Nanotechnology - Business Opportunities And Regulatory Challenges

Friday, December 1, 2006 - 01:00
Barry M. Hartman
B. David Naidu

Nanotechnology - engineering particles that are too small for the eye to see in order to create matter that has different properties than those at the conventional scale - has come of age. There are reportedly over 300 consumer products world-wide that contain some nanomaterials. See Woodrow Wilson Center Project on Emerging Nanotechnologies, A Nanotechnology Consumer Product Inventory, According to some experts, the global sales of nanoscale materials could exceed $1 trillion by the year 2015. See M.C. Roco, The Future of the National Nanotechnology Initiative (2003).

Inevitably, concerns over the potential impacts of this new and largely unseen technology on human health and the environment have arisen, and it may not fit neatly into current regulatory regimes designed to address these concerns. Not surprisingly, over the last year significant debate has begun, and action is being undertaken to address whether and how this technology should be regulated.

Businesses already involved in nanotechnology products, and those interested in getting involved, need to be aware of regulatory developments and should be willing to educate regulators to ensure that new and changing rules do not undermine the promise of this technology. This article gives a snapshot of how government agencies and the public are responding to these concerns, and how nanotechnology is and may be regulated.

Nanotechnology comes of age. 'Nanoscale' means that the materials are at one billionth of a meter. Engineering nanoscale materials has the potential to revolutionize every aspect of business including pharmaceuticals, semi-conductor manufacturing, communication technology, chemical production, consumer products (such as cosmetics) and pollution remediation. Scientists predict that utilization of nanomaterials will give rise to cancer therapies, pollution-neutralizing compounds, advanced detectors for biohazards, and higher-efficiency fuel cells. See Jennifer Sass et al., Nanotechnologies: The Promise and the Peril, Sustainable Development Law & Policy, Vol. VI, Issue 3 (Spring 2006).

Optimism for the promise of this technology abounds. Federal funding of nanotechnology research and development has gone from $464 million in 2001 to a requested $1.2 billion in fiscal year 2007. National Nanotechnology Initiative: Research and Development Funding in the President's 2007 Budget, available at More importantly, as noted above, it has moved into the commercial production phase.

Why might a product that contained a nanomaterial need to be regulated differently? Because size (or lack of it) matters. There is limited empirical data on nanomaterials' toxicity. However, some limited studies have raised concerns. For example, one study suggests that nanoscale materials have the potential to enter the blood and lymph circulation to reach potentially sensitive target sites such as the bone marrow, lymph nodes, spleen and heart. See Gnter Oberdrster et al., Nanotoxicology: An Emerging Discipline Emerging from Studies of Ultrafine Particles, 113 Envtl. Health Persp. 823, 823-839 (2005). Based on these concerns, some argue that the introduction of nanomaterials into consumer products may turn what has been a safe product into one that is unsafe. Others have posited that because of their high surface-area-to-mass ratios and enhanced surface activity, nanomaterials are likely to prove more potent at lower concentration levels than what the regulatory thresholds currently provide. See Karen Florini et al., Nanotechnology: Getting It Right the First Time, Sustainable Development Law & Policy, Vol. VI, Issue 3, p. 49 (Spring 2006).

These observations are arguably directly at odds with many current regulatory standards that are based on mass and mass concentration, and that operate on the logical assumption that toxicity is diminished at these lower levels. Id.

The regulation of nanotechnology is studied - twice. These concerns have led to the question of whether and how nanomaterials should be regulated. Two recent major papers - one by the United States Environmental Protection Agency ('EPA') and the other by the Woodrow Wilson School Project for Emerging Nanotechnologies at Princeton University ('Wilson Project') address the current regulatory structure and what may be needed for the regulation of nanotechnology.

In a December 2005 White Paper, the EPA Nanotechnology Workgroup recognized that nanotechnology posed a challenge to the current statutory and regulatory structure, as current testing procedures, instrumentation, and risk assessment tools might have limited applicability to nanomaterials. Science Policy Council (EPA), Nanotechnology White Paper (External Review Draft 2005), available at OSA/nanotech.htm. EPA suggested an approach under which it would review nanotechnology products and processes as they are introduced and evaluate them under already existing statutes to determine if particular protections (or new legislation or regulation) is necessary. See id . at 24.

In the second study, the Wilson Project concluded that there are enough known and significant shortcomings in the current regulatory regime to justify regulatory action now. See Wilson Project, Managing the Effects of Nanotechnology, available at www.nanotech- For example, the paper noted that with respect to occupational health and safety regulations, the currently permissible levels for certain air contaminants may not be sufficient to address the toxicity of those same substances at the nano scale. Moreover, even if appropriate standards were in place, due to budgetary issues and inappropriate or unavailable equipment, enforcing these standards might be difficult.

The Wilson Project paper also notes that under the Toxic Substances Act ('TSCA'), if the EPA does not have enough information to evaluate the health and environmental effects of a chemical, the agency can only delay or prohibit the chemical's manufacture if the EPA can show that the chemical may present 'unreasonable risk.' It suggests that this creates the ultimate regulatory 'Catch 22': the EPA can't demonstrate 'unreasonable risk' without adequate information, but cannot necessarily get this information without some evidence of unreasonable risk. See id. at 11-12.

The Wilson Project paper also argued that the existing regulatory regime suffers from major shortcomings of either legal authority or lack of resources, or both, and that a new law may be required to address the inherent risks in nanotechnology. See id. at 3. The Wilson Center suggested new legislation should place the burden on the manufacturers to demonstrate that the product is safe. The goal of this proposal is to put a system in place that provides the government with the information it needs for regulation without stifling the entrepreneurship necessary to develop this new technology. Under this approach there would be four stages - (1) the EPA establishes testing protocols based on the type of product, the results of prior tests, and information included in reporting requirements placed on the manufacturer; (2) the manufacturer submits a sustainability plan addressing (among other things) labeling, product risk, restrictions on use, and life cycle analysis; (3) the EPA reviews the sustainability plan; and (4) follow-up procedures are implemented to monitor compliance. See id. at 19-20.

Alternative regulatory approaches: How much is enough? So far, three schools of thought have emerged to address the question of how nanotechnology should be regulated. One school of thought is that existing regulations, with some slight modifications, are adequate to handle the task. This would avoid the concern, as some have argued, that an entirely new regulatory regime would hamper U.S. competitiveness with no appreciable benefit to risk management.

A second school of thought endorses a more aggressive modification and review of various regulatory programs, but without new authorizing legislation. The International Center for Technology Assessment and Environmental Defense advocates this approach (at least for now). It calls for new classifications for all nanomaterials and also supports research that focuses on the risk of nanomaterials independent of the products of which they are a part. This approach also advocates restricting products from entering commerce until after the risks have been researched, assessed, and regulated. Whether existing laws authorize agencies to address these concerns is open to question.

A third school of thought, endorsed by the Wilson Project, argues that existing statutes are inadequate to handle the risks posed by nanotechnology and that new laws are required to effectively manage the risks. Most existing environmental laws are 'media based' (focusing on air, water or the land, each with different types of standards). Adverse impacts from nanomaterials, however, can cross these lines. Instead of a media-specific approach which would have standards entirely dependent on how the nanomaterials creates specific risks, some advocate a new statute that regulates nanomaterials regardless of the context in which they are used. This approach could help ensure that there is a comprehensive protocol to evaluate these new materials, since they can impact multiple environments. Others argue that these regulatory regimes are already being used to regulate ecosystems (called, in EPA parlance, 'multi-media' approaches).

Enacting new legislation is enormously difficult, and the result is often imprecise. Because of the enormous difficulty associated with enacting new legislation, both the minimalist camps and the consumer and environmental groups seem to be focusing their energies on addressing this problem at the regulatory level. Whether the underlying statutes authorize the regulatory action that may be proposed is unknown.

Conclusion. The development of logical, appropriate and comprehensive but focused regulatory regimes is the best way to balance the need to ensure protection of the public with the desire to encourage the safe and effective development and commercialization of this technology. But regulation through reaction - either reaction to an incident, or reaction to a petition for rulemaking or legal ruling - could drive the regulatory action and create the higher potential for a less efficient set of regulations. Consumer and environmental groups are already petitioning for rulemaking. It is crucially important that the business community be involved in this process early and consistently in order to ensure that regulation is based on educated understanding of the technology, and not simply on fear of the unknown.

Barry M. Hartman practices in the Washington, DC office of Kirkpatrick & Lockhart Nicholson Graham LLP. He was formerly the Acting Assistant Attorney General for Environmental and Natural Resources at the United States Department of Justice. B. David Naidu is a senior associate in the New York office of Kirkpatrick & Lockhart Nicholson Graham LLP.

Please email the authors at and with questions about this article.