Nano Regulation and the New U.S. Congress

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Courtesy of Bergeson & Campbell, P.C.

The U.S. Environmental Protection Agency's (EPA) Office of Pollution Prevention and Toxic Substances (OPPT) and Office of Pesticide Programs (OPP) were both active with regard to nanoscale materials regulation and policy in 2010.  The new year is expected to see comparable activity.

The big unknown is whether the change in leadership in the U.S. Congress' House of Representatives will slow down any of EPA's announced policy and/or rulemaking activities.  Early indications are jobs, economic prosperity, and the economy will enjoy a new prominence in the environmental policy debate and may have a meaningful impact on the direction of environmental law and policy.  This is good news for nano stakeholders.  The Administration revealed two important 'tells' recently.

First, on January 18, 2011, President Obama penned an op-ed piece in the Wall Street Journal entitled 'Toward a 21st-Century Regulatory System.'  The op-ed focuses on the need to balance the interests of environmental protection with the goals of economic prosperity, the need for public input and discussion, and the importance of a healthy economy.

Second, President Obama issued an Executive Order (EO) on January 18, 2011, on 'Improving Regulation and Regulatory Review.'  The EO supplements another EO President Clinton issued in 1993 (EO 12866) and emphasizes the importance of understanding the regulatory impacts of rulemakings, the need to identify less onerous alternatives, and the need to engage the public in the process of developing new regulations.  Under the EO, each agency has 120 days to develop and submit to the Office of Information and Regulatory Affairs in the Office of Management and Budget (OMB)(which is part of the Executive Office of the White House) a preliminary plan, consistent with law and its resources and regulatory priorities.  Under this plan the agency will periodically review its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed to make the agency's regulatory program more effective or less burdensome in achieving the regulatory objectives.  The EO is available on the Internet at this link.

The U.S. Small Business Administration (SBA) Office of Advocacy issued a January 19, 2011, press release applauding the President's efforts 'to reduce excessive and unjustified regulatory burdens on small business.'  According to the Office of Advocacy, small businesses with fewer than 20 employees spend 36 percent more than larger firms to comply with federal regulations.

Whether the EO really puts teeth into EO 12866, or is more political rhetoric as the new Congress ramps up for what are expected to be intensive Congressional Oversight Hearings targeting EPA's policies over the past two years, remains to be seen.  That the EO was issued at all is significant, however, and many see it, at the least, as an important tool that can be used to redirect rulemaking initiatives that would benefit from streamlining, reconsideration, and/or repeal.

Not everyone, of course, agrees that some of the Obama Administration's environmental initiatives might excessively burden the economy and stifle innovation.  Many believe, for example, that the Administration has been appropriately safeguarding the environment and making tough, but necessary, decisions, particularly in the area of greenhouse gas controls.

Others look strictly to the numbers.  According to the George Washington University Regulatory Studies Center, in the first two years of Mr. Obama's term, the federal government issued 132 'economically significant regulations,' defined as having impacts of $100 million or more per year.  That averages out to 66 major regulations annually, which is higher than the averages issued by President Clinton (47 per year) or President Bush (48 per year).  President Obama's Regulatory Agenda, released in December 2010, suggests rulemaking is moving at a fast clip.  There are 183 more regulations under way now than last year at this time, representing a 5 percent increase in rulemaking activity.  The Regulatory Agenda reveals a 20 percent increase in economically significant regulations, or 40 more regulations with impacts of over $100 million under development now than at this time last year.

How the EO impacts nano initiatives is, of course, unclear.  EPA is expected to propose early in 2011 a significant new use rule (SNUR) under the Toxic Substances Control Act (TSCA) Section 5 for nanoscale chemical substances.  A draft SNUR is under OMB review.  The SNUR is expected to require manufacturers of nanoscale substances to obtain EPA approval of 'new' uses of existing nanoscale substances deemed 'significant new uses.'  EPA is expected to identify existing nanoscale substances that share the same molecular identity as their conventionally-sized counterparts listed on the TSCA Inventory as a 'category' of chemical substances.

EPA is also working on a TSCA Section 4 test rule under which chemical manufacturers would be required to develop data production to determine the health effects of certain multi-wall carbon nanotubes (CNTs) and nanosized clays and alumina.  EPA is also working on a proposed TSCA Section 8(a) rule to establish reporting requirements for 'certain nanoscale materials.'  The rule, which was also sent to OMB for review, is likely to include 'existing chemical nanoscale materials.'  As noted above, EPA intends to propose these rules in early 2011.

As for OPP nano activity, EPA's expression of interest in adopting a policy that would require any pesticide registrant that is aware that a constituent of a registered pesticide product is at the nanoscale to submit the information to EPA pursuant to Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) Section 6(a)(2) was the recipient of significant industry pushback in 2010.  The policy was submitted to OMB for review on July 31, 2010, and remains there, perhaps telegraphing the Administration's concern with the policy, trade, and regulatory implications of 'repurposing' FIFRA Section 6(a)(2) in this regard.  EPA also expressed its commitment to confirm its view that substitution of a nanoscale active or inert ingredient for a conventionally-sized active or inert ingredient in a FIFRA-registered product requires the registrant to submit an application to amend that registration.

Whether the new EO and changed Congressional politics will influence the pace and/or issuance of these nano initiatives is unclear.  Based on the new political reality in Washington, D.C., however, there is certain to be greater focus on the economic impact of environmental rules of all sorts, including those that are specific to nanomaterials.  Nano advocates can certainly be expected to argue that enhanced regulation of nanoscale materials -- whether industrial or agricultural in application -- needs to reflect a renewed sensitivity to the economic impact of the regulation and to require assurance that the rule's implementation will not stifle innovation, jobs, or the economy.

For more information on the President Obama's Executive Order (EO) please follow this link. Further information on EPA and FIFRA are also available.

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