2011 predictions for EPA`s office of .chemical safety and pollution prevention

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Source: Acta Group

The Acta Group, L.L.C.'s (Acta) thoughts are below on what may be headed our way in 2011 from the U.S. Environmental Protection Agency's (EPA) Office of Chemical Safety and Pollution Prevention (OCSPP). In short, the general trends established by the Obama Administration during the past two years are expected to continue notwithstanding the 2010 election results. At the same time, the impact of the election results, notably with the new Republican majority in the House of Representatives, will have a large but uncertain impact on the operations of OCSPP and all other EPA media programs.

We invite you to review our website at www.actagroup.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.

2009-2010: 'Not Bush' Meets 2011: 'Not Pelosi' -- 2010 Election Results

Throughout 2010, EPA as a whole continued to exhibit a desire to be the 'un-Bush' -- that is, emphasizing how decisions or policies differ from those that originated with Bush Administration appointees (implicitly regarding previous decisions as presumptively inadequate). EPA generally, including OCSPP, continued to push an expanded regulatory agenda in the areas of children's health, right-to-know, enforcement, environmental justice, and particular initiatives across all media programs (e.g., pesticide worker risk assessments, chemical action plans under the Toxic Substances Control Act (TSCA), non-point pollution, Superfund clean-ups, climate change initiatives under existing authority, among others) This is consistent with the stated priorities of the Obama Administration and Administrator Jackson. What will be interesting during 2011 is how much change, if any, there will be in the tone or implementation of the initiatives and directions launched during the past two years.

The dramatic decline in the number of elected Democratic members, especially the loss of the majority in the House of Representatives, will make for some significant differences in the prospects for EPA's budget and legislative proposals, policy initiatives, and general operations. In the Senate, the Democrats not only lost much of their plurality, but also some of the newly elected members have indicated a very hard line attitude against any expansion in the role of government and an overriding concern over federal deficit spending. That could certainly affect the future of EPA and most other government agencies. 2011 does promise to be an eventful year, even if by way of what does not occur. Although many of the leadership and Committee assignments have been made in the House, and party control in the Senate remains the same, it is quite uncertain how much the new Congress will focus on EPA programs and operations in general or what program areas (with the notable exception of climate change) will spark significant Congressional attention. That in turn may drive the degree to which any particular program might change its direction, or even its rhetoric, in the coming year.

Committees of Jurisdiction

For OCSPP, the major Committees of jurisdiction will see some significant changes in leadership. Obviously the most radical change in leadership will come in the House, where the changes in Committee leadership will be monumental. Most notably for EPA, current House Energy and Commerce Committee Chair Henry Waxman (D-CA) will be replaced by Rep. Fred Upton (R-MI). This will affect not only any prospects for climate legislation (immediately after the election, President Obama has already declared the cap and trade approach as 'dead'), but almost every element of EPA's operational programs. Mr. Waxman held numerous hearings and developed or promised significant initiatives to expand EPA's regulatory authorities and to implement more aggressively all of its enabling authority across all media programs. The new goal for many interested parties who a short time ago hoped for expansion of EPA's programs and reach is to fight to maintain the status quo. TSCA legislation, discussed in more detail below, is one example where the likely outcomes are radically different due to the change in leadership of the Committee. It should also be noted that the House Energy and Commerce Committee retains jurisdiction over the Federal Food, Drug, and Cosmetic Act (FFDCA), which governs the implementation of the Food Quality Protection Act (FQPA) tolerance-approval process.

For the pesticide program, the new Chair of the House Agriculture Committee with jurisdiction over the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) will be Rep. Lucas (R-OK). Compared to most others, the partisanship divide is relatively muted on the Agriculture Committee, but nonetheless new Chair Lucas has been quoted in a pre-election forum with the following observation about EPA: 'EPA has become an agency gone wild, creating regulations and policies that are burdensome, overreaching, and that negatively affect jobs and rural economies.' Consistent with broader themes announced by the new House leadership, he is expected to pursue some level of critical oversight of EPA and other executive branch agencies.

In the Senate, where Democrats retain majority control, the Committees of jurisdiction will see much less radical change. Sen. Barbara Boxer (D-CA) was re-elected, and will continue as Chair of the Senate Environment and Public Works (EPW) Committee. Sen. Lautenberg (D-NJ) was not up for re-election, and is expected to continue to champion TSCA reform and attempt to keep it high on the Committee agenda.

For pesticides, in the Senate the Agriculture Committee will have a new Chair, Sen. Debbie Stabenow (D-MI), as former Chair Sen. Blanche Lincoln (D-AR) was defeated for re-election. Although Michigan is not as dependent on agriculture as Arkansas, and is less dependent on row crop production (Michigan has more specialty crops such as apples, cherries, blueberries, greenhouse products), this is not expected to result in a particularly different change in the way the Committee operates. More importantly, the next Congress is expected to wrestle with a new Farm Bill for 2012. Lastly, the Senate Labor Committee, with jurisdiction over FFDCA, has rarely shown any interest in oversight of EPA's tolerance-setting program (and will see no change in leadership as chaired by Sen. Tom Harkin (D-IA)).

Even though these are the major Committees relevant to FIFRA and TSCA, there are numerous other Committees in both the House and Senate with the ability to hold hearings, ask questions, and generally oversee program operations across EPA programs. EPA operations cut across dozens of Committees and Subcommittees, and each may have an interest in some part of EPA. The oversight Committees are among the most notable, and in the House new Chair Darrell Issa (R-CA) of the Governmental Oversight Committee has already stated he intends to conduct extensive oversight hearings on various programs of EPA, and 'EPA science' would likely be among Oversight targets. If the new House members engage in aggressive oversight, the time and resources to prepare for the hearings alone could have a real operational impact on EPA.

EPA Appropriations

One immediate impact of the election has been and will continue to be an emphasis on reducing federal spending. Already, President Obama has frozen federal employee wages for two years. The budget for the remainder of the current fiscal year will also be in play, needing Congressional approval by the end of March. Many expect a freeze in domestic program spending, but that could just be the beginning of a general squeeze on EPA resources. Hiring restrictions, personnel ceilings, and reductions in contractor support can have a relatively immediate impact on program operations if critical skills are lost due to retirement and general turnover, and reductions of contractor support (the first way budgets are cut since federal personnel budgets are relatively fixed) can drastically slow down critical program processes (e.g., for pesticides, the first reviews of submitted registration support data).

As a result, EPA budget tightening could soon adversely impact EPA's ability to process pesticide registrations and Premanufacture Notification (PMN) submissions (notwithstanding statutory deadlines), slow down any pending rulemaking, and generally crimp EPA's ability to implement even non-controversial components of its operating programs. As the budget situation further deteriorates, some personnel impacts could become more drastic -- via direct cuts or hiring freezes, threats of pension cutbacks leading to earlier retirements, or promotion freezes -- which could in turn hinder EPA's ability to attract or retain the most talented of current staff.

EPA will also likely be subject to a variety of restrictions or reductions in its operating programs. For example, if the cap and trade approach to climate change is not available, many will want to have EPA continue its efforts to control carbon emissions via existing authority. This could inspire an effort by those opposed to such a plan to use the appropriations process to restrict the range of possible EPA options. Some could attempt to use appropriations restrictions to limit any EPA program or policy. The key difference for the next two years is that opponents of EPA actions will have a much friendlier forum for this approach to directing or deflecting EPA behavior.

The Prospects for TSCA Legislation

The future prospects for any new TSCA legislation are most affected by the 2010 election. The particulars of the discussion of possible changes to TSCA made during the past two years are mostly moot at this point. For a detailed summary of these legislative changes, please see our July 28, 2010, memorandum, 'House Introduces TSCA Reform Legislation: Summary and Comparison of House and Senate Bills and House Discussion Draft,' available online. Although the leadership and majority in the Senate mostly remain the same, the absence of Mr. Waxman as Chair will have radical implications for any possible TSCA legislation. Mr. Waxman's proposals, actively discussed in the past two years, will need to be reduced greatly in scope and detail to have any realistic chance of enactment in the current Congress. Mr. Lautenberg in the Senate is expected to continue to support more extensive changes, but even in the Senate some of the new members can be expected to oppose any legislation which seeks to 'expand government,' let alone those which could be in any way considered to have an adverse impact on jobs. This is not to pre-determine any analysis of any legislation yet to be introduced, but many of the likely hot-button rhetorical issues have already been identified.

The most interesting question lies with the response of the chemical industry and its allies given the change in House leadership. Notwithstanding the rhetoric of agreeing on many if not all of the 'principles of TSCA reform,' no legislative proposal was forthcoming from industry trade groups or any of its members. This, coupled with a notable absence of any specific proposals for changes to TSCA from the Administration, left a huge void in the political debate over the last two years. Advocates of very significant changes to current law were left talking mostly to themselves as industry trade groups continued to 'agree in principle' while criticizing the proposals, and the Administration broadly endorsed the proposals, also 'in principle,' but also offered few specifics. Issues such as how anything like the ambitious proposals that were introduced in both the House and Senate could be managed, the budget that would be required, the likely impacts on the public or regulated community, and numerous other important elements of a full legislative debate were left wanting by this vacuum.

Perhaps now with expected friendlier forums for any discussion of TSCA amendments, industry representatives will be less hesitant to develop specific amendments they believe will comply with the stated principles. This alone will not lead to agreement, as environmental groups will almost certainly expect and hope for more extensive changes, but the discussion may begin in a way which could lead to some areas of agreement. The Administration at some point will have to join the discussion and declare what it can or would like to support. What the new Congress would do even if such groups do agree on some or all issues, is a separate unknown.

FIFRA/FQPA Oversight

From the perspective of Congress, FIFRA implementation has generally been quiet over the first two years of the Obama Administration. The new Republican majority in the House, however, will likely lead to more aggressive oversight of all EPA programs, pesticides included. For the pesticide program, immediate candidates for an increased level of scrutiny include the use of 'good science' in decision-making, the use of FIFRA or FQPA authority in removing pesticide uses from the market without going through the FIFRA cancellation process, specific product decisions (carbofuran tolerance revocation, atrazine reevaluation), and the overall transparency and participation in developing new program initiatives (e.g., additional safety factors in occupational health assessments, new public review loops in pending new registrations, use and review of existing data in the Office of Pesticide Programs' (OPP) Endocrine Disruptor Screening Program (EDSP), and the economic impact of EPA pesticide decisions).

At the same time, some of the most difficult issues facing the pesticides program, such as implementation of the Endangered Species Act (ESA), the Clean Water Act (CWA), and even the issue of pesticide drift, are likely to remain as intractable as ever. For example, towards the end of the past Congress, there was legislation introduced to affirm that National Pollutant Discharge Elimination System (NPDES) permits are not required when pesticide applications complied with FIFRA requirements. It is not clear, however, that even if the House might now approve such language in 2011, whether the Senate would also agree to such legislation.

Administration Reaction to Republican Resurgence

As President Clinton reminded the leaders of the Republican 'takeover' in 1995, the President is still relevant even if Democrats lose control of the House and/or Senate. If, as expected, the House attempts to undermine budget or legislative priorities of the Obama Administration, the Executive Branch (and its allies in the Senate) will retain numerous ways to attempt to control the agenda in the environmental arena. Large areas of discretion remain in existing authority under both FIFRA and TSCA. Notwithstanding oversight hearings or other criticism of EPA's interpretations of 'good science,' the Administration has much leeway to continue to emphasize its identified priorities such as environmental justice and the protection of children's health -- which in the current context could lead to a greater emphasis on pesticide use in schools, indoor air pollution, restrictions on TSCA chemicals, revised occupational health assessments, 'warnings' about various chemical exposures or products in the home, and the results of biomonitoring studies of children, among many other initiatives.

Presidents can unilaterally sign Executive Orders or determine priorities under current law. One such example for President Clinton came in 1995, when partly in response to the 1994 election losses, the President ordered EPA to accelerate the expansion of the Toxics Release Inventory (TRI) and issued an Executive Order mandating greater TRI reporting obligations on federal contractors. One can expect similar initiatives to be considered by the Obama White House. Another opportunity in this regard is to exert greater influence in the area of international environmental programs and agreements, since that is often viewed as an area of greater autonomy or control of the Executive Branch.

One last implication of the 2010 elections is that the 2012 Presidential Election cycle has already started. This will influence any activity by either party or the Administration over the next two years. 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.

What is less clear is the immediate message the current Administration perceives to be in its best interest in light of the 2010 election results. Whether the Administration be more sensitive to predictions of the impacts on businesses from environmental programs, will the Administration push more extensive environmental initiatives as part of its attempt to compensate for disappointments in the climate change arena, and whether Presidential Election politics will result in no compromises between the House and Senate on anything proposed or sought by the Administration are uncertainties at this point.

Notwithstanding any mega-trends relating to the new Congressional balance of power, there remain numerous discrete issues which remain important to anyone interested in the regulation of pesticides and toxic chemicals at EPA. The next sections will describe in more detail some number of these issues, their current status, and some speculation about their near-term outlook. Overall, as mentioned, EPA can be expected, at least initially, to continue broadly with its agenda and priorities as now identified from the track record of the past two years.

Water Pollution Permits for Pesticide Applications (NPDES)

Mentioned earlier was the attempt by some members in Congress affirmatively to exempt application of a pesticide according to its label from needing any permits under the CWA. Regardless of those efforts, EPA is still under a court order to implement a permit scheme for certain pesticide applications in April 2011. This has been the result of litigation and rule development over the past years and which are now due to become a final rule. EPA has sought to assure users of pesticide products that they will try to make any such permit requirements straightforward and consistent with any pesticide registration label requirements. These assurances have not convinced most users that significant disruption and regulatory burden could ensue for no clear improvement in environmental outcomes (since the requirements to follow the label are already part of FIFRA, many see any other requirements as redundant at best and leading to a possible citation for a CWA violation at worst).

Since this deadline is early in the new year, it may draw significant attention from the new Congress as an example of EPA overreach and overregulation (although it should be noted that EPA tried previously to avoid the current situation but was forced into the rulemaking by the courts). It will also prove politically controversial almost regardless of how it is implemented, which may consume a large amount of senior leadership's time and attention.

ESA

Another seemingly intractable issue which continues to dog EPA's pesticide program is compliance with the ESA. Litigation from advocacy groups has continued to be filed and cooperation with the biological services programs responsible for evaluating biological opinions (biops) on a pesticide's use also remains at impasse. As EPA's attempts to meet ESA requirements continue to be found to be insufficient, there remains a fear that significantly disruptive court orders could be put in place as part of any judicial determination -- for example, large, mandatory buffer zones prohibiting pesticide use in certain situations or broad requirements to forbid pesticide use altogether in certain areas. Senior management of EPA and the other relevant agencies have expressed their desire to come to some kind of coordinated and agreed upon approach, and such discussions appear to be ongoing, but no resolution appears imminent while new and continued litigation marches on. This could rapidly become a highly visible 'oversight' issue for the new members of Congress.

Regardless, attempting to sort out and comply in any way with the ESA will continue to consume large amounts of leadership time and attention. OCSPP Assistant Administrator Owens has already stated that he expects personally to continue to attempt to address any coordination problems with the sister agencies. At the same time, he has little control over how those other agencies allocate their resources or drive their own internal policy development process. The problem has been the regional staff resources and conclusions -- which will continue to be difficult to influence.

Pesticide Drift

EPA's pesticide program continues to struggle with how best to address the issue of pesticide drift. Over the past year, OPP has maintained its position that its policies will define unallowable drift to be that which 'may cause' harm from the pesticide -- which the users and registrants of pesticides believe to be an extreme (and not authorized) extension of the current FIFRA standard of 'does not cause unreasonable risk.' This distinction is more than semantics, since the criticism of EPA's position is that it would provide for a subjective standard placing user of pesticide who followed every label instruction in jeopardy of a possible enforcement action even if 'harm' has not occurred. The debate has been going on for years, and EPA has attempted to reassure critics that no new, more restrictive, standard is being imposed. Such reassurances have not quelled the criticism, and the critics will almost certainly cite this as one example of EPA overreach in any new Congressional oversight setting.

Endocrine Effects -- FIFRA Chemicals

The pesticide program has issued, and continues to issue, endocrine effect test orders for certain pesticides. The program now will soon face both the question of what any newly developed test results from these lower-tier tests mean, and whether any results can obviate the conclusions reached previously by the program on the basis of more advanced tests (e.g., the multi-generation reproductive toxicity tests). As yet, EPA has not defined how any test results from Tier 1 will be related to a determination that Tier 2 is needed.

On November 17, 2010, EPA announced the second list of chemicals and substances for which EPA intends to issue test orders under the EDSP. Access to Bergeson & Campbell, P.C.'s (B&C) Endocrine Disruptor Webinar is found online. In separate notices, EPA also announced its draft policies and procedures for requiring Tier 1 screening under the EDSP, and a new guidance document outlining weight-of-evidence policies. The issuance of the second list of EDSP screening chemicals and the proposed policies and procedures for obtaining testing are important developments for chemical manufacturers because this second list includes chemicals not regulated by either FIFRA or TSCA. The list includes chemicals which may be found in sources of drinking water, and is driven by parallel (to FQPA) requirements for endocrine testing in the Safe Drinking Water Act (SDWA). Meanwhile, regarding submissions of 'other scientifically relevant information (OSRI),' EPA has typically rejected arguments that the OSRI eliminates the need for new, lower-tier tests as required under EPA's endocrine program. Taken together, the rejection of the OSRI analyses, and the expansion of the testing program, indicate EPA's intention to continue to implement aggressively this part of their testing programs.

OPP Pilot Programs

OPP has initiated a handful of pilot programs regarding the use of electronic labels, ingredient disclosure, and consumer 'green seal' programs (specifically the Office of Pollution Prevention and Toxics' (OPPT) Design for the Environment (DfE) program). Taken together, these continue with the Administration's priorities regarding 'right-to-know' and better communication with pesticide users. For a variety of reasons, these initiatives have had some difficulty in enlisting volunteers among the registrant community, although the intent of the pilot programs is to identify and address implementation issues. Nonetheless, these have been identified as program initiatives that will continue as part of EPA's agenda.

Decisions Concerning Individual Pesticides

In addition to the general issues discussed here that affect the entire pesticide program, there are a number of discrete pesticide cases that have given, or will give, some indication of the general program direction. In no particular order, these include:

   1. Aldicarb and Endosulfan

During 2010, OPP announced that use of these two pesticides would be eliminated as part of voluntary cancellation agreements reached with the registrants. In both of these cases, these were chemicals of significant regulatory scrutiny by the program over many years (decades, actually). These 'voluntary' agreements signal a continued aggressiveness in seeking to eliminate or reduce reliance on 'older chemistry' such as pesticides found in the organochlorine or carbamate class of chemistry.

   2. Atrazine

Atrazine, one of the most widely used pesticides in corn production, was the continued subject of Scientific Advisory Panel (SAP) meetings on a variety of issues related to its continued registration. In 2009, EPA announced a series of SAP reviews of the science underpinning the current regulatory position on atrazine -- a move seen by some as a prelude to more stringent regulation. The meeting process alone continues to take a significant amount of time and program resources, and will continue to raise both expectations and suspicions among environmental groups and growers, respectively.

   3. Methyl Iodine

Methyl iodine is a newer pesticide compound registered as a substitute for methyl bromide -- an ozone-depleting pesticide EPA would like to see reduced. Methyl iodine is not without controversy or critics itself, as it claimed to have a number of toxic properties that some believe would otherwise warrant its disapproval. As a methyl bromide substitute, however, EPA registered its use, and now the key decision is its pending registration in California, a decision which is expected to be made in the very near future.

   4. Sulfuryl Flouride

Sulfuryl fluoride is another newly developed fumigant designed as a substitute for ozone-depleting fumigants like methyl bromide. Registered for certain food uses, it required a tolerance issued under the FFDCA as amended by FQPA. One of the requirements, the aggregate risk factor, forbids the tolerance to be issued if the 'risk cup' is already full from other sources. In the case of sulfuryl flouride, the question has been whether the risk cup for the pesticide use is already overly full due to exposure to naturally occurring fluoride in drinking water, which at high enough levels may cause an adverse health effect.

The key current development is that notwithstanding EPA's approval in 2005, those who believe fluoride to be a very toxic material have challenged EPA's granting of the tolerance under the FFDCA. They have persisted for years in their challenge to EPA, and have gone through litigation to force EPA to have a hearing on their objection to the granting of the tolerance. No such hearings have been held in modern history under the relevant parts of the statute, and it is even unclear what the appropriate procedures will or should be.

Why this is important to the larger pesticide user community is that a number of important policies and procedures that underpin EPA's tolerance-setting process could be affected, for example, how EPA articulates its position on how to incorporate drinking water exposures from naturally occurring substances. No schedule is set for any further proceedings at this time, but those seeking to challenge the tolerance are clear in their intent to press the case forward.

TSCA Reform and EPA's Enhanced Chemical Management Program

As noted above, despite the promise of a year ago, both TSCA reform and the enhanced chemical management program encountered difficulties and slower than expected progress in 2010 and the future is a bit cloudy for both. While 2010 saw bills introduced in both houses of Congress, neither bill gained traction and despite the high hopes of activists (that likely had their apogee during the series of meetings on the House's Discussion Draft), the future remains to come into focus.

While there have been some promising signs since the election, such as Senator Inhofe's (R-OK) pledge to work with Senator Lautenberg (D-NJ) on bipartisan TSCA legislation and the American Chemistry Council's (ACC) post-election statement expressing its continued commitment to work with bipartisan leaders in Congress, non-governmental organizations (NGO), and other stakeholders to modernize TSCA, all recognize that Congress has a lot on its plate in the coming year and it remains to be seen if this issue will jell in 2011. In many regards, realizing TSCA reform is an issue that may benefit from being considered by a divided Congress, given the strong needs and expectations held by stakeholders and the difficulty and complexity of the many issues at play in reforming TSCA. For the upcoming Congress to address the issues, early progress will be key. The period over the first 6-8 months of 2011 will be instructive and likely determinative whether legislation is likely to be enacted during this Congress.

Under the enhanced Chemical Management Program in 2010, EPA was able to continue its slow but ongoing release of Chemical Action Plans, while taking the actions identified in earlier Chemical Action Plans has proven difficult. It is clear that resources are being pinched to do all of the things that OPPT has committed to but progress continues.

EPA released four new Chemical Action Plans in 2010 (bisphenol A, benzidine dyes, hexabromocyclododecane (HBCD), and nonyl phenol/nonylphenol ethoxylates), equaling the number released in 2009. Several important actions are pending at the Office of Management and Budget (OMB) and the next several months will speak volumes about OPPT's ability to make progress in advancing its agenda. A key proposed action is EPA's effort to propose a 'chemicals of concern' list under TSCA Section 5(b)(4). The proposed rule was submitted to OMB in May 2010, and its review has been formally extended by OMB. It appears that this rule is being subjected to close scrutiny because of the policy implications of the creation of such a chemicals of concern list, insofar as it is not identified as economically significant. EPA's ability to get this cleared through OMB will be an important test of what the next two years is likely to see as EPA attempts to deliver on its Chemical Action Plan commitments. 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.

There are in addition seven OPPT actions that were submitted to OMB since November 2010 and that remain within their 90-day review window. These include Chemical Action Plans on toluene diisocyanate (TDI) and methylene diphenyl diisocyanate (MDI), the combined TSCA Section 4 test rule and Significant New Use Rule (SNUR) on certain polybrominated diphenyl ethers (PBDEs), a notice on testing of bisphenol A (BPA), SNURs for the glymes and certain uses of elemental mercury, and a reporting rule for certain nanoscale materials. 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 first time that EPA will attempt to handle importation of articles containing a chemical as a significant new use, 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.

A number of other actions are also being developed by OPPT and are expected to be submitted for OMB review and release in 2011. These include the rule promulgating the proposed changes to the Inventory Update Rule (IUR), a TSCA Section 4 nanoscale materials test rule, the High Production Volume (HPV) orphan test rule (this may also include a SNUR component), and the siloxanes Chemical Action Plan. The IUR in particular is an important action, given the broad scope of EPA's proposed changes. It remains to be seen, and as such will be an important development for industry, how EPA will address the timing for reporting and whether it will require reporting of production/importation values during the intervening years since the last IUR reporting cycle.

Beyond these changes, the broad expansion in the reporting requirements proposed by EPA, e.g., removing the 300,000 lb threshold for reporting of processing and use information, changing the reporting standard from 'readily obtainable' to 'known to or reasonably ascertainable,' increasing the reporting frequency, and related changes will, depending on how these proposed changes are addressed, represent a significant increase in the information available to EPA on chemical production and uses. Perhaps the most interesting developments will be those associated with how and whether EPA proceeds with some of the 'issues for comment' raised in the proposal, including expanding reporting requirements to mirror more closely the information required in a PMN and inclusion of reporting by processors (in addition to manufacturers and importers who are currently subject).

EPA is also likely to continue increasing its pressure on Confidential Business Information (CBI) claims in 2011, as it follows up on policy approaches announced in 2010 generally to deny CBI claims for chemical identity in health and safety studies submitted under TSCA Section 8(e) and letters to trade associations and companies asking them voluntarily to declassify previously submitted CBI and to reduce their future CBI claims.

Endocrine -- SDWA Chemicals

2011 will also likely see the first issuance of SDWA/FFFDCA orders requiring endocrine screening of 'other SDWA chemicals' identified by EPA in its November 2010 Federal Register notice. Among the challenges that EPA will face is determining who should receive the orders given the diversity of the chemicals included among this grouping and the fact that only a subset were the subject of reporting under the 2006 IUR. EPA may also be challenged as to the adequacy of the information relied on for listing chemicals on the third Chemical Contaminant List (CCL 3) as the basis for establishing that the chemicals satisfy SDWA Section 1457 requirements for issuance of testing orders.

Key issues in this regard will concern chemicals for which there is little evidence of their presence in sources of drinking water (the CCL 3 listing for certain chemicals was based on TRI releases or production volume information rather than monitoring data) and that a 'substantial population' may be exposed. An additional challenge will be for EPA to find the resources needed for issuance of testing orders given that the OPPT staff who would likely be involved in this effort already have been tasked with meeting Chemical Action Plan commitments such as those discussed above. Access to B&C's Endocrine Disruptor Webinar is found online.

REACH

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) announced in early December that registration dossiers had been submitted for 4,300 substances, including nearly 3,400 phase-in chemicals. According to ECHA, 24,675 registration dossiers were submitted by the registration deadline. Several hundred dossiers were submitted after the registration deadline. ECHA reportedly intends to update these numbers at which point it may be possible to assess the overall compliance with Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) requirements and to understand possible implications (commercial, regulatory, enforcement) for chemicals that did not meet the registration deadline.

Of the substances registered pursuant to the 2010 deadline, approximately 400 are classified as a carcinogen, mutagen, or toxic to reproduction. More than 150 are classified as very toxic to aquatic organisms. Of these substances, 27 are already listed on the Candidate List of Substances of Very High Concern (SVHC). We anticipate that the number of substances currently listed on the Candidate List will dramatically increase in 2011.

In December, ECHA's Member State Committee recommended that eight substances on the Candidate List be considered for Authorization (inclusion in Annex XIV). The eight substances are diisobutyl phthalate, two arsenic oxides, three lead chromates, tris(2-chloroethyl) phosphate, and 2,4-dinitrotoluene. These are in addition to the seven substances recommended by ECHA in June 2009. The final decision on the inclusion of the substances in Annex XIV of REACH will be taken by the European Commission this year.

Four substances were nominated for Restriction in 2010 with two of the substances remaining under consultation until March 24, 2010. Consultation recently ended on lead and its compounds and DMTu; comments have not yet been made publicly available.

There remains much debate on the success and/or effectiveness of many aspects under REACH. We anticipate that many issues will need to be addressed by ECHA and the European Commission, i.e., Lead Registrant functionality, Substance Information Exchange Forum (SIEF)-related problems, data compensation disputes, and a general need for clarity on ECHA procedural and industry guidance documents. The resolution of many of these issues is expected to play out in the European judicial system. Based on experience with the current registration process, a smoother, more developed process is envisioned for 2013 registrations. SIEF activities for these substances are likely to begin in the 1st Quarter of 2011.

CLP

The January 3, 2011, deadline for submission of notifications concerning the Classification, Labeling, and Packaging (CLP) of Substances and Mixtures Regulation (1272/2008) has arrived. The CLP requirements apply to substances placed on the market on or after December 1, 2010. ECHA's website reports that over 2.5 million notifications were received before the end of 2010 and it remains to be seen how many more will be submitted over the next weeks. In addition, there is some question about the reliability of classifications being submitted in association with substances that were not registered under REACH. Harmonization for these substances will likely prove challenging. It is expected that for these substances, more accurate harmonization of CLP will occur once the SIEF and Lead Registrant are more active in meeting first registration deadlines for these substances (2013 or 2018). For many of these substances, data collection activities have not yet begun and thus CLP profiles are not available.

Stockholm Convention

The amendments adding the first set of new persistent organic pollutants (POPs) to the control annexes under the Convention entered into force in August 2010 for Parties that had not selected the 'op-in' procedure for explicitly agreeing to be bound by new additions. The following chemicals were added: alpha hexachlorocyclohexane; beta hexachlorocyclohexane; chlordecone; hexabromobiphenyl; hexabromodiphenyl ether and heptabromodiphenyl ether (commercial octabromodiphenyl ether); lindane; pentachlorobenzene; perfluorooctane sulfonic acid, its salts and perfluorooactane sulfonyl fluoride; and tetrabromodiphenyl ether and pentabromodiphenyl ether (commercial pentabromodiphenyl ether). Also in 2010, the Persistent Organic Pollutants Review Committee (POPRC) recommended listing the pesticide endosulfan in Annex A (elimination annex) of the Convention, with specific exemptions.

The next meeting of the Conference of the Parties will occur in April 2011 and listing of endosulfan will be the major issue on the agenda. The meeting will also consider issues relating to the compliance mechanism, technical assistance and financial resources, reporting requirements, and synergies among Basel, Rotterdam, and Stockholm conventions.

Rotterdam Convention

The next meeting of Rotterdam's Chemical Review Committee (CRC 7) will be held in late March-early April 2011. Meeting documents have not been posted but the Secretariat reports that it has received a proposal for listing a severely hazardous pesticide formulation containing paraquat. The Conference of the Parties to the Rotterdam Convention will meet in June 2011 and consider four chemicals for addition to the Annex III listing of chemicals subject to the Prior Informed Consent procedure: chrysotile asbestos, endosulfan, alachlor, and aldicarb. Chrysotile asbestos in particular has been the subject of difficult negotiations in getting to this point and this is likely to continue in the deliberations by the Conference of the Parties insofar as decisions to add chemicals to Annex III are taken by consensus.

Regulation of Nanoscale Materials

OPPT and OPP were both active with regard to nanoscale materials in 2010 and the New Year is expected to see comparable activity. The big unknown is whether the change in leadership in the House will slow down any of EPA's announced policy and/or rulemaking activities.

EPA is expected to propose early in 2011 a SNUR under 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 reportedly working on a proposed TSCA Section 8(a) rule to establish reporting requirements for 'certain nanoscale materials.' The rule is likely to include 'existing chemical nanoscale materials.' As noted above, EPA intends to propose these rules in 2011. When, or perhaps even whether, may turn on Congressional support for each initiative.

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 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 Administration 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.

EPA's response to the International Center for Technology Assessment's (ICTA) November 18, 2010, request of EPA to halt the sale of 'untested nano-copper' FIFRA products registered, if any, may further clarify EPA's position on nanopesticides. ICTA alleges that nano-copper based wood preservative pesticides marketed in the U.S. should have been subject to review as 'new' pesticides requiring additional data and review. ICTA also urged EPA to issue 'long-awaited' industry guidance on nano-scale pesticides submitted in July to OMB for review.

Developments in California are also relevant. In response to concerns vigorously expressed by diverse stakeholders over the final draft of the Safer Consumer Product Alternatives (SCPA) Regulations, the California Environmental Protection Agency (CalEPA) has effectively delayed implementation of the much-anticipated regulations. The net effect of this recent development on the regulation of nanoscale materials in consumer products in California is equally uncertain.

Scheduled to go into effect on January 1, 2011, the start date of the game changing regulations is now indeterminate. CalEPA released a widely circulated December 23, 2010, letter from Linda Adams, California's Secretary for Environmental Protection, to Assembly Member Mike Feuer (D-LA), the author of the 2008 law (A.B. 1879), that would require regulations to address chemicals and chemical ingredients in consumer products. In the letter, Secretary Adams responded to Feuer's December 3, 2010, letter outlining his serious concerns about the Department of Toxic Substances Control's (DTSC) November 16, 2010, release of revisions to its SCPA regulations. Adams noted that instead of implementing the regulations, DTSC will reconvene the Green Chemistry Science Panel in early 2011 to 'further vet the programmatic issues that have been brought to our attention via the public comment process.'

Feuer charged that the revisions both failed to address the flaws of the earlier version and 'compounds them by fundamentally altering the approach called for under legislation I authored.' In addition to Feuer's letter, the Environmental Working Group (EWG) and 32 other organizations submitted a letter on December 14, 2010, to California Governor Schwarzenegger urging him to 'take immediate action to stop implementation of the draft regulations' because of their wholesale failure to give expression to the intent of the Green Chemistry legislation.

Based on these developments, it would appear that changes in the revised regulations that the nano industry supported could be subject to further discussion and revision. Among these issues are the proposed exemption of nanomaterials; the decision to focus the first five years on children's products, personal care products, and household cleaning products; and the revised process by which 'chemicals of concern' and 'priority products' will be identified. Indeed, among the 'defects' identified in the EWG letter to Governor Schwarzenegger include the exemption for 'nanomaterials from regulation.'

Earlier versions of the regulations posed challenges for the nano community. The term 'chemical' used in the SCPA included 'nanomaterial.' Nanomaterial, in turn, was defined poorly and in ways largely indifferent to the global conversation underway to define the nomenclature of nano with precision and in response to the many thoughtful global initiatives designed to avoid confusion and inspire scientific harmonization. Additionally, prioritization factors were defined in ways that would have made consumer products containing nanomaterials almost certain candidates for target lists.

One important development in the European Union (EU) merits noting here. Several types of nanoscale materials recently dodged a bullet as the European Parliament declined to ban nanosilver and long multi-walled CNTs in the EU's Directive on the Restriction and Use of Certain Hazardous Substances in Electrical and Electronic Equipment (RoHS Recast). For reasons not entirely clear, detractors of these nanoscale materials tried, and failed, to ban them outright in the RoHS Recast initiative. A more thorough discussion regarding the basis of nanomaterials regulation in the EU, in electrical and electronic equipment, or more generally in the context of the ongoing discussions on nanomaterials under REACH is underway. A specific working group was created for this purpose, and preliminary conclusions are expected to be released soon.

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.actagroup.com and click Regulatory Developments for more information.

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