New and more extensive government regulation may be in the future for a host of industries and products we have blogged about at MassTortDefense, including tobacco, medical devices, food, and drugs. A new report from the “Investor Environmental Health Network” calls for regulations not of the products themselves, but new rules governing disclosure of potential liabilities that can arise from emerging product technologies like nanotechnology.
EHN is a partnership of investment managers who report they oversee more than $25 billion in assets. The new report identifies alleged “loopholes” in the current system of securities and accounting regulation that the group says prevent a complete reporting of a firm’s potential liabilities. They point, as a case study, to the alleged danger of asbestos-like litigation risks for nanotechnology companies and investors, as potentially “ultra-hazardous” nanotechnologies enter the market.
They argue that nanomaterials, lighter and stronger than other materials, are used in hundreds of products already on the market, including many cosmetics and skin care products. They cite a study published in May, 2008 which suggested certain carbon nanotubes could have similar health effects as asbestos; and they point to a concern that particles at the nano level will be able to penetrate membranes in the brain in a way traditional particles do not. Materials can take on new properties at the nano level, becoming stronger, or better conductors of heat or electricity, for example. But what creates their potential for new applications across a range of industries, may also be the source of their risk.
The report calls for more consistent liability estimates made to insurers and investors; benchmarking liabilities against other companies whose published litigation results could offer another estimate of liability; and several new disclosure regulations from the SEC.
Companies developing or contemplating selling products with nanotechnology will, of course, want to monitor these efforts, which seem at times to call for a level of foresight requiring a working crystal ball. This particular report appears to assume that all the potential risks of nanotechnology are real; that manufacturers have no interest in exploring the potential risks; and, if they do, certainly won’t ever disclose them. Begrudgingly, it admits that “a number of questions remain regarding whether carbon nanotubes will actually cause health harms to the same degree that asbestos did.” That’s an understatement. In fact, the published studies relate to only some forms of carbon nanotubes, and like any potentially toxic substance, the levels of exposure to carbon nanotubes by workers or consumers is a key issue in assessing risk. Many of the current uses of nanotechnology are in FDA-regulated products where there is a demonstrated lack of dermal absorption. Similarly, regarding potential nanotechnology in food packaging, substances used in food packaging are already regulated by FDA as “food contact substances” with the burden resting on the sponsor of a new food contact substance to demonstrate its safety.
Currently, companies involved in nanotechnology regularly disclose to investors that there is no scientific agreement on the health effects of nanomaterials; they note that some scientists believe that in some exposure contexts, nanomaterials may be hazardous to an individual’s health or the environment. They disclose that the science of nanotechnology is based on arranging atoms in way not made in nature; that future research into the effects of nanomaterials may thus have an adverse effect on products using the new technology. They also typically disclose that the future regulation and limitation of the kinds of materials used in or used to develop nanotechnology-based products could halt or delay the commercialization such products. Such disclosures would seem to put investors on adequate notice of an uncertain future; speculative and alarmist predictions of the “next asbestos” seem unwarranted.