Historically, sustainable development is development that “meets the needs of the present without compromising the ability of future generations to meet their own needs.” United Nations Commission on Sustainable Development. While sustainability is not well-defined, this general principle has recently been interpreted as supporting substitution of less toxic substances in products, if cost-effective. A variety of forces provide incentives, either explicitly or indirectly, for companies to remove toxic chemicals from products. These include regulatory trends, concern about adverse publicity, exercise of purchasing power, and corporate sustainability policies (including concern about potential litigation).
Company sustainability policies, unlike traditional environmental compliance programs, may include anticipation of future requirements or a view that sustainability makes companies “better . . . by reducing waste, lowering costs, driving innovation, increasing productivity and helping us fulfill our mission of saving people money so they can live better.” Wal-Mart, Global Sustainability Report, 2010 Progress Update at 1.
There are no generally applicable federal sustainability standards. However, federal, state, and local governments are using their enormous purchasing power to create a market for “sustainable” products, which may establish de facto sustainability criteria. Similarly, some companies have prepared their own priority list of “toxic” chemicals in conjunction with a “product screening tool” to “bring to market products that contain alternatives to these chemicals.” Wal-Mart, Fact Sheet: Wal-Mart Stores, Inc. Identifying and Reducing the Use of Potentially Hazardous Chemicals Found in Various Household Products (May 2008). EPA’s Assistant Administrator for Research has called the “goal of sustainability” the “true north” of EPA’s future mission. Memorandum from Paul Anastas to ORD All, Re: The Path Forward (Mar. 4, 2010).
These developments (coupled with the adoption of new, more precautionary regulatory policies governing chemicals in products) affect a broad range of companies because all products (whether they are made from substances that are grown, mined, or manufactured) are, in effect, made up of chemicals. Statutory or regulatory bans or restrictions on uses of chemicals, although still rare, have become more common. When deciding whether to substitute a more environmentally friendly chemical for a chemical that may present a relatively higher risk, the inherent tradeoffs in deciding what is an acceptable risk and other balancing factors become explicit. Companies and regulators alike must draw lines concerning what level of risk and level and quality of evidence justifies a ban on uses. For example, do the historic delays in classifying chemicals as carcinogenic justify designating chemicals by class, as opposed to individually? Should risk quantification be based on limited numbers of studies (even if it overestimates the risk) rather than the traditional weight of the evidence? When a chemical has long been in use without any observable adverse affects, may a change in the toxicity of the chemical be based on a new interpretation of existing regulatory guidance or new guidance that requires regulators to be more precautionary than has traditionally been the practice rather than a weight of scientific evidence?
More broadly, companies and regulators need to decide the proper balance of sustainability and risk assessment policies that accelerate substituting chemicals thought to be less toxic with the inherent risk of error that might have significant economic impacts and even disrupt supply chains. The remainder of this article assesses these product regulation trends and the potential implications for companies that manufacture or sell products.
Existing Legal Schemes
Since past is prologue, it is useful to provide a brief overview of the trend in the regulation of chemicals in products to understand what may come and the options for modernizing chemical regulation. The primary federal statute is the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq. (enacted in 1976). TSCA’s implementation has dramatically transformed over the years and it may be significantly amended in the next few years. State regulators are regulating chemicals more aggressively, often citing the European regulatory approach. Finally, retailers and product manufacturers are adopting their own policies to reduce the use of toxic substances. Each of these approaches raises the question of how to balance expediting safety decisions and a rush to judgment that may cause unnecessary economic disruption.
TSCA allows regulation of new and existing chemicals based on a finding that the chemical in commerce may present an “unreasonable risk.” The burden is generally on EPA to demonstrate that a substance may present an unreasonable risk. Absolute bans of any concentration of a substance in a product are rare. For example, a complete ban on the use of asbestos (even relative low risk uses) was overturned because, among other reasons: (1) EPA only showed that “banning some asbestos products might reduce the harm that could occur from the use of these products” (and “few indeed are the products that are so safe that a complete ban of them would not make the world still safer”); (2) EPA refused to consider less burdensome alternatives (i.e., improved workplace controls), particularly, where “no substitutes were available; (3) EPA “explicitly reject[ed] considering the harm that may flow from the increased use of products designed to substitute for asbestos, even where the probable substitutes themselves are known carcinogens;” and (4) EPA “basically ignored the cost side of the TSCA equation.” Corrosion Proof Fittings v. EPA, 947 F.2d 1201, 1217, 1220, 1223-29 (5th Cir. 1991). As a result, the court found that “spending $200-300 million to save approximately seven lives (approximately $30-40 million per life) over thirteen years” was not reasonable. Id.
As observed by Chief Justice Burger in a concurrence to a seminal worker protection risk assessment case, “[w]hen the administrative record reveals only scant or minimal risk of material health impairment, responsible administration calls for avoidance of extravagant, comprehensive regulation. Perfect safety is a chimera; regulation must not strangle human activity in the search for the impossible.” Industrial Union Dep’t. v. API, 448 U.S. 607, 664 (1980). Instead, EPA uses the assumption that at low doses the harm reduces on a one-to-one basis as exposure decreases to “generate what is sometimes considered an upper bound on cancer risk. Although the actual risk cannot be known, it is thought that it will not exceed the upper bound, might be lower, and could be zero.” National Research Council, Science and Judgment in Risk Assessment at 65 (1994), available at www.nap.edu/openbook.php?record_id=2125&page=65 (emphasis added) (last visited Sept. 6, 2010).
As a matter of policy, EPA generally selects regulatory action that results in a residual risk after regulation of a risk that lies between 1 in 10,000 (a safe level) to 1 in 1,000,000 risk level. See e.g., Natural Resources Defense Council v. EPA, 824 F.2d 1146, at 1164–65 (D.C. Cir. 1987) (unanimous en banc decision). EPA, in effect, has the practical burden of assembling a record containing sufficient scientific information and analysis to survive a reviewing court’s “hard look” review under the “substantial evidence” or “arbitrary and capricious” tests for judicial review of administrative action.” NRC, Science and Decisions: Advancing Risk Assessment at 29 (2009).
Nonetheless, EPA has been able to “convince” companies to reduce risks “voluntarily,” without significantly modifying statutes or regulations. For example, EPA initially brought a TSCA enforcement action against one manufacturer of perfluorooctanoic acid (PFOA) (primarily based on an alleged Section 8(e) failure to report the presence of PFOA in the blood of workers and local residents). EPA requested all manufacturers to reduce usage of PFOA voluntarily, because of the widespread use of PFOA, its presence in human blood, and the alleged uncertainties in the risk assessment. In 2006, eight major manufacturers agreed to reduce by 95 percent the global emissions and product content of PFOA and related chemicals by 2010, and to work toward eliminating emissions and product content by 2015. EPA, 2010/2015 PFOA Stewardship Program.
Even in this partisan era, in 2008, Congress by a 89–3 vote in the Senate banned the sale or import of, among other things, children’s products containing greater than 100 parts per million of lead by August 14, 2011, if attaining this level is technically feasible. Sections 101 and 108 of the Consumer Product Safety Improvement Act of 2008 (CPSIA), Pub. L. 110-314, 122 Stat. 3016 (2008) (codified as amended at 15 U.S.C. §§ 1278a et seq.). Similarly, although it was never enacted, the House of Representatives discussion draft of the Bruce Vento Ban Asbestos and Prevent Mesothelioma Act of 2008 would have banned any product containing more than 0.001 percent asbestos (1,000 times lower than the current regulatory limit) and possibly would have applied this limit to many other fibers. Id. § 603(b) (5).
Over the last decade or so, individual states have enacted outright bans on specific chemicals in products, limited uses of chemicals, or required labeling. For example, the California Safer Consumer Product Alternative draft regulation, if promulgated, will require products containing chemicals of concern (i.e., a broad list of high priority chemicals) to be prioritized. Lower-risk alternatives for the priority products will then be evaluated. Finally, use restrictions, bans, recalls, and substitution of lower risk constituents or products may be required of companies. California Department of Toxic Substances, Green Chemistry Internet Page.
The European Union’s (EU) Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) regulation is also relevant to understanding trends because it has been a touchstone for state laws (such as the California law), TSCA statutory reform, and EPA administrative action. Companies selling chemicals and products in Europe are required to provide health and safety information on existing and new chemicals. As of October 2009, the EU had identified approximately 356 “substances of very high concern,” i.e., substances that are carcinogenic, mutagenic and reproductive toxicants, bioaccumulative persistent toxics (PBTs), and very persistent, very bioaccumulative, and substances that are of “equivalent concern.” The International Chemical Secretariat Internet Page, 356 Substances of Very High Concern, available at www.chemsec.org/list/about-sin (last visited Sept. 6, 2010). Companies must now convince EU regulators that there are not any less-toxic substitutes for these chemicals of “very serious concern,” (i.e., the so-called “SIN” list—Substitute It Now) that are currently used in certain products such as detergents, paints, electronics, residential buildings, toys, apparel and clothes.
Although the European approach shifts the burden of persuasion, the regulatory standard used to decide whether to take regulatory action or not and the nature of any action required (sometimes called the precautionary principle or approach) may not be as dramatically different from the historic approach to chemical regulation in the United States, as some argue. For example, many environmental groups advocate that the precautionary principle means that “precautionary measures should be taken even if some cause and effect relationships are not fully established scientifically.” This is the so called “better to be safe than sorry” policy. Wingspread Statement on the Precautionary Principle (Jan. 1998).
However, the European Commission states that the precautionary principle “can under no circumstances be used to justify the adoption of arbitrary decisions,” “must not be disproportionate to the desired level of protection,” and “must not aim at zero risk.” Communication on Precautionary Principle / COM/2000/0001 final (Feb. 2, 2000). A “significant hazard” must be “identified using the scientific evidence.” The EC’s precautionary principle “presupposes that potentially dangerous effects deriving from a phenomenon, product or process have been identified.” EC Press Release, Commission adopts Communication on Precautionary Principle, IP/00/96 (Feb. 2, 2000). The EU examines the “potential benefits and costs of action or lack of action.” Id.
The full contours of the change in chemical regulation caused by adoption of REACH and a “precautionary approach” are not yet known because it is still a work in progress. In many regards, the current EU definition of the precautionary approach to selecting environmental requirements in the face of uncertainty is similar to the U.S. historic chemical regulation policy. However, actions should be examined (both in the United States and Europe) as they speak louder than words.
Recent Developments and Trends
Congress is considering reforming TSCA (e.g., the Democratic leadership in the Senate proposed the Safe Chemicals Act of 2010 (Safe Chemicals Act, S. 3209, 111th Cong. (2010)) to shift the burden of proof to industry to demonstrate that the use of a toxic chemical has a “reasonable certainty of no harm.” If enacted, no company may manufacture or process a “new chemical substance ” unless EPA agrees with the company’s demonstration that the chemical substance meets the safety standard for the chemical substance, or finds the chemical substance, or a metabolite or degradation product of the chemical substance is not and is not expected to be: (1) a known or a suspected reproduction, developmental, neurological and immunological oxidant; (2) manufactured in a volume of more than one million pounds annually or involved in releases of more than 3,000 pounds annually; (3) persistent and bioaccumulative; (4) found in humans at commonly detected natural levels; or (5) found in food, drinking water, ambient air, soil, dust, except in naturally occurring deposits. Id. § 5(a)(1).
Also, under the proposed Safe Chemicals Act, until EPA makes a safety determination, companies cannot manufacture or process even existing chemicals if: (1) the use “was not ongoing on the date of enactment of the statute;” (2) the volume of the substance being processed or manufactured is “significantly increased . . . above the level on the date of enactment;” or (3) the person had not previously manufactured or processed the chemical substance on the date of enactment. Id. § 5(a)(2).
“Reasonable certainty of no harm” is defined as “a negligible risk of any adverse effect on the general population or a vulnerable population” based upon the “aggregate exposure and cumulative exposure of the general population” or “of any vulnerable population to the chemical substance or mixture.” Id. § 4(23). The “negligible risk” standard protects “vulnerable populations,” which are populations that are subject to a “disproportionate exposure” to, or “potential for a disproportionate adverse effect from exposure to, a chemical substance or mixture,” including infants, children, and adolescents, pregnant women, elderly, individuals with preexisting medical conditions, workers that work with chemical substance and mixtures; as well as a catchall category of “members of any other appropriate population identified by” EPA. Id. § 4(27).
The proposed bill even makes EPA’s “determination . . . that a manufacturer or processor has not established that the chemical substance meets the safety standard” judicially unreviewable. Id. § 6(b)(1)(D). Thus, the proposed Safe Chemicals Act provides more stringent criteria than the original TSCA “unreasonable risk” criteria. On their face, these criteria present a formidable, if not impossible, burden of proof. Although the chemical industry is seeking a science-based reform of TSCA, the draft Safe Chemicals Act seems unlikely to be enacted at least without some modifications.
If efforts to amend TSCA are unsuccessful or delayed, EPA’s back-up plan is to transform the historic regulatory process through guidance and changes in implementation. For example, a significant amount of controversy has been raised over the method that EPA uses to quantify the potency of carcinogenic and non-carcinogenic effects of chemicals. It has been claimed that, although EPA’s guidance still requires decisions based on the weight of the scientific evidence (see generally EPA, Guidelines for Carcinogen (2005), in some cases, all or almost all but the worst case studies have been discounted, hundreds of studies have been ignored, uncertainty factors added, recommendations of expert panels have been ignored, and other innovative methods of interpreting data have been used on an ad hoc basis (Industry, Agencies Struggle To Revise EPA’s Risk Assessment Process, Superfund Report at 24 (May 17, 2010). Regulators obviously must balance the need for scientific certainty (and avoidance of false positive results) against undue delay and other consequences from the delay caused by obtaining more certainty. But if some of these complaints are valid, significant changes to EPA risk assessment practice are being made on an ad hoc basis, rather than through an open and transparent process after appropriate peer review of the science involved.
Similarly, EPA has long issued various types of action plans for existing chemicals that primarily consisted of compiling already initiated or planned regulatory actions. EPA has modified the TSCA Action Plan process to accelerate the identification and characterization of the risks from priority chemicals, initiate new regulatory action to reduce potential public exposure to toxic chemicals, and provide an incentive for the development of safer alternatives. The initial chemicals covered by these new TSCA action plans were selected based on, among other things: (1) presence in human tissue; (2) persistence, bioaccumulation, and toxicity (i.e., PBT), (3) use in consumer products; (4) manufacturing in high volumes; (5) impact on children’s health; and (6) potential action in international forums. EPA will identify every four months several chemicals for which it will update risk assessments.
For example, EPA proposed a National Action Plan to accelerate the regulation of a family of plasticizers (pthalates) that are used in many products that contain plastic (including intravenous medical tubing). The Phthalate National Action Plan will: (1) evaluate the toxicity of phthalates more quickly; (2) determine what actions need to be taken to address the risks these chemicals may pose; and (c) initiate appropriate regulatory actions to reduce exposure. EPA TSCA Phthalates Action Plan (Dec. 30, 2009). EPA intends to “weigh the relative toxicity and feasibility of other phthalate substitutes” and identify “safer and affordable nonphthalate substitutes” as “an important consideration in any action that would restrict the use of these chemicals.” Id. at p. 10. Although the American Chemistry Council supports modernization of the way that chemicals are regulated, they are concerned that the new national action plan process does not use a systematic, science-based approach. American Chemistry Council, Statement, EPA’s Chemical Action Plan Process Should Consider Critical Uses for HBCD (Aug. 18, 2010).
Thus, it appears that by changing the methodology for quantifying the risks from chemicals, coupled with the use of the new type of national action plans that change the burden of persuasion, EPA provides a significant new incentive for companies to substitute less toxic chemicals in products or processes, even if the risk of such chemicals is relatively low. This shift in the burden of persuading the regulator seen in EPA’s new TSCA Action Plan process has been adopted in Europe, but is not explicitly authorized by TSCA. EPA is asserting, after years of TSCA regulation, very broad, seemingly new authority.
In summary, a variety of programs provide incentives for new products that have less impact on human health or the environment and the regulatory decision-making processes governing products seems to be significantly changing. These decision-making processes were never simple or uncontroversial. Newer state programs, TSCA reform in Congress, and EPA’s new TSCA Action Plans now seek to shift the burden of persuasion to manufacturers and seek to have companies evaluate potentially less “toxic” substitutes. Many of these policy trends also are attempting to lessen the traditional scientific standards used by regulators to assess hazards from exposure to chemicals. Often, there are legitimate scientific uncertainties in such determinations and the U.S. regulatory system has long favored providing adequate margins of safety. However, regulators can always add “protective” assumptions, each which may have some appeal, but which can result in a cumulative margin of safety that leads to absurd results. Economic considerations and practical impacts on companies that are being regulated are legitimate concerns. As proposed, some of the new product safety approaches may be unworkable. These developments make sustainability decisions more complex.
Rather than merely react on a case-by-case basis to product-specific actions, companies are increasingly adopting preventive or precautionary measures concerning chemicals in their products, including but not limited to adopting sustainability policies involving the components discussed below. Such policies should reflect many of the complexities already addressed in this article.
First, companies may track regulatory and legislative developments. To adapt Thomas Jefferson’s statement concerning political liberty, the price of economic liberty is regulatory vigilance. Tracking these developments would enable companies to anticipate impacts on their products before a final regulatory decision. Second, even a company that adopts a sustainability policy may not want to assume that regulators always “get it right,” so companies may decide to provide their input and insight in shaping the direction of new statutes, regulations, and policies. In the U.S. legal system, an accusation should not be the same as a conviction. Unlike the Alice in Wonderland world where the guilty verdict is followed by the “fair trial,” the rule of law dictates a case-by-case evaluation. This means neutral experts should be assembled to review the pertinent scientific facts (i.e., the use of scientific peer review and avoidance of any bias, whether based on economic or ideological influences).
The decision on whether and when to take regulatory action concerning a chemical typically involves balancing a number of factors and trade-offs between expeditious action and the potential to cause more harm than good by selecting an excessive safety factor or by relying on an erroneous study. Evaluation of substitutes should take into consideration whether the new substance might reduce a product’s effectiveness or even render the product less safe. Finding a substitute is not only costly and time-consuming, but may be unsuccessful. A rush to judgment that alters the composition of products constitutes bad public policy and poor business judgment.
Third, companies should engage in a transparent and open manner in the process of evaluating the toxicity of chemicals. Given the costs involved, small companies may elect to rely upon the manufacturer to perform such assessments.
Fourth, companies who make “green” claims must comply with the Federal Trade Commission (FTC) green marketing guides and the Security and Exchange Commission (SEC) disclosure requirements (if they fall within the jurisdiction of the SEC). While “greener than competitors” claims may increase profits, companies need to evaluate the facts, science, legal risks and overall impacts of removing substances from products, particularly when the evidence does not compel such a draconian action. Precisely because of these benefits, facts and impartiality must be the basis for environmentally preferable requirements.
FTC rules apply “to any claim about the environmental attributes of a product, package or service in connection with the sale, offering for sale, or marketing of such product, package or service for personal, family or household use, or for commercial, institutional or industrial use.” 15 C.F.R. § 260 (2010). Literal truth is not a defense. Rather, the issue is whether a reasonable consumer might be misled.
Fifth, in order to implement these goals, companies may perform a more detailed sustainability assessment focused on near-, mid-, and long-term requirements. A sustainability assessment for a company that manufactures consumer products may include an evaluation of whether and when any high-risk chemicals might need to be substituted (as is done in the European REACH program). This would include consideration of impacts on workers and consumers (e.g., product liability) and impacts on the environment.
Such an approach may anticipate potential future regulatory or retailer sustainability demands. Some companies have already undertaken a broad strategic review, including analyzing upstream and downstream product supply chain effects.
In summary, to quote Bob Dylan, “the times they are a-changin’.” Therefore, companies must understand both existing and potential future regulations and trends and must have the proper policies in place tailored to address this frequently transforming landscape. The approach of each company within the supply chain to such situations is, of course, a business decision that is informed by the company’s philosophy and practices.
This article was originally published in Natural Resources & Environment, Volume 25, Number 3, Winter 2011. © 2010 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.