Environmental Law ReSource : Environmental Lawyer & Attorney : Reed Smith Law Firm : Climate Change, Sustainability

Significant substantive changes were also made to the SCPA Regulations, including:

• While slightly expanding the list of “temporary” hazard traits in effect until the Office of Environmental Health Hazard Assessment (OEHHA) publishes its final list, the categories of products that can be designated as Priority Products have been significantly restricted. Specifically, for the first five years following implementation of the SCPA Regulations (through January 1, 2016), Priority Products can consist only of three categories deemed to pose the greatest threat to human health and the environment: (a) Children’s products; (b) Personal care products; and (c) Household cleaning products. Moreover, nanomaterials have been removed from the scope of the revised regulations completely.
• Certain important regulatory exclusions have been expanded, clarified and the criteria for their application made more objective. For example, the exclusion of chemicals and products regulated by other regulatory programs (the “non-duplication” provision) has been expanded to include international trade agreements, no longer includes the burden of proof by clear and convincing evidence, and is now applied in a more objective manner. Similarly, the exclusion applicable to products containing chemicals that exhibit a hazard trait, but for which there is no exposure pathway posing a threat to public health or the environment, no longer carries a negative presumption (i.e. is no longer presumed not to apply).
• The Chemicals Under Consideration and Products Under Consideration lists have been deleted, eliminating intermediate steps in the prioritization process between initial data assessment and final determination of the chemicals and products to be regulated. Additionally, deadlines have been specified for publishing the initial lists of those chemicals and products to be regulated, i.e., the lists of Chemicals of Concern and Priority Products. The initial list of Chemicals of Concern must be published no later than one year following enactment of the SCPA Regulations (December 31, 2011), and the initial Priority Products list one year later (December 31, 2012).
• Changes to the regulations governing treatment of confidential information, including trade secrets, include removal of the prohibition against the misuse of confidential information by DTSC employees (based on assertion that this provision was duplicative of existing law and DTSC practice), and deletion of a process allowing for DTSC’s independent review of trade secret claims separate from the provisions in Health and Safety Code section 25257(a) governing the same issue.

In addition to the revisions made to the text of the SCPA Regulations, DTSC also added documents to the rulemaking file supporting the enactment of the regulations, which include scientific peer-review documents and a resolution by the California Environmental Policy Council (CEPC) concluding that the regulations would not have any significant adverse impacts on public health or the environment. CEPC’s determination was strongly opposed by industry, based upon the adverse impacts the SCPA Regulations could cause by replacing certain chemicals with other substances that pose an even greater threat. Deferring the analysis of such potential impacts is arguably a violation of the California Environmental Quality Act.

Despite the significant changes reflected in the current version of the SCPA Regulations, those regulations and the underlying green chemistry program remain very controversial. Common criticisms include environmentalists’ persistent claims that the program is not broad enough in scope and would not regulate fast enough, compared to industry’s claims that the program would essentially regulate every product sold in California. Another major area of disagreement is how the regulations treat confidential information, such as trade secret protections. Additionally, complementary regulations drafted by OEHHA to create the toxics information clearinghouse, a key component of the green chemistry program, have also come under fire for potentially exceeding that agency’s authority because they would conclusively link chemicals with specific hazard traits, instead of merely publishing data concerning hazard traits and toxicology for public review.

Although DTSC is legally authorized to issue another revised version of the SCPA Regulations after considering the comments received on the current draft, the time to do so is very short. DTSC has a statutory mandate to enact the SCPA Regulations by January 1, 2011, and releasing another revised draft of those regulations would have to include another 15-day public comment period.

• How wide to cast the net – a threshold issue is how to balance the goal of regulating chemicals in consumer products to reduce their potentially harmful effects with the financial burden imposed on the regulated community, particularly in this challenging economy. For instance, some wish to maximize the number of chemicals addressed and populate the public clearinghouse mandated by SB 509 with a great deal of data in a very short period of time. However, the burdens of this approach must also be recognized, which include the enormously time consuming and expensive tasks of identifying all the chemicals used in the broad array of consumer products sold throughout the State, followed by preparing life cycle assessments for each one of them.

Early versions of the SCPA regulations were strongly criticized for borrowing "lists of lists" of chemicals from other regulatory programs and adopting broad categories of loosely defined consumer products. The Green Chemistry Alliance warned that unless chemicals and products are selected and prioritized based upon real life exposure risk, the green chemistry initiative will collapse under its own weight. The current draft relies on this approach to a lesser degree, and instead applies a lengthy list of prioritization factors to chemicals in consumer products that exhibit hazard traits. Nevertheless, the number of chemicals covered at the outset – which include all 800+ listed under California's Proposition 65 – is still an ambitious first step.

• Prioritizing chemicals of concern – An effective mechanism is needed to prioritize the chemicals addressed, but various stakeholders have advocated for different criteria to govern that process. Industry’s position is that a policy automatically equating any amount of exposure with harm is not only contrary to AB 1879, but would also put an onerous burden on manufacturers to develop, gather and analyze vast amounts of data on hazard traits and exposure in very little time, and in some cases without good reason. Scientists, including those on the Green Ribbon Science Panel, are concerned that without an effective prioritization mechanism, the green chemistry program will fall victim to “paralysis by analysis.” Environmentalists are similarly concerned that if the regulations do not take effect quickly enough, the primary goal of the program – to avoid adverse human health and environmental impacts – will be thwarted.

The current draft of the SCPA regulations uses a mechanism of funneling down those chemicals and consumer products to be regulated. Chemicals and consumer products are first "considered" based on their volume, toxicity and exposure potential, and then the highest priority products containing the highest priority chemicals are selected for further regulatory analysis. However, there are currently no deadlines for completing the various steps of this subsequent funneling process, which will follow DTSC's January 1, 2011 deadline to specify the threshold hazard traits to be regulated.

• Alternatives analysis – The process by which manufacturers will be required to study potential alternative chemicals for use in consumer products remains the subject of much debate. Of particular concern to all involved is who will perform those assessments – industry, third parties working for industry, independent third parties, regulators, or some combination of those entities. Manufacturers prefer to conduct their own alternatives analyses, given the complexity of evaluating chemical uses and exposures, the risks associated with being bound by others’ decisions, and the desire to control the dissemination of confidential information. Assemblyman Feuer, the author of AB 1879, has commented on the need to counter the “adverse incentives” that would result if industry could sidestep regulation by failing to develop data upon which regulatory decisions could be based, e.g., by purposefully neglecting to fill critical "data gaps." Similarly, environmentalists insist that the data considered must be completely transparent to the public and subject to DTSC oversight.

Another criticism of the alternatives analysis process is the lack of deadlines to force industry to complete the various steps involved. DTSC's Acting Director Maziar Movassaghi has acknowledged that the timeframe under the current regulations is variable and that it could take years to find suitable alternatives for certain chemicals currently in use.

• Confidential business information (CBI) – CBI is a hotly disputed issue and is closely tied to the alternatives analysis process. That process requires industry to provide detailed information about chemicals of concern (COC) and potential alternatives, including their identity, composition and performance characteristics, as well as redesign of COC-containing products, redesign of associated manufacturing processes, and manufacturers' customer lists. Much of this information is typically considered by industry to be proprietary CBI to protect substantial investments made in research and development, and its public disclosure would have severe economic consequences. Industry is also concerned that publicizing information about chemical and product design alternatives will pave the road for product liability lawsuits.

While the draft regulations do protect trade secrets identified by industry, they also: restrict the scope of data for which such protection can be claimed; reserve for DTSC the discretion to accept or reject claims of trade secret status; allow for disclosure of trade secrets in cases of "substantial need" as determined by DTSC; fail to specify the precise measures to be used to protect such confidential information; and do not impose legal liability against DTSC employees who fail to safeguard such information.

• Conflicting and duplicative regulations – Faced with a new, all-encompassing system of chemical regulation, industry is concerned about how that system will overlap, and perhaps conflict, with the existing patchwork of chemical and product regulations already in effect on the federal and state level. For example, federal agencies could regulate a particular public health or environmental risk under their existing authority that could conflict with the regulatory actions taken under the draft SCPA regulations. Moreover, due to the perceived sluggish operation of the current SCPA regulations, lawmakers are currently considering the need for additional chemical-specific bans, the elimination of which was a goal of the green chemistry laws. The draft regulations allow for the exemption of COCs regulated in a similar manner under other laws, but leave exemption determinations to DTSC's discretion and do not specify the criteria to be considered when making such determinations.
• Cost of implementation – Perhaps the one thing that all parties involved – scientists, industry, activists and regulators – appear to agree on is that implementing the new SCPA regulations will require significant funding and staffing resources. While much of this burden appears destined to fall on industry, a substantial role must also be played by the regulators to administer and enforce the program. However, the source of government funding remains unclear amidst the State’s budget crisis and service cutbacks.

Thus, while progress has been made in developing the SCPA regulations, there is much disagreement about whether this progress is headed in the right direction. For instance, industry representatives have recently commented that DTSC’s latest draft of the SCPA regulations may overreach the agency’s authority under the green chemistry laws and appear to be considering grounds for challenging the regulations in court. However, DTSC has not yet issued a final draft of the SCPA regulations, which will trigger further hearings and a 45-day public comment period under the formal rulemaking process. Consequently, there is still time and opportunity for further debate and revision of the SCPA regulations.

The green chemistry law is best described as an umbrella, authorizing and directing California’s Department of Toxic Substances Control (DTSC) to adopt a system of detailed regulations highlighted by the following:

• Creating a process to identify potentially harmful chemicals in consumer products and prioritize them. Factors will include chemical volume, potential for exposure, and potential effects on sensitive receptors, e.g., children and the elderly
• Enumerating steps to evaluate chemicals of concern and their alternatives, to determine the best way to reduce exposure to them or the degree of threat they pose to public health and the environment
• Mandatory multimedia lifecycle evaluations for those consumer products containing chemicals identified as harmful and targeted for regulation – evaluations must analyze the impact of the production, use or disposal of those consumer products
• Specifying a range of possible regulatory responses to each chemical evaluated, including no action, labeling requirements, product access control, restrictions/prohibitions on chemical use in products, mandated funding for research, imposing end-of-life disposal or recycling requirements
• Evaluating numerous aspects of possible chemical alternatives, including product function and performance; useful life, materials and resource consumption; and economic impacts
• Mandatory California Environmental Policy Council review of DTSC’s proposed regulations as a checks-and-balances system
• Establishing a Toxics Information Clearinghouse to collect and disseminate information about chemical hazards, and both environmental and toxicological data for use in risk assessments
• Creating a Green Ribbon Science Panel to advise DTSC on the costs of proposed regulations and to ensure that such regulations are based on sound science

The most prominent feature of California’s green chemistry law is its foundation on science and real-life assessment of chemical usage and exposure risk. The drafters intended to create a regulatory system that balances various interests in tension with one another, such as: (1) A structured yet transparent process, where the factors to be considered are specified, the decision-makers identified, and a checks-and-balances system is utilized; (2) Consideration of the costs and technological feasibility of alternatives, recognizing practical economic realities and societal demands for certain products; and (3) Fostering innovation by regulating the design phase of products and processes, rather than managing and controlling wastes and byproducts.

However, given that the green chemistry law only creates a broad legal framework, the specific regulations to be drafted by DTSC will give life to the system and will directly impact industry. Thus, industry stakeholders must carefully focus their attention on the drafting phase, express their views and voice their concerns. The following areas are worthy of particular focus:

• The lifecycle evaluation process to be performed and/or coordinated by DTSC will involve the identification and evaluation of whether a chemical, as used in consumer products, has a “significant adverse impact on public health or the environment.” How stringently or loosely this phrase is interpreted will determine whether or not particular chemicals are subject to regulation under the green chemistry law, and therefore is critically important.
• The definition of a “consumer product” under the green chemistry law is extremely broad: “a product or part of the product that is used, bought, or leased for use by a person for any purposes.” How the DTSC regulations interpret this term and apply its definition will govern whether specific products or product categories are regulated or exempt under the green chemistry law.
• The degree to which comments by the California Environmental Policy Council, whose role is to advise on DTSC’s proposed regulations, are considered and acted upon by DTSC as the lead agency to implement the green chemistry law, remains to be seen.
• The level of involvement of the Green Ribbon Science Panel in providing advice to DTSC in the regulatory process remains unknown, but is vulnerable in two ways: First, the Panel’s responsibilities are permissive (“the panel may take any of the following actions”) rather than prescriptive. Second, DTSC decides whether the Panel meets more than twice annually and is responsible for providing the Panel with staff and administrative support.

Like all new regulations, those promulgated under the new green chemistry law will impose operational changes and up-front compliance costs on the regulated community. However, change also presents new opportunities. Compliance with California’s green chemistry law will likely reduce the costs of proper hazardous waste management and disposal, and satisfaction of workplace safety and health requirements. New opportunities to market products and processes as eco-friendly will also arise. In the near-term, once the regulations have been drafted, industry will be able to assess the impacts on specific operations and work proactively to satisfy them in as cost-efficient a manner as possible.

Reed Smith attorneys are actively monitoring new developments concerning California’s green chemistry law, focusing on stakeholder participation in the drafting of the law’s implementing regulations. Please contact us for additional information or for assistance in providing comments at upcoming workshops and other public participation forums.