Environmental, Land and Natural Resources Alert June 2010 Author: Edward P. Sangster ed.sangster@klgates.com +1.415.249.1028 Other Contact: Nicholas A. Leibham Tsunami Warning: California’s “Regulations for Safer Products” Are on the Way A tsunami is a wave that washes over lands far distant from the geological event that caused it. So it will be with California’s “Regulations for Safer Products,” which will shortly be released for public comment. These regulations will have far reaching impacts in markets throughout the United States and beyond. nick.leibham@klgates.com +1.202.778.9284 K&L Gates includes lawyers practicing out of 36 offices located in North America, Europe, Asia and the Middle East, and represents numerous GLOBAL 500, FORTUNE 100, and FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market participants and public sector entities. For more information, visit www.klgates.com. The Green Chemistry Initiative The Regulations for Safer Products will comprise one part of California’s Green Chemistry Initiative. The Green Chemistry Initiative surfaced in April 2007 as a directive from the Secretary of California’s Environmental Protection Agency to its subsidiary agencies and boards. The Green Chemistry Initiative was described at the time as a “preemptive strategy to stop toxic substances before they contaminate the environment and our bodies.” The Secretary directed agencies to place new emphasis on enforcing existing statutes and regulations, and to develop new regulations focused on eliminating exposures, rather than regulating wastes. The official motto for the Green Chemistry Initiative succinctly, if quixotically, states its ultimate goal: “cradle to cradle” regulation. The motto signifies the intention of California regulators to compel the design of chemical products and processes that will reduce or eliminate the use of hazardous substances and the generation of hazardous wastes. In 2008, the California Legislature empowered the Green Chemistry Initiative by enacting Assembly Bill (“AB”) 1879. AB 1879 requires California’s Department of Toxic Substances Control (“DTSC”) to enact regulations by January 1, 2011 to identify Chemicals of Concern in consumer products, and then to impose life cycle regulation on consumer products containing such chemicals. Regulations for Safer Products Release of the regulations required by AB 1879 for formal public comment is imminent. The DTSC recently released an outline of draft regulations that it called “Regulations for Safer Products.” The DTSC has stated that draft regulations will be issued for comment “in the very near future.” The outline reveals regulations that will impose comprehensive testing, reporting, justification, and labeling requirements for the use of any Chemical of Concern contained in a consumer product. In so doing, the regulations will inject governmental regulators into the product design and manufacturing process to an unprecedented extent. According to the DTSC’s outline, the Regulations for Safer Products will apply to all consumer products manufactured, sold, offered for sale, or imported into California, except for foods, pesticides, and a few other types of narrowly defined products. DTSC regulatory activities will start by selecting “Chemicals under Consideration,” and then narrowing those to “Chemicals of Concern.” The first list of Chemicals of Environmental, Land and Natural Resources Alert Concern will only include chemicals that are (1) included on California’s list (currently 21 pages long) of chemicals believed to cause cancer or reproductive toxicity, (2) classified by the European Union as having mutagenic effects, or (3) determined by the U.S. EPA to be persistent in the environment, bioaccumulative and toxic. Subsequent lists of Chemicals of Concern will not be limited to chemicals having such classifications. The DTSC will next develop a list of consumer products and product categories that contain Chemicals of Concern. From these, the DTSC will select “Priority Products” based on the relative threat to public health or the environment, prohibition on landfill disposal in California, and something vaguely referred to in the outline as “availability of resources.” Alternatives Assessments Manufacturers of Priority Products will be required to perform “Alternatives Assessments.” The Alternatives Assessments will start with the submission of a required work plan, which must consider product reformulation, substitution of the Chemical of Concern, product and manufacturing process redesign, and substitution of another product for the current product. Companies performing Alternatives Assessments will be required to explain, among other things, the function of the consumer product, the function of the Chemical of Concern, the useful life of the product, the materials and resources consumed to manufacture the product, public health effects, environmental impacts (including end-of-life disposal) and economic impacts. The manufacturer will then be required to identify and study alternatives to continued use of the Chemical of Concern. In other words, the manufacturer will be required to analyze available alternatives and justify why alternatives deemed to be “safer” should not be required. The regulations will empower the DTSC to take a wide range of actions in response to information contained in Alternatives Assessments. These will range from no further action to outright bans of products, and will include restrictions on use (short of an outright ban), end of life management of the product, product labeling to warn consumers, and compulsory, additional research regarding the Chemical of Concern and product alternatives. Conclusion It appears that the DTSC envisions a process in which it will deal with the most threatening chemicals and products first, and then expand its regulatory reach to an increasing number of less hazardous chemicals and products. Manufacturers of Priority Products can expect to incur substantial costs preparing Alternatives Assessments and disruptions caused by regulatory action resulting from the Alternatives Assessments. Although the Regulations for Safer Products will only apply to the California market, the size of that market means that most companies having a presence in the United States market for consumer products will need to comply. Persons and companies to be affected by the regulations should consider taking an active role in commenting on draft regulations and, when enacted, each step in the regulatory process, including development of the list of Chemicals of Concern and product prioritization. Anchorage Austin Beijing Berlin Boston Charlotte Chicago Dallas Dubai Fort Worth Frankfurt Harrisburg Hong Kong London Los Angeles Miami Moscow Newark New York Orange County Palo Alto Paris Pittsburgh Portland Raleigh Research Triangle Park San Diego San Francisco Seattle Shanghai Singapore Spokane/Coeur d’Alene Taipei Tokyo Warsaw Washington, D.C. K&L Gates includes lawyers practicing out of 36 offices located in North America, Europe, Asia and the Middle East, and represents numerous GLOBAL 500, FORTUNE 100, and FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market participants and public sector entities. For more information, visit www.klgates.com. 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