False Claims Suit Against Danimer Scientific

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Danimer Scientific is facing a federal securities class action after an investor, Darryl Keith Rosencrants, filed a suit against the manufacturer in May, 2021.  The suit is a result of severe stock price drops after the publication of articles alleging the manufacturer made false claims on their products.  Danimer maintains that their claims are accurate.

Danimer sells polyhydroxyalkanoates (PHAs) under their brand name Nodax.  These PHAs are used in the creation of various plastic items, such as water bottles, straws, and food containers.  Danimer claims on their website that their Nodax products are 100 percent renewable and biodegradable in marine, freshwater, and soil environments.  They further state that the biodegradability due to certain microorganisms means the Nodax products have the possibility to biodegrade in landfills.

The plaintiff alleges Danimer overstated and exaggerated claims on the biodegradability of Nodax in oceans and landfills.  The plaintiff further claims that these statements led to an inflated value of the company and resulted in the severe drop in stock price once publication reported on the issue.  An article published in the Wall Street Journal on March 20, 2021 states Danimer made misleading claims and cites at least one expert calling Nodax’s biodegradability “not accurate” and “greenwashing”.  When stock trading opened again, Danimer’s value dropped 12.87 percent.

Spruce Point Capital Management, an investment firm, published a report critical of Danimer on several issues, including degradability, on April 22, 2021.  Throughout the trading day, the stock dropped 8.04 percent.  From March 20, 2021 to April 22, 2021, the total drop in value was 54 percent.  The Plaintiff and other Class members are claiming losses and damages due to the precipitous decline of Danimer’s market value securities.

Confidential Status Change of TSCA Chemicals

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The confidential business information status of chemicals on the TSCA Inventory is scheduled for change, removing the confidential chemical identity status for 390 chemicals.  This will move the chemicals to the public portion of the TSCA Inventory.  During the 2012, 2016, and 2020 reporting periods, one or more manufacturers reported these chemicals as non-confidential, which is a result of at least one of these manufacturers not reporting a previous confidential chemical as confidential.

EPA recognizes that some manufacturers may have simply been in error for not reporting their chemicals as confidential.  However, EPA states that for each of the 390 chemicals, there is independent reporting based and EPA validated reasons to include the chemicals on the list.  EPA intends to move these chemicals from the confidential chemical identity status of the TSCA Inventory to the public portion sometime during the summer of 2021.

EPA also recognizes stakeholder interest in the status change for these chemicals and has given June 30, 2021 as a deadline for interest, questions, or concerns regarding the change.

Policy Changes for PFAS Entering the Market

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On April 27, 2021 EPA announced policy changes regarding new PFAS prior to the chemicals entering the market.  Previously, low volume exemptions were allowed for some new PFAS.  EPA will implement new rules for reviewing and managing the low volume exemption requests.  After receiving the request, EPA has 30 days to conduct the review and determine if the chemical in the request could cause serious human health effects or significant environmental effects.  If either of the effects are determined, or if the process would take more than 30 days, the request is denied.

EPA stated it is unlikely to grant any low volume exemptions for PFAS due to the chemicals’ history of damaging health effects and the complexity of the process resulting in longer than 30 days to complete a review.  Denying these lengthy process reviews of PFAS allows the EPA to devote more time on pre-manufacture notice review processes and mitigate potential risks of the chemicals.  EPA is also looking for way to work with companies which have been granted low volume exemptions for PFAS and have them voluntarily withdraw their low volume exemptions.

ITC Submits New Priority Testing List

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The TSCA Interagency Testing Committee (ITC) submitted a report to EPA on April 13, 2020 listing an additional 39 chemicals on the priority testing list.  Within the 39 chemicals, 15 are already designated as high-priority substances and 24 are organohalogen flame retardants.  The priority testing list currently has five other high-priority substances and six organohalogen flame retardants.  The high-priority substance list contains substances with the most demand for evaluation from a risk-based screening process.

ITC also recommended the 15 high-priority substances be added to TSCA section 8(d) Health and Safety Data Reporting rule in order for EPA to obtain unpublished health and safety studies.  The report states the high-priority substances may present an unreasonable risk for the health of people and/or the environment.  The risk evaluation process has already begun for each of these high-priority substances.

The 24 organohalogen flame retardants were added to the priority testing listing after the Consumer Product Safety Commission (CPSC) voted to ask the ITC to add the chemicals.  In addition, CPSC granted a petition to begin rulemaking for additive, nonpolymeric organohalogen flame retardants under the Federal Hazardous Substances Act

EPA is currently seeking public comments on the revisions to the priority testing list and any information relevant to the listing.  The comment period is open until May 28, 2021.

Rite Aid Chemical Policy Update

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The pharmacy chain Rite Aid expanded its chemical management policy on March 3, 2021 to add transparency, include additional chemicals on their restricted substance list, and update their screening method.  Transparency for the new policy requires suppliers to be more specific in listing their ingredients, such as replacing ‘fragrance’ with the ingredients that make up the fragrance.  These generic terms will be replaced with the substances in those components.  Additionally, Rite Aid is encouraging their suppliers to disclose nonfunctional constituents such as by-products and contaminants.  This additional level of detail on the packaging of products sold at Rite Aid stores will become mandatory by December 2023.

Rite Aid initially had eight chemicals on its restricted substance list (triclosan, propyl paraben, formaldehyde, dibutyl phthalate, toluene, diethyl phthalate, butyl paraben, and nonylphenol ethoxylates).  The new policy has added 61 chemicals.  These chemicals include heavy metals, PFAS, Bisphenols, and solvents.

Along with updating their chemical management policy, Rite Aid has transitioned away from survey-based assessments for identifying chemicals on the restricted substance list.  Rite Aid began the transition process to WERCSmart in September 2018 and has now finish the transition.  Rite Aid suppliers are required to report the substances in their products to WERCSmart.  WERCSmart then analyzes the substances to see if they meet the retailer’s policy.  The chemical management policy does not address CBI issues, although WERCSmart may protect confidential data.

OSHA Proposes Revisions to Hazard Communication Standard

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On February 15, 2021, OSHA posted a notice of proposed rulemaking to make changes to the Hazard Communication Standard.  The proposed changes include updates the criteria for classification on health and physical hazard, updating labels, new labeling provisions for small containers, technical amendments for the contents of safety data sheets, and revisions to definitions of certain terms.

The revised criteria for classification of certain health and physical hazards now includes any hazards associated with a change in the chemical’s physical form or from a reaction with other chemicals. The revised provisions for updating labels now includes the date the chemical is released for shipment.  Labels for bulk shipments can be on the immediate container or with the shipping papers, bills of lading or other electronic means that makes it immediately available to workers “in printed form on the receiving end of shipment”.

The proposed changes also state that chemical manufacturers or importers need to update the label for each individual container with each shipment, but do not need to relabel chemicals that have been released for shipment and are awaiting future distribution. For the new labeling provisions for small containers, additional options are available in situations where it is not feasible to use the full label information.  This includes putting the full label information on an outer package, a statement on the outer package that the smaller container needs to remain in the outer package when not in use, and at least has the product identifier on containers less than or equal to 3 ml.

OSHA is taking public comments on all of the proposed changes and the use of electronic template files to create safety data sheets and labels.  The comment period is open until May 19, 2021.

Manufacturer Request for Risk Evaluation of OTNE

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On November 20, 2020, EPA received a manufacturer request for risk evaluation for the chemical substances in the octahydro-tetramethyl-naphthalenyl-ethanone chemical category (OTNE).  These substances are used as fragrance ingredients.  The three manufacturers, International Flavors and Fragrances, Inc., Privi Organics USA Corporation, and DRT America, Inc., sent the request through the OTNE Consortium.

The risk evaluation request applies to four chemicals within OTNE.  The Toxic Substances Control Act (TSCA) considers two of the chemicals to be persistent, bioaccumulative and toxic (PBT) chemicals.  While completing the risk evaluation for the OTNE chemical, EPA is not allowed to consider costs or other non-risk factors (15 U.S.C. 2605(b)(4)(F)(iii)).  The request for evaluation also includes possible conditions of use for EPA to identify.

EPA has until no later than June 5, 2021 to either grant or deny the request to conduct the risk evaluation for the OTNE chemicals.  In order for EPA to grant the request, it must meet all of the requirements listed under 40 CFR 702.37(e)(6)(ii).  These conditions are that the request constitutes conditions of use that warrant inclusion in a risk evaluation, EPA has all the necessary information to conduct the risk evaluation, and all the remaining criteria of 40 CFR 702.37 are met, such as manufacturers paying fees to support the risk evaluations.

PBT Rules

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In January 2021, EPA published the final rules for five Persistent, Bioaccumulative, and Toxic (PBT) chemicals.  The public comment period for these rules is open until May 17, 2021.  The five PBT chemicals are:

  • Decabromodiphenyl ether (DecaBDE)
  • Phenol, isopropylated phosphate (3:1) (PIP (3:1))
  • 2,4,6-Tris(tert-butyl)phenol (2,4,6-TTBP)
  • Hexachlorobutadiene (HCBD)
  • Pentachlorothiophenol (PCTP)

DecaBDE is used as an additive flame retardant in plastic enclosures for TVs, computers, and other household appliances.  It is toxic to aquatic animals and terrestrial invertebrates, causing developmental, neurological, and immunological issues.  It also harms the liver and is a carcinogen.  EPA’s published rule for decaBDE prohibits the manufacture, important, process and distribution of decaBDE products with a few exceptions, such as wire and cable for the two-year period until the prohibition goes into effect.

PIP (3:1) is used as a plasticizer, flame retardant, anti-wear additive, and anti-compressibility additive.  It is toxic to aquatic plants and animals, potentially causing reproductive and developmental effects on the animals’ organs.  EPA’s published rule for PIP (3:1) prohibits processing and distribution of PIP (3:1) and products containing it with some exceptions, such as various automotive and aviation products.  EPA issued a temporary 180-day “No Action Assurance” on the prohibitions for processing and distributing PIP (3:1) articles, which gives EPA enforcement discretion to ensure important articles are no interrupted in the supply chain.

2,4,6-TTBP is used as a reactant in processing and is used in fuel, fuel-related additives, oils, and lubricants.  It is toxic to aquatic plants and animals, causing developmental issues and harm to the liver. EPA’s published rule is to effectively prevent the use of 2,4,6-TTBP as a fuel injector cleaner and fuel additive for small commercial operations by prohibiting distributions of the chemical in concentrations above 0.3% in any container with less than 35 gallons.  Additionally, EPA prohibits its use as an oil and lubricant additive in concentrations of 0.3% regardless of the container size.

HCBD is burned as waste fuel after being created as a byproduct in the manufacturing of chlorinated hydrocarbons, particularly perchloroethylene, trichloroethylene, and carbon tetrachloride.  It is toxic to aquatic animals, birds, causing renal, reproductive, and developmental effects.  It is also potentially a human carcinogen. EPA’s published rule prohibits manufacturing, processing, and distributing HCBD is all products except those that unintentionally create it as a byproduct in the production of chlorinated solvents.

PCTP is used to make rubber more pliable.  It is toxic to fish, plants, and birds, causing liver and reproductive effects.  EPA’s published rule prohibits the manufacturing, processing, and distribution of all PCTP products above 1% concentration by weight of the chemical.

EPA Changing Systematic Review Approach

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In February 2021, EPA announced the Agency’s commitment to strengthening science used in chemical risk evaluations.  EPA stated the Agency will continue to update its systematic review approach and its broader efforts to review the first 10 TSCA risk evaluations.  The first 10 TSCA risk evaluations were complete in January 2021.  Following the review of their 2018 systematic review approach by the National Academies of Science, Engineering, and Medicine (NAS), EPA stated they will never use that particular systematic review again.

NAS recommendations included:

  • Engaging in ongoing cross-sector efforts to develop and validate new tools and approaches.
  • Incorporating components of existing hazard assessments approaches.
  • Creating a handbook to assist with incomplete and hard to follow documentation.
  • Using standard descriptors for the strength of evidence.

EPA stressed that the NAS report was based on earlier EPA practices, and part of the reason for updating the systematic review approach is to ensure the review of the first 10 TSCA risk evaluations are done in accordance with Executive Orders and other directives from the Biden Administration.  The Agency’s goals from the review are that:

  • All Agency actions meet statutory obligations,
  • Be guided by the best available science,
  • Ensure the integrity of Federal decision-making, and
  • Protect human health and the environment.

EPA has begun the process of creating a TSCA systematic review protocol in collaboration with the Agency’s Office of Research and Development.  The new review protocol will incorporate approaches from the Integrated Risk Information System (IRIS) Program, as recommended by NAS.  EPA expects to publish and take comments on the new review protocol later this year.

Prop. 65 Short Form Warning Change

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In January 2021, OEHHA announced a proposal to make changes to use the of the short-form Proposition 65 warnings.  These changes restrict when a manufacturer would be allowed to use the short-form.  Previous use of the short-form warning label had “no limitation on using the short-form warning on larger products”.  The only requirement was that the entire warning text be at least the same size as the largest text for the rest of the consumer information on the product, or at least 6-point in size if the rest of the consumer information text was smaller.

Under the proposal, short-form warnings would only be allowed under the following conditions:

  • The total surface area of the product label available for consumer information is 5 square inches or less, and;
  • The package shape or size cannot accommodate the full-length warning described in section 25603(a).

The shape and size limitation described in section 25603(a) govern the ability to fit the text of the warning on the product and not dimensions of the shape or size of the warning.

OEHHA stated the purpose of the change is to correct widespread overuse use of the short form warning and to provide additional guidance for its use.  The comment period for this proposal is open until March 29, 2021.