Court Partially Vacates and Remands EPA's Decision Granting Conditional Registrations for HeiQ's Nanosilver Products
November 12, 2013
On November 7, 2013, a panel of the U.S. Court of Appeals for the Ninth Circuit issued a decision granting in part and denying in part the Natural Resources Defense Council's (NRDC) petition for review of the U.S. Environmental Protection Agency's (EPA) conditional registration of HeiQ AGS-20 and AGS-20 U (collectively, AGS-20) pesticide products that EPA has determined contain nanoscale silver (nanosilver). The court vacated EPA's decision "insofar as it concluded that there was no risk concern requiring mitigation for short- and intermediate-term aggregate oral and dermal exposure to textiles that are surface-coated with AGS-20." The opinion by a majority of the appellate panel based this holding solely on EPA's failure to require risk mitigation after calculating a margin of exposure (MOE) for aggregate exposure to AGS-20 of exactly 1,000, and stated that this holding has no effect on "any portion of EPA's decision where the calculated MOE is greater than 1,000." The majority opinion also denied NRDC's other objections to the registration decision, holding that substantial evidence supported EPA's decision to use the characteristics of toddlers rather than infants in its risk assessment for AGS-20, as well as EPA's decision not to consider other sources of exposure to nanosilver in its risk assessment. In a dissenting opinion, one member of the panel disagreed with the decision by the majority to deny these other objections. The decision is available online.
EPA announced in December 2011 that it was conditionally registering a pesticide product containing nanosilver as a new active ingredient. HeiQ AGS-20 is a silver-based antimicrobial product approved for use as a preservative for textiles. Issuance of the registration followed a lengthy review by EPA and its Scientific Advisory Panel. EPA's December 1, 2011, announcement is available online, and Bergeson & Campbell, P.C.'s December 5, 2011, memorandum discussing that announcement is available online.
Because EPA decided to treat the nanosilver in AGS-20 as a new active ingredient, EPA issued the conditional registration for AGS-20 under Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) Section 3(c)(7)(C). As a condition of registration, EPA required HeiQ to develop and to submit additional data to confirm EPA's initial determination that AGS-20 would not cause unreasonable adverse effects on human health or the environment.
On January 26, 2012, NRDC filed suit in the U.S. Court of Appeals for the Ninth Circuit challenging the FIFRA registration of AGS-20, arguing that EPA should not have allowed use of AGS-20 in clothing, baby blankets, and other textiles "without the legally-required data about its suspected harmful effects on humans and wildlife." NRDC challenged EPA's actions under FIFRA Section 16(b), which allows "any person" who claims to be adversely affected by an EPA order issued after a "public hearing" to obtain judicial review "praying that the order be set aside in whole or in part." Courts have construed a process in which EPA solicits public comment and compiles a record to constitute a public hearing within the meaning of this provision.
In its April 16, 2012, brief, NRDC argued that EPA's decision to conditionally register AGS-20 was not supported by substantial evidence. NRDC argued that EPA should have considered exposure by infants in its risk assessment, and that this "would have shown that AGS-20 poses unacceptable risks, and thus may have 'unreasonable adverse effects.'" NRDC also argued that EPA should have considered the risk from aggregate exposure to AGS-20 along with other sources of nanosilver, and that such an assessment would have also shown that registering AGS-20 presented unacceptable risks.
On June 14, 2012, EPA filed a brief arguing that NRDC lacked standing to challenge EPA's decision to register AGS-20 because NRDC did not demonstrate that it or its members face an injury that is "actual or imminent," rather than "conjectural or hypothetical." EPA also argued that its decision was supported by substantial evidence. According to EPA, it "conservatively estimated potential consumer exposure to nanosilver from HeiQ AGS-20, assuming, among other things, that 35% of the silver contained in an AGS-20 treated textile that is chewed or worn could be ingested or absorbed as nanosilver, and that a three-year-old child could be exposed to a new textile daily for six months." With respect to aggregate exposure to nanosilver from sources other than AGS-20, EPA argued that "FIFRA neither requires aggregation nor specifies when aggregation might be appropriate," and that the decision not to address other sources of nanosilver was appropriate "because there was no data indicating that any other products contain nanosilver that is chemically similar to the nanosilver in AGS-20."
On August 7, 2013, the court ordered supplemental briefs addressing EPA's determination that aggregate oral and dermal exposure when AGS-20 is used as a surface treatment does not present a risk concern even though EPA calculated an MOE for this exposure of exactly 1,000. EPA's August 21, 2013, supplemental brief argued that the precise aggregate MOE for this scenario prior to rounding was 1,006, which is greater than the target MOE of 1,000 or less. EPA also argued that the MOE was based on conservative assumptions that likely overestimate the amount of nanosilver exposure. NRDC argued in its August 29, 2013, supplemental brief that, given a calculated MOE of 1,000, which is not greater than the target MOE of 1,000, EPA's decision criterion dictates a finding that the risk is of concern and mitigation is required. In its September 5, 2013, reply brief, EPA reiterated its view that its risk assessment is reasonable and adhered to the MOE framework guidelines in this case, regardless of whether the aggregate MOE is 1,000 or 1,006.
The Court's Decision
In the majority opinion by Circuit Judge Bybee, the court first determined that NRDC had demonstrated that its members have Article III standing to challenge the conditional registration of AGS-20, because there is "a 'credible threat' that a probabilistic harm will materialize" and the alleged risk of injury is not too speculative to confer standing. The court then addressed three potential objections to the EPA decision to conditionally register AGS-20. With respect to the two principal objections that were originally raised by NRDC, the court found that the EPA decision was supported by substantial evidence, but the court also found that EPA's decision with respect to the specific issue addressed by the supplemental briefing was not supported by substantial evidence and vacated that part of the decision. Specifically, the court found that EPA did not follow its own "rule of decision," under which "there is a risk concern requiring mitigation when the short- or intermediate-term MOE is less than or equal to 1,000." The court rejected EPA's argument that the MOE was actually 1,006, which it found to be based on a methodology that did not properly apply conventional rules for rounding. The court also rejected EPA's argument that the calculated MOE of exactly 1,000 was based on very conservative assumptions and that an MOE near 1,000 is acceptable, stating that "[a]lthough EPA's point is well taken as a practical matter, it is irrelevant as a legal matter." Noting that the rule of decision was created by EPA rather than the court, the court stated that it could not "revise EPA's assumptions, alter its rule of decision, or perform our own risk assessment."
The majority opinion found that there was substantial evidence supporting EPA's decision to use three-year-olds rather than infants in its risk assessment. The court stated: "Infants are more vulnerable because they weigh less, but toddlers are more vulnerable because they can chew fabric aggressively." The court acknowledged that there could be a "reasonable basis for disagreement" on this issue, but found there was substantial evidence supporting the choice as made by EPA.
The court also found that there was substantial evidence supporting EPA's decision not to include other sources of nanosilver exposure in its risk assessment for AGS-20. The court stated that "Congress expressly required aggregate risk assessment for food-use pesticides," but did not impose a similar requirement for pesticides not resulting in residues in food. The court also noted that EPA has treated the nanosilver in AGS-20 as a "new active ingredient," and that EPA could reasonably conclude based on the available information that "other types of nanosilver might not be chemically similar to AGS-20" or that consumers may not "be exposed to them in the same way in meaningful quantities."
A dissenting opinion written by Judge Adelman, a District Judge sitting on the panel by designation, argued that all members of the panel found one aspect of the EPA decision was flawed, so the court should have vacated the registrations issued in reliance on that decision rather than only purporting to vacate a part of the decision. The dissenting opinion argues that it was not appropriate for the court to partially deny and to partially grant the petition, that the court did not need to rule specifically on additional objections raised by NRDC, and that the court ruled incorrectly on the merits of these additional objections. The majority opinion responds to the dissent by construing FIFRA Section 16(b) to require that the court resolve "all of the arguments presented by the party petitioning for review..."
At the outset, we think it is helpful to consider the practical effect of the court's ruling. Although the court only vacated a part of the EPA decision supporting conditional registration of AGS-20, that part of the decision was an essential constituent element in EPA's rationale for granting the registrations. Accordingly, a reasonable construction of the court's action is that the HeiQ registrations themselves have been vacated, pending EPA actions on remand that address and resolve the specific problem identified by the court. Having said this, we note that the court also specifically ruled against two principal objections as originally articulated by NRDC in its petition for review. NRDC may be able to renew these objections in the event EPA decides on remand to reissue the registrations, but NRDC will need to argue that EPA has new pertinent information or that the record assembled during remand otherwise provides new grounds for these objections.
The sole basis given by the court for its decision is a very narrow issue. The court has essentially stated that EPA itself established binding rules for its decision and that EPA is obligated to follow its own rules. Nevertheless, we believe that scientists may be frustrated by the implicit premise of this narrow ruling that an MOE of 1,000 can be meaningfully distinguished from an MOE of 1,001. The narrow basis for the decision suggests that EPA may be able to refine its risk assessment in a way that results in an MOE exceeding 1,000. For example, HeiQ has been developing additional data and these data might alter one or more assumptions underlying the risk assessment. In the alternative, EPA and HeiQ may be able to agree on some form of risk mitigation that would incrementally increase the calculated MOE.
Given the narrow ground for the decision and its applicability to risk assessment in general, it appears unlikely that this decision itself will have broad significance for EPA's regulation of nanomaterials, or for EPA's issuance of conditional registrations under FIFRA. Nevertheless, it is quite possible that the issues on remand will ultimately be broader than the single narrow question identified by the court. We note that EPA has stated its intension to evaluate the characteristics of a variety of registered pesticide products that contain metallic silver or silver compounds in the forthcoming registration review process, and this may influence how EPA decides to regulate any products found to contain nanosilver.