The Department of Toxic Substances Control Issues New Demand for Information to Companies Using Nanometals and Nano Oxides

Challenge: Companies need to lawfully respond to the information demand while at the same time protecting their trade secrets or inadvertently opening up their employee health & safety program to claims of inadequacy.

Recommendation: Nano companies need to insure their responses are coordinated with legal counsel to ensure their trade secrets are protected. Companies should also review their risk management programs to make sure they can withstand scrutiny.

The Call-In: This call-in follows DTSC's call in for information related to Carbon Nano Tubes last year. The six new nanomaterials subject to the second call-in are:

• Nano Silver
• Nano Zero Valent Iron (nZVI)
• Nano Titanium Dioxide
• Nano Zinc Oxide
• Nano Cerium Oxide
• Quantum Dots

Pursuant to DTSC's authorizing statute this second call-in applies not only to those companies that actually manufacture, but also to those who merely import these materials into the state of California. Health & Safety Code Section 57018(a)(4) defines a "manufacturer" as a "person who produces a chemical in this state or imports a chemical into this state for sale in this state." DTSC also takes the position that businesses that produce or import any of these six chemicals, in any quantity, must comply with the call-in.

Under its call-in authority DTSC is requiring companies to provide information about analytical test methods that can be used to detect and measure these six nanomaterials in the environment. Specifically, they are looking for analytical test methods which identify and quantify these nanomaterials, their metabolites, and their degradation products in water, air, soil, sediment, sludge, chemical waste, fish, blood, adipose tissue, and urine.

Trade Secret Issues: Of critical importance in responding to DTSC's call-in is protection of a company's nanotechnology trade secrets. California law allows the protection of trade secrets in the call-in process. However, a company cannot simply declare information a trade secret and expect that declaration to be honored. There are specific and detailed requirements for protecting trade secrets in this regulatory context. Without adequate supporting documentation the trade secret protection may be irretrievably waived.

The term "trade secret" is broad. It is not just a formula or a design. While California's Uniform Trade Secrets Act ("UTSA") certainly protects such information, the UTSA also affords protection to much more common pieces of information. If a company takes reasonable measures to protect its information, and if the information is valuable because it is kept secret, California courts will recognize that common, every-day pieces of data can be afforded protection as a trade secret. For example, customer lists, business plans, spreadsheets, corporate minutes and agendas, and bid specifications can be afforded protection as trade secrets. The scope of what a nanotechnology company needs to protect is broad. But this information will not be protected unless the response to the call-in is done properly.

Companies are strongly advised to obtain the assistance of counsel in responding to this call-in in order to protect their nanotechnology trade secrets.

Health & Safety Concerns: In addition to protecting trade secrets, companies must consider DTSC's ongoing interest in how the company is dealing with worker health and safety, fate and transport (how nanomaterials move through the environment and where they end up), disposal and labeling.

DTSC in its call-in documentation identifies a multitude of potential hazards posed by these six nanomaterials. For example, DTSC points out that nano zero valent iron has potential adverse impacts on ecosystems, nano titanium dioxide may cause toxicity in human colon cells and nano zinc oxide has been observed to cause toxic impacts on small organisms. It does not take much imagination to understand where DTSC is going when it cites these potential problems. Companies subject to this call-in should review their risk management programs and insure those programs can withstand scrutiny.