulty in reauthorizing PRIA, revenue from which provides a significant resource to EPA's pesticide program. This possibility is in addition to the virtual certainty that the pesticide program, the toxics program, and all media programs of EPA will be under increasingly tight budgetary constraints in the foreseeable future. The overarching debate about the federal deficit could result in significant reductions in domestic program discretionary spending. If attempts are made to reduce federal personnel costs by changes to the federal pension system, personnel ceiling reductions, or other measures, not only would morale suffer in general, but also EPA could see significant loss of personnel due to retirement or even reductions in force. If that happens, replacement hiring could be a significant problem in EPA's ability to maintain critical skills and generally backfill positions sufficiently to avoid delays in regulatory approvals and other programmatic activities.

Pesticide Enforcement Priorities for 2012

For 2012, EPA's stated enforcement goals are to pursue aggressively pollution problems that matter to communities and vigorous civil and criminal enforcement. Importantly for pesticide registrants, EPA's FY 2012 Office of Enforcement and Compliance Assurance (OECA) National Program Managers (NPM) Guidance provides two new national focus areas for enforcement of FIFRA: imports and supplemental registrations. According to Rosemarie Kelley, Director of EPA's Office of Civil Enforcement's Waste and Chemical Enforcement Division, EPA is aware that supplemental registrants' labels are sometimes not consistent with the FIFRA registrants' label and is now targeting both the registrant and the supplemental registrant (distributor) for enhanced enforcement action. Under the NPM Guidance, Regions are expected to choose an additional area of participation: fumigants/fumigation; worker safety; retail marketing; container-containment.

EPA uses the following tools for FIFRA compliance monitoring and enforcement: coordinating inspections; information request letters (IRL); stop sale, use, or removal orders (SSURO); and hearings. EPA has begun sending out more IRLs because there is reduced funding for travel, resulting in fewer in-person inspections, and this is expected to continue. EPA is also increasing its use of SSUROs, which are 'a quick way to address non-compliance.' EPA expects its use of SSUROs to result in more hearing requests, and EPA will provide Regional offices with data and experts from OPP to serve as witnesses. More information is available in our November 9, 2011, memorandum available online.

TSCA Reform and EPA's Enhanced Chemical Management Program

While EPA released two new Chemical Action Plans in 2011, for methylene diphenyl diisocyanate (MDI) and related compounds, and toluene diisocyanate (TDI) and related compounds, this is half as many plans as were released in 2010 and 2009. EPA's emphasis on Action Plans was reported to be stretching thin the available resources of OPPT. In September 2011, EPA announced a new approach for identifying priority chemicals for review and assessment under TSCA, and this is reportedly part of a broad new risk review program that EPA intends to replace the Chemical Action Plans. In Step 1 of the prioritization process, EPA plans to identify an initial group of priority chemicals for review by using a specific set of data sources to identify chemicals that meet one or more of the Action Plan priority factors. In Step 2, EPA intends to refine that group by using a broader range of data sources to analyze further and select specific chemicals from the initial group for further assessment. EPA opened a discussion forum to obtain comments on the two-step prioritization process, and held a webinar on September 7, 2011, to present the process and discuss the prioritization factors and data sources. More information is available in our September 8, 2011, memorandum online.

Also throughout 2011, several important actions remain pending at the Office of Management and Budget (OMB). A key proposed action is EPA's effort to propose a 'chemicals of concern' list under TSCA Section 5(b)(4). The long-delayed proposed rule, which was submitted to OMB in May 2010, still remains under OMB review. It appears that this rule is being subjected to close scrutiny because of the policy implications of the creation of a 'chemicals of concern' list, insofar as it is not identified as economically significant (that is, the annual impact of the rule on the economy is not 'significant' -- $100 million or more -- nor is it expected to have any material adverse effect on the economy, productivity, jobs, or related metrics). For a detailed review of the Section 5(b)(4) list, please see an article entitled 'TSCA Section 5(b)(4) 'Chemicals of Concern' List: Questions, Issues, Concerns,' available online.

In addition, the combined TSCA Section 4 test rule and Significant New Use Rule (SNUR) on certain polybrominated diphenyl ethers (PBDE) submitted to OMB on December 17, 2010, remains under review. EPA has submitted more recent rulemakings, including a proposed SNUR that would add nine chemicals (dyes) to the benzidine-based chemical substances (dyes) SNUR at 40 C.F.R. Section 721.1660; create a SNUR for di-n-pentyl phthalate (DnPP); and create a SNUR for alkanes, C12-13, chloro. EPA also submitted a proposed SNUR concerning hexabromocyclododecane (HBCD) used in textiles. The PBDEs action is particularly interesting in the way it will attempt to combine SNUR requirements with a test rule, thus forcing industry to choose to abide by the SNUR or confront potentially significant testing costs if a chemical such as decabrominated diphenyl ether (decaBDE) is to remain in the market.

The SNUR is also likely to break new ground with the inclusion within its scope of imported articles containing pentaBDE, octaBDE, and/or decaBDE. This represents the second time that EPA will attempt to handle importation of articles containing a chemical as a significant new use. The issue was first raised in the proposed SNUR on pentaBDE and octaBDE but in issuing the rule, EPA did not include imported articles within its scope. This is a potentially difficult and complex undertaking considering that it remains to be established that such importation is not ongoing and that EPA has stated it intends to allow continued recycling ('processing') of PBDE-containing foam and plastics that would then be involved in domestic manufacture of new PBDE articles. EPA's ability to get these actions through OMB in relatively intact form will, as with the chemicals of concern list, be telling.

EPA promulgated the much anticipated final revisions to its Inventory Update Reporting (IUR) Modifications Rule, now known as the Chemical Data Reporting (CDR) Rule. The CDR Rule is intended to enable EPA to collect and publish information on the manufacturing, processing, and use of commercial chemical substances and mixtures on the TSCA Chemical Substance Inventory (TSCA Inventory). This includes current information on chemical substance production volumes, manufacturing sites, and how the chemical substances are used. The CDR Rule establishes the upcoming submission period, which will be from February 1, 2012, to June 30, 2012, and which will include submission of production information from 2010 and production, processing, and use information from 2011. Questions and Answers (Q&A) from a September 15, 2011, webinar on the CDR Rule are available online. EPA reportedly intends to convene a webinar in January 2012 to help explain the requirements, but has yet to make a formal announcement.

REACH

While the first registration deadline for 'phase-in' substances (i.e., high volume chemicals (>1,000 tons) and those with certain classifications) occurred at the end of November 2010, the European Chemicals Agency (ECHA) is urging companies to begin preparing for the 2013 registration deadline. Companies manufacturing or importing chemicals in quantities at or above 100 tons per year are required to register these substances with ECHA by May 31, 2013. ECHA has organized the 'Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) 2013 -- Act Now!' campaign to promote the best practice in fulfilling the obligations and also to publicize the various services and tools that can help companies comply with the REACH registration requirements. More information is available on the ECHA website.

The Forum for Exchange of Information on Enforcement's third harmonized enforcement project will once more focus on registration obligations under the REACH program. The scope of the project will cover the verification of the registrations by Only Representatives, European Union (EU)-based companies or individuals appointed to fulfill the registration obligations that would otherwise fall on the EU importer of record, and the cooperation with custom authorities controlling imports of substances. Separately from this project, some member states will pilot the verification of registrations for intermediates.

ECHA submitted the first draft Community Rolling Action Plan (CoRAP) to the member state competent authorities and ECHA Member State Committee. The draft CoRAP lists 91 substances proposed for review under the REACH evaluation process. The substances are divided for evaluation during 2012, 2013, and 2014. The Committee will prepare an opinion on the draft plan in February 2012. From the publication of the final CoRAP, the respective member state responsible for the evaluation of each substance and the initial reasons of concern will have one year to evaluate substances specified for 2012 and, where regarded as necessary, to prepare a draft decision for requesting further information to clarify the suspected risks. The other member states, ECHA, and the Member State Committee will review and agree on the draft decisions before they become effective. Registrants of substances listed on the final CoRAP have an opportunity to comment before any final decision to request further information will be taken.

Regulation of Nanoscale Materials

EPA reportedly continues to work on a TSCA Section 4 test rule to require chemical manufacturers of certain multiwall carbon nanotubes, certain clays (e.g., kaolin (including halloysite) and bentonite (including montmorillonite)), alumina, and spray-applied nanomaterials to conduct testing for health effects, ecological effects, and environmental fate, as well as provide material characterization data. EPA is also developing a SNUR for existing chemical nanoscale materials under TSCA Section 5(a)(2). In addition, EPA is developing a proposal to require reporting and recordkeeping under TSCA Section 8(a), which would require that persons who manufacture such nanoscale materials notify EPA of certain information, including production volume, methods of manufacture and processing, exposure and release information, and available health and safety data. While the SNUR and TSCA Section 8(a) rulemakings were previously separate, EPA has combined them into a single rulemaking. In November 2010, EPA submitted a proposed rule regarding TSCA Section 8(a) reporting to OMB, where it remains, and it is unclear how or whether EPA will incorporate this proposed rule into its 'single rulemaking.'

As for OPP nano activity, in June 2011, EPA proposed several possible approaches for obtaining certain additional information on the composition of pesticide products. EPA focused particularly on information about what nanoscale materials are present in registered pesticide products, and defined 'nanoscale material' as 'an active or inert ingredient and any component parts thereof intentionally produced to have at least one dimension that measures between approximately 1 and 100 nanometers (nm).' Under one approach, EPA would use FIFRA Section 6(a)(2) to obtain information regarding what nanoscale material is present in a registered pesticide product and its potential effects on humans or the environment. Under an alternative approach, EPA would obtain such information using a data call-in (DCI) under FIFRA Section 3(c)(2)(B). According to EPA's June 17, 2011, Federal Register notice, EPA believes FIFRA Section 6(a)(2) 'is the most efficient and expedient administrative approach to obtaining information about nanoscale materials in pesticides and EPA would prefer to use this approach.' The notice also proposes a 'new approach' that EPA will use to determine on a case-by-case basis whether a nanoscale active or inert ingredient is a 'new' active or inert ingredient for purposes of FIFRA and PRIA, even when an identical, non-nanoscale form of the nanoscale ingredient is already registered. More information is available in our June 10, 2011, memorandum online.

EPA's June 17, 2011, Federal Register notice represents a significant departure -- and considerable improvement -- over EPA's initial description of its intended 'nano-pesticide,' which appeared to reflect a pre-ordained approach to require Section 6(a)(2) reporting. For months EPA was dismissive of other options to obtain information under FIFRA that many believed more appropriate, including the FIFRA Section 3(c)(2)(B) DCI approach. It remains to be seen how EPA will decide to proceed. The notice reflects a much more nuanced and thoughtful articulation of what EPA hopes to achieve. In particular, the discussion of how best to avoid the 'stigmatization' of pesticide nano-components as necessarily representing an adverse effect is a clear concession to pesticide manufacturers who forcefully raised significant concerns over EPA's initial assurances about its plans regarding implementing and communicating the Section 6(a)(2) reporting policy.

One last point would be to note the possible implications of the PRIA issues mentioned appropriately in the policy document. The PRIA category designation as a new chemical could result in a PRIA fee of almost a million dollars for any nano pesticide product declared as new and not an existing ('old' or me-too) product. The price distinction is obvious, but the underlying point is that policy determinations outside of PRIA, driven by how EPA articulates a final policy for reporting or to define the parameters of its regulatory vigilance, could have significant and far-reaching impacts on the development of the nanomaterials industry or the adoption of nanotechnologies in the pesticide industry.

EPA announced on December 1, 2011, that it is conditionally registering a pesticide product containing nanosilver as a new active ingredient. HeiQ AGS-20 is a silver-based antimicrobial pesticide product approved for use as a preservative for textiles. Textiles will be by application of AGS-20 either as a surface coating or by incorporation into the starting materials. As members of the nano community know well, this is very good news and demonstrates that EPA is prepared to make regulatory decisions involving nanotechnology, even where, as here, they are likely to inspire controversy. Granted, the registrant and many in the pesticide community wish the final approval were swifter, with fewer Tier I and Tier II data requirements, and not time-limited. These should not detract, however, from the bigger picture and HeiQ's success in procuring the first FIFRA approval of a nano pesticide.

Importantly, EPA had some supportive statements for nanotechnology -- all the more important as they came from OPP, which has been criticized by the nano community for its proposed FIFRA Section 6(a)(2) policy. Specifically, EPA states in its Decision Document: 'EPA sees the emergence of nanotechnology as offering potential benefits for society in many different fields, including pest control products. The use of nanotechnology in pesticide products may allow for more effective targeting of pests and use of smaller quantities of pesticide. These could contribute to improved human and environmental safety and could lower pest control costs. Therefore, EPA seeks to encourage innovative work to realize these benefits.' More information regarding EPA's conditional registration is available in our December 5, 2011, memorandum online.

DTSC Nano Developments

Developments in California are also relevant. On October 31, 2011, the California Department of Toxic Substances Control (DTSC) released an 'informal draft' Safer Consumer Products Regulations (SCPR). DTSC proposed these regulations after ten months of meetings following the California Secretary for Environmental Protection's December 2010 instructions to DTSC to stop working on issuing proposed regulations and instead 'take additional time to be responsive to the concerns raised and revisit the proposed regulations.' Memoranda providing background information are available online. Concerns raised in 2010 included the proposed exemption of certain chemicals; the decision to focus the first five years on children's products, personal care products, and household cleaning products; and the process by which 'chemicals of concern' (COC) and 'priority products' (PP) were identified and alternative assessments (AA) conducted. In the revised October 31, 2011, regulations, DTSC has removed exemptions for unintentionally added chemicals and chemicals for which there is 'no exposure pathway,' eliminated the initial focus for certain types of products, and expanded the criteria and processes by which COCs and PPs are identified and prioritized and AAs are conducted. In addition, while there had been a contemplated exemption for nanomaterials in the prior regulations, there is no mention of nanomaterials or any specific exemption for nanomaterials in these informal draft regulations. To the extent that any nanomaterials have not yet been identified by regulatory agencies on the lists from which DTSC will derive the COC list, the nanomaterials will not, at least initially, be subject to these requirements.

The good news is the availability of the regulations now provides a useful snapshot of where the Green Ribbon Science Panel's thinking is at following months of deliberations. The bad news is this is a cumbersome 'informal draft' regulation with many definitions, criteria, and procedures. Companies with consumer products in the stream of commerce in California will need to notify DTSC that its product is a PP (or cease to enter the product in the stream of commerce in California or satisfy a de minimis exemption); perform an AA and prepare a Preliminary AA Report and Final AA Report; and comply with any regulatory responses applicable to its product or that DTSC determines are necessary. Companies also may need to respond to information requests from DTSC, substantiate claims when information is submitted as trade secret, and potentially utilize the dispute resolution procedures to dispute certain actions taken by DTSC. DTSC provides that these responsibilities may be fulfilled by a consortium, trade association, etc., but does not provide in the regulations any conditions or criteria for how issues (e.g., formation, compensation) will be resolved.

While the potential impact of this regulation is expansive, and the initial list of COCs and initial list of PPs will be issued within 30 and 180 days of the effective date of the regulations, respectively, DTSC has noted that it anticipates the initial list of PPs will include only two to five products. In addition to opportunities now for companies to review and comment on these informal draft regulations and eventual draft regulations, the small number of products that will be subject to regulations initially may provide some opportunity for interested parties to understand how these regulations will be implemented and what changes or refinements may be needed.

FDA

2011 proved to be a year where FDA increased its enforcement activity across a broad spectrum. Virtually all areas of regulated industry saw action: food, medical devices, pharmaceuticals, advertising and promotion, and consumer products. Most recently, FDA took action to enforce dietary supplement Good Manufacturing Practices, signaling a renewed interest in this previously under regulated area. Globalization was also the focus of agency attention in the past year. Consistent with its mission to improve global regulatory coordination, FDA created a new senior position for this function: Deputy Commissioner for Global Regulatory Operations and Policy.

FDA is expected to continue its pursuit of increased enforcement activity and globalization into 2012. Global regulatory operations will focus attention and resources on pharmaceutical supply chain security and compliance, a development of particular significance for those engaged in manufacturing excipients and other bulk chemicals used in pharmaceutical manufacturing. Passage of the Food Safety Modernization Act galvanized concern and attention around food safety issues and ensured the subject will remain top priority for FDA. Medical device regulation continues to undergo significant scrutiny with FDA advancing on its planning to revamp the 510(k) process.

In general, 2012 is shaping up to be a year of increased activity for FDA as it seeks to solidify its coordination of global regulatory issues and increase its enforcement and compliance activities to maximize its regulatory objectives.

Asia Overview

China

China implemented in 2011 the amended version of the Environmental Management of New Chemical Substances in China (Decree 7). To date, implementation appears successful. A more vigorous and consistent enforcement approach is anticipated in 2012. Many of the relevant guidelines associated with Decree 7 are expected to be published initially or revised in 2012.

China's Regulations on the Safe Management of Dangerous Chemicals and Globally Harmonized System of Classification and Labeling of Chemicals (GHS) implementation (Decree 591), considered 'keystone' legislation, took effect on December 1, 2011. The Decree broadens the scope of activities that involve the production, storage, transport, and marketing of dangerous chemicals. Dangerous chemicals are redefined under Decree 591 as those substances that are: corrosive, explosive, combustible and supporting of combustion; and harmful for humans, facilities (property), and the environment. Additional regulations are expected to be issued by a variety of governmental bodies that will modify and/or propose legislation to align with Decree 591's provisions.

The Twelfth Five Year Plan on Prevention and Control of Environmental Risks of Chemicals is an important task to be carried out within the next five years. The purpose of this initiative is to strengthen the environmental management of chemicals, prevent accidents that result in environmental pollution, protect the environment, and protect and promote the sustainable development of the chemical industry.

In 2012, alignment with the 4th edition of the Purple Book is anticipated, which will require revisions to the 26 mandatory national classification standards (GB 20576-GB20602-2006) that are currently based on the 1st edition of the Purple Book.

Chinese Taipei (Taiwan)

Although Taiwan expected to publish the draft Inventory of Existing Chemical Substances by mid-summer 2011, due to the significantly high number of substances notified (>300,000 dossiers received), it is still compiling the inventory. The inventory has not yet been published and is expected to be released in 2012. In all likelihood, the Existing Chemical Notification (ECN) process will re-open in 2012 to allow substances not previously notified to be notified. The New Chemical Notification (NCN) was also scheduled for release by the end of 2011. The NCN is still in the legislative phase, however. A more accurate estimate of the NCN timeframe will be known after the publication of the draft inventory.

GHS adoption in Taiwan follows the 2nd version of the Purple Book. Although Taiwan fully adopted the GHS, implementation remained voluntary for certain provisions. The first stage of GHS implementation in Taiwan required that no later than December 31, 2009, 1,062 substances (and mixtures containing the substances) identified online come into compliance. As part of the second phase of GHS adoption, mandatory compliance for 1,089 hazardous chemicals came into effect on January 7, 2011. The announcement of the third phase of GHS implementation is expected in 2012 with full GHS implementation scheduled by 2015.

Japan

As a result of recent amendments to the Chemical Substance Control Law (CSCL), as of April 1, 2011, manufacturers and importers of chemicals in Japan became subject to new annual reporting requirements. The amendments differentiate between lower risk substances, i.e., polymers of low concern, and define certain reporting requirements. The revisions are meant to assist Japanese regulators in prioritizing chemicals within its marketplace. The first batch of 88 priority assessment chemicals (PAC) was announced in April 2011. Japan is to announce in early 2012 the next batch of PACs that may ultimately result in the eventual inclusion of over 1,000 chemical substances. The list of chemicals that are exempt from the reporting requirements (primarily polymers) is to be updated annually.

Korea

The existing key legislation, the Toxic Chemicals Control Act (TCCA), is expected to be replaced in 2012 with new chemical control legislation similar to that of the EU's REACH legislation, with implementation possible in mid-2013 with priority assessment substances (PAS) being published six months prior to initiation of the pre-registration period. As of now, the draft legislation, commonly referred to as K-REACH, is still under review. A draft of the legislation is expected in 2012. As review and discussion continues, it is possible that the timeframe could be delayed.

Adoption of GHS in Korea occurred in 2008 and was based upon the 3rd edition of the Purple Book. Korea intends to modify its implementation of GHS to be in-line with the 4th edition of the Purple Book by June 2012.

Malaysia

On November 21, 2011, Malaysia's Department of Environment (DOE) updated the number of company registrations and environmentally hazardous substance (EHS) notifications performed under its voluntary scheme. Participation in the program has grown steadily. The number of participating companies registered is 312, the number of EHSs officially notified to DOE is 628, and the number of basic notifications performed is 1,205 with 145 of the submissions being reviewed by DOE, as of November 21, 2011 (see online). Upon approval of the legislation, the voluntary scheme will become mandatory. The legislation is not yet available, but is expected in early 2012.

The EHS Register is available online. The Register contains a listing of all chemical substances, notified by manufacturers and importers in Malaysia, which are hazardous to human health and the environment.

Malaysia's Department of Occupational Safety and Health (DOSH) is in the process of legislating a new regulation, Occupational Safety and Health Regulation (Chemical Classification, Labelling and Safety Data Sheets), better known as the CLASS regulation. The CLASS regulation will replace the existing Classification, Packaging and Labelling of Hazardous Chemical 1997 (CPL) and is expected to come into force by mid-2012 (see online).

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We hope you have found this forecast useful. As noted, B&C's website contains many more substantive memoranda on a wide range of subjects. Please go to www.lawbc.com and click 'Regulatory Developments' for more information.

We wish you all the best in the New Year.

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