Why It Matters
On January 12, 2017, the U.S. Environmental Protection Agency (EPA) issued a controversial rule requiring all persons who propose to commence importing, manufacturing or processing certain nanoscale materials, or who have done so in the past three years, to prepare and submit a comprehensive report for each material, including all information known or reasonably ascertainable relevant to assessing its risk under the intended circumstances of use. Additional reports must be submitted for the same material if production changes are made that intentionally change the shape, size or certain physicochemical properties of the material (referred to as a 'discrete form'). EPA has not concluded that all nanoscale materials present special risks. There is no particular risk associated with nanoscale particle size alone. Rather, the collected information will be used by EPA to assess, on a case-by-case basis, whether individual nanoscale materials may present risks warranting further investigation or, ultimately, individual regulation of safe use and handling under the Toxic Substances Control Act (TSCA). The rule becomes effective on May 12, 2017.
The rule is applicable to materials with a significant nanoscale fraction made to take advantage of size-dependent properties that vary from those found in larger scale materials. This covers true nanotechnology products such as quantum dot semiconductor materials used in televisions that can be tuned to emit light at specific frequencies by changing their particle size and shape. But it also appears to include other, less exotic materials, purposefully produced in ultrafine or colloidal particle size ranges to take advantage of very ordinary size-dependent properties, such as increased surface area. Consumer product manufacturers that import, manufacture or process with ultrafine materials should assess potential applicability to current materials and set a screening procedure to identify future materials that trigger pre-manufacture reporting requirements.
Reporting Deadlines for Future and Past Activities
For proposed new nanoscale material manufacturing, importing or processing activity (or producing a discrete form of a previously reported material), a report is due either 135 days before commencement of the new activity, or, where a shorter start-up period is planned, 30 days after forming the intent to commence the activity. The 135/30-day reporting obligation for new activities becomes effective on May 12, 2017. Reports for nanomaterial activities that commenced prior to that date are not due until May 2018. Reporting must be done electronically through EPA's secure data collection system.
The reporting rule has been in development for more than six years, including four years on hold at the Office of Management and Budget. There, an initial draft was scaled back significantly during interagency review to remove terms that would have required all companies in the future to notify EPA and wait 90 or more days before they could start manufacturing or processing particular nanomaterials, which EPA then could authorize on a case-by-case basis (a 'significant new use rule' or SNUR). The final rule maintains vestiges of that approach reflected in the permanent 135/30-day reporting obligation for new manufacturers and processors. The 30-day reporting option was added to the final rule, without prior proposal or public comment, in response to vigorous industry objections that the 135-day reporting arrangement was an unwarranted and illegal prior restraint on manufacturing not authorized by TSCA. Although EPA correctly states in the preamble to the final rule that the 135-day reporting obligation does not expressly prohibit the start of manufacture or processing until the end of that period, the inhibitory effect is the same if a company can be penalized for 'late' reports submitted less than 135 days before commencement. The newly added 30-day reporting option provides additional flexibility, but may be impractical given uncertainty about exactly when a company forms a specific manufacturing intent, and because the period is much too short. Based on EPA's estimate of the average time needed to complete a submission, it would require an individual to work on the report nearly six hours/day every day in the 30-day reporting period to meet the regulatory deadline.
Reports are required only for nanoscale materials that are solids at ambient temperatures and have a particle size less than or equal to 100 nm. In addition, to be reportable, the material must be made or processed in the nanoscale form with the specific intent to produce 'unique and novel,' size-dependent properties in the material.
In response to criticism of the highly subjective and undefined 'unique and novel' applicability criterion in the proposed rule, EPA adopted a definition in the final rule. Without prior proposal or public comment, EPA has defined 'unique and novel' properties as 'those that vary from [properties] associated with other forms or sizes of the same substance.' This definition would have benefited from public comment, as it appears to have the unintended effect of triggering reporting for a wide range of common materials for very ordinary and predictable properties associated with smaller-sized particles, such as increased surface area. And it also arguably may have the unintended effect of exempting from reporting relatively exotic nanoscale materials, such as carbon nanotubes and buckyballs, that exist only in the nanoscale size range and therefore do not have properties that vary from those of a larger form of the same substance (because there is no larger form). In addition, like the many exempt nanoscale biological materials, the special properties of these materials often are not a function of their particle size per se but of their chemical structure and shape.
In the final rule, EPA has narrowed some exclusions and broadened others. Reporting is not required for those handling aggregates and agglomerates that are greater than 100 nm, even if they are made up of primary particles less than 100 nm. Reporting generally is not required for unintentionally present nanoscale fractions of larger-sized materials, or where the nanoscale fraction is 1% or less by weight. Nor is reporting required for a wide range of biological materials (e.g., DNA, proteins, enzymes), substances that form in films to be less than 100 nm, and substances that dissociate completely in water to form ions less than 100 nm. Substances that release ions but do not completely dissociate are not exempt. Many nanoscale substances are incorporated into formulated products or matrices. The preamble to the rule clarifies that otherwise covered nanomaterials are not reportable by processors after they have been incorporated into a formulated product, a polymer matrix or an article, but processors that prepare these mixtures are not exempt. In a significant break from the proposal, the final rule omits an express exemption for nanoclays and nanoscale zinc oxide materials. EPA had proposed to exempt them because it already had sufficient information. These materials are reportable in particular cases if they otherwise meet the size and 'unique and novel' applicability criteria. The rule does not apply to 'new chemicals' that are not yet on the TSCA inventory. Nor does it apply to materials subject to the TSCA R&D exemption, and materials not subject to TSCA, such as pesticides, foods, drugs, and cosmetics.
Small business entities with total sales (together with those of their parent companies) of less than $11 million are exempt. Also exempt are companies that submitted a pre-manufacture notice or other TSCA Section 5 notice for the particular nanoscale substance after 2004. This exemption applies only to the Section 5 notice submitter and not to others making or processing the same substance. On the other hand, a person potentially subject to 135/30-day reporting for a new nanomaterial activity or discrete form may be exempt from reporting in some circumstances if another person has already reported the substance to EPA. The rule provides that new manufacturers and processors have to report only for materials that were not reported during the initial reporting period for nanomaterial activities commenced prior to the effective date. While uncertainty remains, this construction may make it possible for current reportable material manufacturers and importers to shield their new downstream customers from reporting obligations by submitting their own reports as early as possible.
Extent of Respondents' Duty to Investigate Facts
Respondents need only supply information that is 'known or reasonably ascertainable.' This standard requires reporting companies to conduct careful investigation and review of available facts, including, according to EPA, asking material suppliers and customers for information to fill gaps in knowledge. But it does not include the obligation to conduct any testing on a material to determine whether it triggers any of the applicability criteria. This may be particularly significant in respect of determining whether a process change has produced a reportable 'discrete form,' which may turn on whether there is an intentional change in size, zeta potential, surface area, dispersion stability or surface reactivity that is greater than seven times the standard deviation of the measured value. New testing is not required to make these judgments and, in the absence of data, new reporting may not be required unless the person reasonably knows that the criteria have been met even without specific test data. EPA has committed to provide further guidance concerning which information it believes is 'reasonably ascertainable.'
Minimizing Impact on Product Supply and Distribution Chains
Companies potentially subject to reporting should start now to assess how reporting may affect their product development process and supply and product distribution chains. Reporting for static products may represent only a one-time inconvenience for nanomaterial manufacturers and importers. But as a commercial matter, manufacturers should start to plan now for means to limit the potential burden on their current and future direct and indirect customers, who may have their own reporting obligations. This might include providing clear guidance on the extent of the customer's reporting obligations with, for example, prepackaged product information, product stewardship guidance to ensure safer handling, and potentially regulatory form assembly and submission services. Manufacturers that continually modify or improve their nanoscale material products will need to build checks into their own systems to know when they've made a new 'discrete material' triggering new reporting obligations.
Special Compliance Risks
Companies also need to prepare for two other possible contingencies. First, as part of inventorying a company's nanomaterial handling activities that must be reported, it may discover potential violations of TSCA, such as past failure to recognize and provide EPA with pre-manufacture notification of new chemicals being made or imported, failure to provide required TSCA import certifications, noncompliance with applicable significant use rules for certain nanoscale materials, or previously undisclosed studies subject to disclosure under TSCA § 8(e). To prepare for these risks, companies may decide to couple the nanomaterial product inquiry with a TSCA compliance audit. This would give the company the opportunity to promptly disclose and correct any violations discovered without incurring gravity-based penalties using EPA's audit policy. The second concern is the potential discovery of previously unknown hazard information and/or inadequate material handling practices that may result in, for example, unnecessary chemical exposures to workers, or adverse environmental impacts. The long lead time allowed for current manufacturers and processors to assemble and submit their initial reports provides an ideal opportunity for companies to audit and improve these systems before reporting, where warranted, so that the final report submitted to EPA effectively demonstrates that no further regulation or testing is warranted for the particular nanomaterial under the circumstances of use.