BY THE
   (FEDERAL REGISTER; VOL.  45,  NO.  196  -
TUESDAY, OCTOBER 7,  1980,  PAGES 66726-66734;
     EPA [OPTS-62009  (TSW-FRL  1606-5)]
                SUBMITTED  BY
              JANUARY  5,  1981

         On  October  1,  1980,  the  United  States  Environmental
Protection Agency  (EPA)  published an Advance  Notice  of Proposed
Rulemaking (ANPR) titled, "Ozone - Depleting Chlorofluorocarbons:
Proposed  Production  Restriction"  (45  Federal  Register  66726-
66734).  EPA requested submission of  comments.   E.  I. du Pont de
Nemours  &  Company   (Du  Pont)  manufactures  and markets  chloro-
fluorocarbons  (CFCs) under the trademark "Freon".  Du Pont herein
presents comments for the record on:
             or use of CFCs at
of restricting
this time.
domestic production
             Infeasibility and impact of. implementing CFC
             controls as proposed.
         Questions or requests for additional
clarification may be addressed to:
               information or
                   Paul W. Halter
                   Environmental Manager
                   "Freon" Products Division
                   E. I. du Pont de Nemours & Company
                   Wilmington, Delaware  19898

Table of Contents
and Conclusions


  A.  Problem Background
  B.  Du Pont Assessment
  C.  Du Pont Position
  D.  Problems with EPA's Approach to Issue
  E.  Recommendations for Action by EPA



     A.  Introduction

     B.  Refrigeration and Air-Conditioning

         1.   Description of Use
         2.   Essentiality and Benefits
         3.   Alternatives and Limitations

     C.  Mobile Air-Conditioning

         1.   Description of Use
         2.   Essentiality and Benefits
         3.   Alternatives and Limitations

     D.  Solvents

         1.   Description of
         2.   Essentiality and Benefits
         3.   Alternatives and Limitations

     E.  Blowing Agent for Rigid Polyurethane Foam

         1.   Description of Use
         2.   Essentiality and Benefits
         3.   Alternatives and Limitations

     F.  Blowing Agent for Flexible Polyurethane Foam

         1.   Description of Use
         2.   Essentiality and Benefits
         3.   Alternatives and Limitations













                                            Table of Contents

        G.  Blowing Agent for Polystyrene,  Polyethylene
            and Phenolic Foam                                    21

            1.   Description of Use                               21
            2.   Essentiality and Benefits                        22
            3.   Alternatives and Limitations                     23

        H.  Food Freezant                                        24

            1.   Description of Use                               24
            2.   Essentiality and Benefits                        24
            3.   Alternatives and Limitations                     25

        I.  Sterilant Gas                                        28

            1.   Description of Use                               28
            2.   Essentiality and Benefits                        29
            3.   Alternatives and Limitations                     30

        J.  Intermediate for Fluoropolymer  Production             32

            1.   Description of Use                               32
            2.   Essentiality and Benefits                        32
            3.   Alternatives and Limitations                     34

        K.  Chlorofluorocarbons and Energy  Conservation          36

            1.   Summary                                          36
            2.   General Conclusions and Methodology              39
            3.   Specific Applications                            41
            4.   U.S. Department of Energy Standards              42

        L.  Summary                                              44

  III.  LEGAL ISSUES                                          III-1-45

        A.  Introduction                                          2

        B.  Authority to Regulate                                 4

            1.   Findings to Support Regulation May Not
                Be Made                                           4
            2.   International Concerns                           10
            3.   Scope of Proposed Regulation                     14
            4.   Regulatory Focus                                 16

                                            Table  of  Contents

        C.   Economic Disincentives Regulation                    17

            1.   Authority                                        19
            2.   Implementation and Operation                     22

                a.  Direct  Allocation                            23
                b.  Auction                                      24

            3.   Competitive Impacts                              26

        D.   Rulemaking Procedures                                29

            1.   General-Clean Air Act                            29
            2.   General-Toxic Substances  Control  Act              30
            3.   Research                                         33
            4.   Economic and Regulatory Impact  Analyses           38

                a.  Clean Air Act                                38
                b.  Toxic Substances Control Act                  41
                c.  Executive Order 12044                        42
                d.  Regulatory Flexibility Act                    43

        E.   Conclusion                                           45

   IV.   THE SCIENCE                                           IV-1-63

        A.   Introduction                                          2

        B.   The Chlorofluorocarbon/Ozone  Depletion  Theory          7

            1.   General Description of  the Theory                 7
            2.   Model Calculations - What They  Are;
                Why They Are Needed                               9
            3.   Previous Scientific Assessments of  the
                Theory                                           10

        C.   Ozone Measurements and Ozone  Trend  Analysis           15

            1.   Overview                                         15
            2.   Detail                                           17

        D.   EPA's ANPR Assessment of the  Theory                  22

        E.   Present Status  of the Theory                          32

            1.   Production  and Release  of CFCs                    32
            2.   Lower Atmospheric (Tropospheric)
                Processes                                        32

    Table of Contents

P1?  v-^"'

         """""	      Page

             If'SO  -
                                          4  til ST., S1"  ,-; 7.Yi
                                          •WASHIWGTO-j.      '
                a.  CFC-11 and CFC-12 Lifetimes                   33
                b.  CFC-21                                        34
                c.  CFC-22                                        36

            3.  Transport to the Upper Atmosphere                 36
            4.  Chemistry in the Lower and Upper
                Atmosphere                                        37

                a.  Hydroxyl Radical Reactions                    39
                b.  Pressure and Temperature
                    Dependencies                                  41
                c.  Alternative Reaction Products                 42
                d.  Chlorine Nitrate                              43

            5.  Atmospheric Models                                44

                a.  2-D Calculations                              45
                b.  C02/N20 Effects                               46
                c.  Volcanoes                                     47

            6.  Stratospheric Measurements                        48

                a.  Chlorine Species                              48
                b.  Nitrogen Species                              50

        F.   Resolution of Uncertainties                           51

            1.  Atmospheric Measurements                          51
            2.  Modeling                                          54
            3.  Chemistry                                         55

        G.   Summary                                               56

    V.   THE QUESTION OF RISK                                  V-l-64

        A.   Introduction                                          2

        B.   Impact of Uncertainties in the Under-
            lying Science of the Theory of Ozone
            Depletion on Risk                                     5

            1.  Introduction                                      5
            2.  Major Current Uncertainty Sources in
                the Atmospheric Science           .                6
            3.  Errors Made by EPA In Treatment of
                Uncertainties                                     9

                a.  EPA Over Relies on the "Key Findings"
                    of the NAS Report                             9

                                            Table of Contents

                b.  EPA Places Sole Reliance on the NAS
                    Report                                       10
                c.  EPA Does Not  Acknowledge Conflict Between
                    the NAS Report and More Recent Reports        11
                d.  EPA Relies on an Out-of-Date Report,
                    While Ignoring Recent Critical Develop-
                    ments In the  Science                         13

        C.  Impact of Uncertainties in the Potential
            Effects of Ozone Depletion on Risk                   14

            1.  Introduction                                     14
            2.  Human Skin Cancer Effects                        18

                a.  Melanoma Skin Cancer                         18
                b.  Nonmelanoma Skin Cancer                      19

            3.  Natural Variations in Normal Background
                Radiation,  Its Simulation and Its
                Measurement                                      21
            4.  Crop Effects                                     22
            5.  Marine Effects                                   24
            6.  Climatological Effects                           25

        D.  Probability and Timing of Reducing
            Uncertainties                                        27

            1.  Introduction                                     27
            2.  Du Pont/Fluorocarbon Project Panel
                Estimates                                        27
            3.  SRI Workshop Conclusions                         28
            4.  Conclusion                                       30

        E.  Risk In Waiting - Risk Versus Time                   32

            1.  Introduction                                     32
            2.  Conclusions from  1980 Du Pont Submission          34
            3.  Conclusions from  University of Maryland
                Study                                            35
            4.  Conclusions from Systems Control, Inc.
                Study           '                                 37
            5.  Summary                                          37

        F.  Is the Risk Developing As Predicted?                 39

            1.  Introduction                                     39
            2.  Opposing Trends                                  40
            3.  Reliability of the Theory                        41

                                            Table of Contents



        G.  Availability and Significance of an Early
            Warning System                                       43

        H.  The Relationship of the International Aspects
            of the Issue to Risk                                  46

        I.  Risk Created by Regulation and the Need for
            Risk - Risk Comparison                               48

        J.  Approaches Which Are  Inappropriate for
            Assessment of Risk on the Chlorolfuorocarbon/
            Ozone Issue                                          53

            1.  Preoccupation with Extreme Future
                Extrapolation                                    54
            2.  Conviction that Immediate Decisions Are
                Necessarily Required, and Are Necessarily
                Better than Deferred Decisions                   57
            3.  Excessive Emphasis on Political Action
                Over Objective Scientific Decision-Making        59

        K.  Summary and Conclusions                              60

   VI.  INTERNATIONAL ASPECTS                                 VI-1-37

        A.  Introduction                                          2

        B.  Differences In National Approaches to the Issue       4

        C.  Illogic and Limitations of U.S.  Unilateral
            Response                                              7

            1.  Proposed U.S. Cap on Production Will Have
                Inconsequential Direct Environmental Impact       7
            2.  Why U.S. Production Cap Will not Result in
                EPA's Goal of Worldwide Regulatory Action         9

        D.  Consequences of U.S.  Unilateral Response             13

            1.  Potential for Counter-Productive Results         13
            2.  Imbalance Between Costs and Potential
                Environmental Benefit                            14
            3.  Loss of Political Option                         15

        E.  Need for a True Global Assessment, Consensus
            and Resolution of Issue                              17

        F.  The Leadership Role - Suggestions on How to
            Proceed                                              20

                                            Table of Contents



        G.  International Trade Implications of Proposed
            Controls                                             23

            1.  Exports                                          23

                a.  Inclusion of Exports Under Domestic
                    Production Cap Would Eliminate Exports       23
                b.  Restriction of Exports Would Have No
                    Net Environmental Benefit                    24
                c.  EPA's Defense of Proposed Policy to
                    Include Exports Under a Domestic
                    Production Cap is Weak                       25
                d.  EPA Expresses More Concern for Foreign
                    Exporters to the U.S. Than for U.S.
                    Exporters to Other Countries                 28

            2.  Imports                                          29

                a.  Imports Should Be Treated"the Same as
                    Exports                                      29
                b.  If U.S. Production Is Capped, Imports
                    Should Be Capped Separately and On the
                    Same Basis                                   30
                c.  Taxing of Imported Finished Goods Made
                    With CFCs                                    31
                d.  Potential for Illegal Imports Has Not
                    Been Addressed                               32

        H.  Summary                                              34

  VII.  ECONOMIC CONSIDERATIONS                               VII-1-71

        A.  Introduction                                          2

        B.  Economic Significance of Chlorofluorocarbons          4

        C.  Regulation of Chlorofluorocarbons via
            Economic Incentives                                  10

            1.  Introduction                                     10
            2.  Impact on CFC Prices                             12
            3.  Inflation                                        19
            4.  Economic Growth                                  20
            5.  Employment                                       21
            6.  CFC Substitutes                                  22
            7.  Energy                                           29
            8.  Financial Markets                                30
            9.  Impact of Uncertainty                            31

                                            Table of Contents
        D.  Regulation of Chlorofluorocarbons via
            Command and Control                                  35

        E.  Inadequacy of the Rand Report to Support a
            Regulatory Decision                                  37

            1.  Introduction                                     37
            2.  Data Base                                        40
            3.  Study Assumptions                                43

                a.   No Regulatory Restriction of
                    Alternatives                                 43
                b.   Discount Rates                               43
                c.   Time Delay of Emissions                      44
                d.   Transfer Payments Not Inflationary           44
                e.   Scope of Economic Incentives
                    Regulatory Options                           44
                f.   Legal Issues                                 45

            4.  Limitations on Use of Report Findings            46

                a.   Introduction                                 46
                b.   Analytical Conclusions Must Be
                    Extrapolated With Care                       47
                c.   Regulatory Cost Remains Uncertain            49
                d.   Criteria for Benchmark Controls Too
                    Restrictive                                  49

                      i.  Enforceability                         50
                     ii.  Adequacy of Information                50
                    iii.  Immediacy of Emission Reduction        51

                e.   Designs of Economic Incentives Options
                    Are Too General                              52
                f.   Transfer Payment Concerns Are Not
                    Resolved                                     53
                g.   Inadequate Attention Is Given to Market
                    Structure Effects of Regulatory Option
                    Design                                       55

            5.  Needed Further Work                              55

                a.   Consider Mixed Regulatory Options            55
                b.   Risk Trade-Off Analysis Needed               56
                c.   Develop Alternative Approach to
                    Policy Evaluation                            56

                                            Table of Contents



                d.  Broaden Analysis                             57

                      i.  Time-Frame                             57
                     ii.  Technical Assessments                  58
                    iii.  Design                                 58
                     iv.  Option Implementation and
                          Administration                         59
                      v.  Legal Issues                           60

                e.  Expand and Add Detail to Economic
                    Incentives Option Structures                 60

        F.  Miscellaneous ANPR Points Having Economic
            Implications                                         61

            1.  Choosing a Regulatory Strategy                   61
            2.  Cost/Benefit Analysis                            61
            3.  EPA's Long-Term Regulatory Strategy              63
            4.  Product/End Use Bans                             63
            5.  Economic Incentives or Disincentives?            64
            6.  Tax or Surcharge on CFC Use                      64
            7.  Base Year                                        64
            8.  Term of Permits                                  65
            9.  Direct Allocation of Permits to
                Manufacturers                                    66
           10.  Direct Allocation of Permits to Users            66
           11.  Government Auction of Permits                    67

        G.  Summary                                              69

 VIII.  THE SEARCH FOR ALTERNATIVES                           VIII-1-7

        A.  Introduction                                          2

        B.  Criteria for Alternatives                             2

        C.  Scope of Program                                      4

        D.  Program Status and Plans                              5

        E.  Timetable                                             5

        F.  Summary                                               7

                                            Table of Contents
IX.  CONCLUSIONS AND RECOMMENDATIONS                          IX-1-18

        A.  Conclusions                                           2

        B.  Recommendations                                      13


        A.  Description of Major Pertinent Reports and
            Submissions on the Chlorofluorocarbon/Ozone
            Issue                                             A-l-13

        B.  The Du Pont Development Program on the
            Alternatives to Commerical Chlorofluorocarbons     B-l-15

        C.  The Energy Consequences of Chlorofluoro-
            carbon Regulation (Battelle Report)                C-l-28

        D.  A Comparison of Some of the Principal
            Findings of the November 1979 National
            Academy of Sciences' Report and the
            October 1979 United Kingdom Department
            of the Environment's Report                       D-l-5

        E.  Chlorofluorocarbons and Ozone - The Science       E-l-69

        F.  Effects of Ozone Depletion

            1.  Human Skin Cancer;  Review by
                Professor Frederick Urbach, M.D.               F-l (1-199)

            2.  Measurement and Instrumentation;  Review
                by Dr. William H. Klein.                      F-2(l-19)

            3.  Agricultural Crops; Review by
                     Professor R. Hilton Biggs.                F-3(l-13)

            4.  Aquatic Ecosystems; Review by
                Dr. David M. Damkaer.                         F-4(l-36)

        G.  Ranking Compounds by Potential for Ozone
            Depletion - "Permit Pounds"                       G-l-9

        H.  Scope of Proposed Regulation                      H-l-13

        I.  Economic Incentives Regulatory Options            1-1-39

        J.  Chlorofluorocarbon Production and Emissions       J-l-16

                                            Table of Contents


        K.  Industry Funded Fluorocarbon Research Program -
            Effect of Chlorofluorocarbons on the Atmosphere
            (CMA/FPP)                                         K-l-77

        L.  Uncertainties - Chlorofluorocarbon Effects
            and Stratospheric Ozone (SRI Report)              L-l-8

XI.  BIBLIOGRAPHY                                             XI-1-47
NOTE: •   The  Executive  Summary  and  Sections  I-IX  appear  in
          Volume 1.

      •   Section X (Appendices A-F) appear in Volume 2.

      •   Section X  (Appendices  G-L)  and  Section XI-Bibliography
          appear in Volume 3.

             COMMENTS ON THE


                  BY THE

               SUBMITTED BY

             JANUARY 5, 1981

                   EXECUTIVE SUMMARY
                   Table of Contents
A.  PROBLEM BACKGROUND                                  3


C.  DU PONT POSITION                                   23



                                           Executive Summary
                        EXECUTIVE  SUMMARY
    Uses -

     Chlorof1uorocarbons  or  CFCs,  also  commonly  known  as
fluorocarbons, are used worldwide  because of their safety, energy
efficiency, high  stability  and   performance  attributes.    Uses

         •   Commercial   and  residential   refrigeration   and

         •   Automotive air-conditioning.

         •   Expanding agents used to manufacture plastic foams,
             including thermal  insulating foams.

         •   Cleaning   agents   for  precision   electronic  and
             electrical equipment  and  also military hardware.

         •   Fireproofing of  sterilizing  gas  for  hospital  and
             industrial use.
         •   Freezing of food.

         •   Intermediate for fluoropolymer  production.

         •   Aerosol  propellants   (although  not  in  the  United
             States except for  a few specific  exceptions).

                                            Executive  Summary  -
         CFCs are emitted to the atmosphere at the  point  of  their
use or during the lifetime of products which contain  them.   Their
inherent stability, so necessary  in  these  uses, also means  that
CFCs do not contribute to photochemical oxidant levels  in smog,  a
major national concern with most volatile organic compounds.

    Theory -

         In  1974,   scientists   theorized  that  because  of   this
stability in  the lower atmosphere  (troposphere), essentially all
CFCs  emitted  eventually diffused   unreacted  into  the  upper
atmosphere   (stratosphere).    In  the  stratosphere,   the   CFC
molecules would  be  subjected to high energy radiation  from  the
sun and dissociate, liberating  chlorine atoms from  the  molecules.

         A compound known to occur naturally  in trace  amounts in
the  stratosphere  is  ozone   (CO ,  a   form  of oxygen.   Ozone  is
generated in  the  stratosphere   from  the  interaction  of  sunlight
and oxygen.   This ozone serves  the important function of  limiting
the amount of  solar  ultra-violet  (UV) light  which penetrates to
the earth's surface.

         Several natural  processes are thought to convert  ozone
back to oxygen.  Chlorine has been suggested  as a  contributor to
one of  these processes.    The   theoretical   concern  over  CFCs  is
that chlorine  liberated   from the  photodissociation  of  CFCs  may
add to the natural chlorine in the stratosphere, and  hence result
in a lowering  or depletion  of the  natural  balance  of ozone,  thus
allowing more UV to penetrate to ground level.

         The  underlying  concern is  that a large increase  in UV
could increase  the  incidence  of skin  cancer,  affect the produc-
tivity  of  crops  and marine  life and,  conceiveably,  alter  the

                                           Executive Summary -
         It  is  important  to  note  that  these  changes  were
theorized to occur gradually over  a  70-100 year period, presuming
that CFC emissions continued at  a  constant rate worldwide.

    Industry Position -

         From the theory's inception,  industry has maintained:

         •   The  theory  warrants  serious concern  and  should be

         •   Scientific  measurements and  evaluations  --  not
             hypothesis — should  decide  the  issue,

         •   Experimental   evidence   can   be   obtained   to
             quantitatively verify or  disprove the  theory, and

         •   There is time to perform  these  necessary experiments
             without  undue  risk  to  the  health  and  welfare of
             society or the world's  ecosystems.

         To these ends, industry launched  a  major research effort
to prove  or disprove  the  theory.   Other  research  efforts  were
initiated by various government  bodies.

    Global Realities -

         Also  from  the  inception  it has been clear  that due to
the widespread global  use of  CFCs,  any effective solution to the
theorized  problem  would have  to  be  premised  on   two global
political realities:

         •   The  potential  problem  of future depletion of ozone
             by  CFC  emissions  is  global   in  nature,  requiring
             global assessment and coordinated action,  and


                                            Executive  Summary -
         •   Such global  action  as  may be  appropriate  will not
             occur  until  and  unless  there  is a  proper global
             resolution of the status of the underlying  science,
             the  quantitative  validity of  the theory,  and the
             related risks.
    EPA Action -

         In   response  to   the  theory,   the  United  States
Environmental  Protection  Agency (EPA),  in  conjunction with  the
Consumer Product Safety Commission  (CPSC)  and the Food and  Drug
Administration (FDA),  essentially banned  in  1978  all  domestic use
of CFCs as aerosol propellants.  Prior to the  initiation of  this
regulatory process, this  use  of  CFCs  accounted for  approximately
half of U.S.  CFC  production.   As a consequence of this ban,  the
U.S.  share  of  total  world  CFC  production has   fallen   from
approximately 50 percent down to approximately 37  percent.

    World Action -

         In spite of  major  political  efforts by  EPA  to convince
other countries to impose like  bans,  to  date only Canada, Sweden
and Norway  have  followed suit.   None of these  countries  was  a
major  producer  of CFCs.   More  recently,  the European Economic
Community  (EEC)  agreed  to  a 30  percent  reduction   (from  1976
levels) in  the  use  of CFC aerosol propellants to be  effected  by
1982.  However, to date rto country in the world except the United
States has proposed to regulate the non-aerosol uses  of CFCs.

    Recent EPA Action -

         On  October  7, 1980,  EPA  issued  an  Advance Notice  of
Proposed  Rulemaking  (ANPR)   in which   it  proposes  to further
regulate domestic production and use of CFCs by imposing a cap on


                                            Executive  Summary  -
total CFC production at current levels, regardless of product or
application.   (In  April,  1980, EPA  had  announced its intent to
propose  such  a  regulation as  the  first  step  in  an   eventual
planned phase-down of 50 to 70 percent  in world CFC production).

         EPA's stated preference is for the cap to  be  implemented
through  some  yet to  be determined system of  production or use
allocation or auction.   It is  then  stated  that  this artificial
supply limitation would cause prices to increase, thus  creating
an economic incentive to  use  substitutes  in  place of CFCs or to
force CFC  users  to better conserve  CFCs during  their use.   The
Agency  acknowledges   that  such  an  action  would  not have  any
significant impact per  se^ on  either  U.S.  or world emissions of
CFCs  but the action is  justified  on  the  basis  that  it  will
achieve   the  Agency's  goal  of   stimulating   international
cooperation,  and  will  enable  EPA to  retain leadership  on the

         It is against  this  scientific and political background
that  the  Du Pont Company submits  its  comments  on EPA's ANPR on

                                       Executive  Summary -
                                       Assessment  & Conclusions

         In  response   to   the  ANPR,  the  Du  Pont  Company  has
reviewed  the  status  of  the  Chlorofluorocarbon  (CFC)/Ozone
Depletion  Theory,  its  implications,  and  the  array  of options
available to  industry  and  government.   Upon  completion of this
review, we reassessed  our  position  and program, and the  position,
program and plans of  EPA.   We  conclude:

     1.  There  remains  no scientific  justification  for  any
         further regulation of CFCs at this  time.

     2.   A unilateral  approach  to a solution  of the  CFC/Ozone
         Issue   through   domestic   regulation,   without   an
         international  consensus,  is seriously  flawed.

     3.  Continuing assessment of  the  science and  surveillance of
         the ozone layer is the only  sensible option open to the
         world's governments.

     4.  EPA has done  inadequate  work to support  its regulatory
         proposals and to  apprise  the public of exactly what its
         proposals are.

     5.  The proposed  economic incentives regulatory  options have
         many serious  problems.

     6.  EPA has  not  provided sufficient evidence  to  support a
         conclusion that continued  release  of  CFCs  represent an
         unreasonable   risk  to  human health  and the  environment;
         nor  that  the  potential  environmental  benefit  of  the
         proposed regulation is justified by the  risk and cost of
         such regulation.

                                       Executive Summary -
                                       Assessment & Conclusions
         Findings  leading  to these  overview  conclusions  are
discussed in depth in the  body of  the  submission.   A summary of
key points follows:

    1.   There remains  no  scientific justification  for  any fur-
         ther regulation of CFCs  at this  time.
             The CFG/Ozone  Depletion Theory remains an unverified
             theory.    There  is  major  disagreement within  the
             world's  scientific community as to  the  validity of
             the  theory.    There  remain  numerous  discrepancies
             between  what  is assumed,  estimated,  and predicted in
             the theory  and actual atmospheric measurements.

             Analysis of  actual  measurements  of  stratospheric
             ozone  concentration  over  the  last  20   years,
             (analysis   sensitive  to  an  approximate  change  in
             concentration  of  plus  or  minus  1   to  1.5  percent)
             does not detect any  depletion of ozone  --  in sharp
             contrast to  predictions   (based  on computer  model
             calculations)  made in 1979  by  the  National  Academy
             of  Sciences   (upon which  EPA  relies)  that  over  2
             percent  depletion  of  the  ozone has already occurred.

             One  may  conclude  from   this  key discrepancy that

                  i.  The  theory  is  wrong  in  that  it  signifi-
                     cantly overstates  potential  depletion  of
                     ozone by  CFCs, or

                 ii.   There  is  an equal and offsetting  positive
                     effect on ozone generation.

                              Executive  Summary -
                              Assessment & Conclusions
    In  either  case,  ozone  is  not  exhibiting   a  net
    decrease as predicted.

•   This technique of analysis of  ozone  concentrations,
    called   "time-trend   analysis"  is   sufficiently
    sensitive to serve as  an early  warning  system  of any
    developing problem.    Under  this  umbrella,  the
    research   programs  needed  to   resolve  the  key
    discrepancies  between  theory  and  measurement,  and to
    reduce  the key  uncertainties,   can  be  allowed  to
    proceed with  confidence that  their  continuance  in
    the absense of further  regulation does  not  result in
    undue risk.

•   Most of  these needed  research  efforts already are
    underway.   Many are specifically  targeted to resolve
    key uncertainties and  discrepancies.

•   Even if these  studies  should  confirm  that the  theory
    is quantitatively accurate,  the  risk in waiting for
    these results is  small.  As  an example, the maximum
    calculated long-term incremental  change in  depletion
    from a  5-year U.S.  regulatory postponement  would,
    even in the extreme case of a ban, be  approximately
    only 0.2  percent.   This should  be  compared  to the
    known natural variations  in  stratospheric  ozone of
    approximately  10  percent occurring over periods of a
    decade or so.

•   EPA cites  as  its  justification for  further regula-
    tion  a  1979   report   by  the  National Academy  of
    Sciences  (WAS).    There are  serious  discrepancies
    between this  report  and other  reports  issued  imme-
    diately prior  to,  and  subsequent  to,  the WAS report.
    Further,  EPA  does not  incorporate  recent  develop-

                                 Executive Summary -
                                 Assessment & Conclusions
        ments in the science  in  its  assessment  — develop-
        ments  which render  portions of  the  NAS  report
        incorrect  and  reduce the  NAS predicted  depletion
        numbers by approximately one-half.  In addition,  EPA
        continues  to ignore  the  utility  of  ozone time-trend
        analysis as  an early  warning  system  without  making
        any  attempt  to  formally  assess the  technique  in
        light of recent rapid  advances.

2.   A unilateral approach to the CFC/Ozone Issue through
    domestic regulation,  without an international consensus,
    is seriously flawed.
    •   The United States produces  and  uses more  CFC  than
        any other  single country,  yet  the  U.S.   share  is
        approximately   only   one-third   of   world   CFC
        production.   The  problem, if it exists, is global in
        nature.   Thus, no  country  can solve  the  potential
        problem  through unilateral regulation.

    •   Other  countries generally have not regulated CFCs at
        all,  or have employed  restrictions  on  aerosol  uses
        that are much less stringent than U.S. measures, due
        to  their assessments that serious questions exist on
        the validity  of  the  ozone  depletion  theory and  that
        most  of these    questions  can be  resolved without
        serious  risk  to human health or the environment.

    •   EPA's  strategy  of obtaining  worldwide regulation of
        CFCs  through the  setting  of  a  U.S.  regulatory
        example  is  ill-conceived and doomed to failure.   The
        underlying  disagreement  on  this   issue  between
        countries  of  the world is over  the  validity of the
        theory.    More  information  and  objective,  shared

                                  Executive Summary -
                                  Assessment & Conclusions
        assessments of  the  science  are  needed  to  resolve
        this  disagreement  before  a  world  consensus and  a
        solution can be forged.   Regulatory example-setting
        by  EPA  will  not  advance  this  goal.   Such  action
        relies on political effort, not  scientific  facts.

    •   There  is  rio  evidence  to  support  EPA's  conclusion
        that  its unilateral  proposals  will meet its stated
        goal  of  a  world major  phasedown  of  CFC  uses.   In
        light of the  failure of  the 1978  U.S. aerosol  pro-
        pellant ban to  stimulate significant action abroad
        of  equivalent  scope,  it  is  difficult  to  see  how
        further U.S.  regulation  will meet  with any  greater

    •   Further, a  unilateral  cap  on  U.S. production  will
        not  per  ^£ have  a  significant  potential  environ-
        mental benefit to  the  U.S.  or  the  world should  the
        theory  prove  to be  valid,  but  will have   a  large
        negative impact on the U.S.  economy.   In short,  no
        one potentially gains but the United States  pays.

3.   Continuing assessment  of  the  science and surveillance  of
    the ozone layer is the only  sensible option  open to the
    world's governments


    •   the great scientific  uncertainties and discrepancies
        between theory and  measurement,

    •   that research  programs  are underway to resolve these
        uncertainties  and  discrepancies,

    •   the low risk in waiting for this needed  resolution,

                                  Executive Summary -
                                  Assessment & Conclusions
    •   the existence  of ah  early  warning system  for any
        •developing problem,

    •   the need for, but lack of, an international resolu-
        tion on this issue,  and

    •   the very  questionable utility  of EPA's excessively
        political  approach  to  obtaining  this resolution,

    we  believe that  a  strategy  of  diligent  testing and
    assessment,  coupled with constant surveillance, and
    prompt action  if a  problem is  found  to  be  developing, is
    the  only   supportable   policy  available.    We  do not
    propose that  the world's  governments  wait until actual
    human or environmental  harm occurs  or  is  determined to
    be inevitable.

4.   EPA has done inadequate work to  support its regulatory
    proposals  and to apprise  the  public of exactly what its
    proposals  are

    •   The potential  risks  created  from  restricting CFC
        availability,   resulting   in   use   of   currently
        available  CFC  substitutes, have not  been addressed
        by EPA.

        In comparison to  currently available alternatives or
        substitutes, CFCs have the  more desirable combina-
        tion of characteristics:   safety  (nonflammability,
        low toxicity)y energy  efficiency,  material compat-
        ability and value-in-use.   EPA  does  not propose to
        eliminate  major  segments  of  U.S.  industry,  such as
        refrigeration.     Therefore,  it must  evaluate the
        availability of  substitutes  and  what the  risks,
        costs,  etc., of these  substitutes will  be.

                              Executive Summary -
                              Assessment & Conclusions
    Any  proper  regulation  must  balance  the  potential
    risks which  the  regulation is  projected  to reduce
    versus the risks  which such regulation would create,
    e.g., the risks  from  forced  use of substitute pro-
    ducts or processes.

•   The  low  potential  for future  availability  of  safe
    alternatives  for  CFCs  has not been  addressed.

    It  has   been  more  difficult  to   develop  suitable
    alternatives  for  the  current  commercial  CFCs  than
    initially believed.   Such compounds,  meeting EPA's
    standards   of   environmental   acceptability   and
    industry's standards  of  safety,  utility,  and cost,
    ji_f  available aj;  all,  are  at best  7-10  years  away
    from commercialization.

•   EPA has  not  assessed  the  energy consequence of its
    proposed regulation, neither  restriction on current
    CFC  uses  nor   what   would   be   sacrificed  from
    unavailability  of CFCs for  new  uses.

•   EPA has  prematurely  concluded  that economic incen-
    tives  regulatory  options  are  preferable.    The
    reasons  given for the  stated  preference are based on
    theoretical  economic  relationships and  projected
    responses.    But  EPA's  preference  is not  based  on
    detailed assessments of  the impacts of these options
    on  the  actual  producers  and  consumers of  CFCs and
    CFC-dependent goods.   Additionally,  the primary

                              Executive  Summary -
                              Assessment & Conclusions
    competing option,  emission  reduction,  has not been
    adequately    assessed,   either   technically   or

    The Rand study cited  by  EPA  in  support of its pre-
    ference  is  not an  adequate  work on which to base a
    decision.   The study  is  deficient opposite the use
    to which  it  is  being  put by EPA  because  it  a)  is
    based on an obsolete data base,  b) does not include
    all CFCs being proposed  for  regulation, c) does not
    assess all  uses  of  CFCs  which  would be impacted by
    the  proposed regulation,   and  d)  only  compares
    regulatory  options  under artificial study  para-
    meters,  several  of which  were  selected  to  meet
    budget and  time constraints  on the study.  However,
    most  importantly,  the Rand  study  is  an empirical
    comparison of regulatory options  under artificially
    bounded  study conditions; not  an  economic  impact
    study  of the consequences   of   the  options  being
    applied to  the real world uses  of  CFCs  (all  CFCs,
    all uses).

•   The economic  incentives regulatory options proposed
    by  EPA are  not  adequately  developed.   Only  the
    theory and  skeletal  structures  are presented.   No
    "how  to's"   are  suggested.     Left unanswered  are
    questions on "How  would the  options be  put  in
    place?" and  "How  would they  work?".  The Agency has
    not  yet done its homework on  these   concepts.
    Industry's  ability  to provide meaningful  comment is
    severely  constrained  until  such  time  as  it  is
    apparent what exactly  is  to be commented on.

•   No determination  has been made on the  impact of the
    production  cap proposal.   No determination has been

                                  Executive Summary -
                                  Assessment  & Conclusions
        made on  which specific  CFC-dependent  end products
        and services would  be  impacted  by  the proposal, what
        the cost  would  be, or  whether such cost  could  be
        justified by the potential environmental benefit to
        the ozone  layer  of giving  up  or  curtailing these
        specific  products  or  services.   There  has been no
        quantification of these  trade-offs.

5.  The proposed  economic incentives  regulatory  options have
    many serious  problems

    •   There  are  substantial  questions  concerning  the
        authority of  EPA  to  promulgate  a  regulation per-
        mitting it to auction permits  for  the  right to use
        or  produce  CFCs.   Such  a  system  would  result  in
        revenue generation  by  EPA,  an  authority  vested  in
        the Congress.

    •   Both auction  and  allocation  of  use  or production
        rights  under  a  production limitation  would create
        complicated  economic problems.   In addition, anti-
        competitive  concerns created  by these options cannot
        be ignored.

    •   Any system  of  redistribution  of limited resources,
        particularly if  done more than  once, e.g.,  by yearly
        auction,  will create  tremendous uncertainty on the
        part of both  producers  and  users.  Business cannot
        plan or  operate  effectively   under  uncertainty  of
        this magnitude.

        To  reduce  or  eliminate this  uncertainty  many
        businesses will  attempt  to do one  of two things:  1)
        hoard permits to  insure  supply or 2)  precipitously
        eliminate CFCs   from  their  product  lines.    Both

                              Executive  Summary -
                              Assessment &  Conclusions
    actions   will   have   adverse   consequences   —
    consequences not addressed  to  date  by  EPA.  Hoarding
    will  create  shortages elsewhere,  possibly  in some
    "essential" use areas.  Precipitous phaseout of CFCs
    will  result  in performance problems,  possible end-
    product shortages,  loss  of  jobs,  and an  increase  in
    industrial and consumer  risk  from exposure to  less
    safe alternatives.   The  consequences of  both actions
    will  mean  significantly more  economic  impact than
    the smooth transition case  presumed by EPA.

    It  cannot  be   stressed  enough  that  the  economic
    incentives implementation schemes,  in  concert  with a
    production  cap, have  the  potential  for  creating
    massive uncertainty,  which in turn will  result in
    major unaddressed impacts.

•   EPA seems to assume  that ownership  of production or
    use  rights  should  be  in  its  hands.    For  all  the
    discussion  about   economic  incentives   options
    allowing the  free  market  to  operate,  such  schemes
    represent  more, not  less,  government  intrusion into
    the  marketplace.     EPA  ownership  means  that  the
    distribution of production  and use  evolved over the
    years would be  disassembled,  to  be replaced   by the
    imposition of  a new distribution  system controlled
    by government,  with unknown consequences.

•   Unilateral imposition of a production cap will have
    negative impacts on U.S.  industry and  the balance of

    Higher  prices created by   the  unilateral  U.S.
    restriction will reduce the competitiveness  of U.S.
    CFCs  and  CFC-dependent  products  abroad, but will

                          Executive  Summary -
                          Assessment & Conclusions
have no net environmental benefit.   This is because
U.S.  regulation  will  have  no impact on  demand
abroad, only on the ability  of  U.S.  industry to meet
this demand competitively.   What U.S.  companies lose
will be gained by foreign companies.

The  control  of  imports as   proposed is  equally
inequitable as  foreign  firms  would  have  an  unfair
advantage  in   the  domestic   marketplace.    This   is
because they would be competing from an unrestricted
production  base  opposite domestic  producers, thus
giving them an unfair cost advantage.

EPA's  system  of  permit pounds  is  inaccurate.   A
correct evaluation of "potential environmental  risk"
or "depletion potential" for a  CFC  (according  to the
theory) must include weight  percent chlorine and the
altitude  at  which  chlorine  is  released to the

Below we compare EPA's relative permit pound ranking
to a correctly developed ranking:

                     EPA            Du Pont

CFC-11               1.0              1.00
CFC-12               1.27             1.19
CFC-113              1.30             1.22
CFC-114              2.04             1.64
CFC-115              5.00             2.86
CFC-22               5.56            34.00

                          Executive  Summary  -
                          Assessment &  Conclusions
This  means  that   it  would  take  approximately   34
pounds  of  CFC-22  to  equal  the  potential  environ-
mental concern of 1 pound of CFC-11,  not  the roughly
6:1 ratio presented by EPA.

The  inclusion of  CFC-22  in  the  proposed  cap   is
unjustified  and  counterproductive.   EPA  does  not
have  studies or  data  to  support  any  finding   of
environmental risk from the  use of  CFC-22.   The fact
is  that its  potential  risk  factor  and  its  total
production makes it less  of  a  potential  or  theoret-
ical problem to the ozone than other  compounds, such
as  methyl  chloroform,  which are  not  addressed   by
EPA.  Further, to the extent  that  CFC-22  represents
one of  the  solutions  to the  potential  problem  of
release  of  more environmentally  suspect CFCs,  its
inclusion   under   the   proposed  restriction   is
counterproductive.   Conversion from CFC-12  to CFC-22
will be  restricted  by the inclusion  of CFC-22  under
the  regulation   due   to the attendant  business

It  is  the  emission of CFCs  that  should  be of con-
cern,  not the use.  The  use  of CFCs  cannot  possibly
impact on stratospheric ozone,  only emissions to  the
atmosphere.  Consequently, uses of  CFCs  resulting in
no emissions must be exempted.  The use  of  CFC-22 as
a raw material for  the  production  of fluoropolymers
is a prime example.

EPA illogically  makes  no  exemption  for  such  non-
emitting CFC uses in its regulatory proposals.

                              Executive Summary -
                              Assessment  & Conclusions
EPA has not provided sufficient evidence  to  support a
conclusion that continued  release  of  all CFCs  represents
an unreasonable risk to human  health  and the environment
nor  that  the  potential  environmental benefit of the
proposed regulation is  justified by the risk and cost of
such regulation.
•   There is no evidence  that  ozone  is  being depleted as

•   EPA  incorrectly  bases  its case  on the theoretical
    impact of CFCs exclusive of other factors.  EPA does
    not address other potential depleters  of ozone, such
    as  methyl   chloroform  nor,  more  importantly,  the
    potential off-setting effect of  C02  releases.   EPA
    does not  demonstrate that the  theorized  risk from
    CFC  emissions  can  justifiably be  considered  in
    isolation   from  other  competing  risks,  or  from
    off-setting factors  which reduce  net risk  to  the

•   EPA presents an "either-or" choice  of  regulating now
    or waiting  for some distant  future   date  at which
    time it will  be  too  late  to stave off  harm  if  the
    theory should prove  to be valid.   However, research
    programs targeted at  the remaining  key uncertainties
    and discrepancies  are  underway.   And this research
    can be done under the umbrella of an  existing early
    warning system  —  ozone   time-trend  analysis.   EPA
    has not  addressed  the  incremental risk  in waiting
    for these  research  results  in conjunction with  the
    use of the  early warning system.

                              Executive Summary -
                              Assessment & Conclusions
•   A related point is  that  EPA  has not quantified the
    theorized benefit  of regulating  now  versus deferral,
    again in conjunction with the  existing early warning

•   EPA has  not demonstrated  that  there would  be any
    significant  environmental  benefit, per  se  from its
    proposed  unilateral  restrictions.   Further,  no
    support  is  offered  for  EPA's  proposition  that
    further  unilateral  regulation  of  CFCs by  the  U.S.
    will achieve EPA's goal  of  a world phaseout of CFCs,
    nor is  any  probability  of success  given.   The law
    supports regulation by EPA if  there is  an environ-
    mental benefit  — not to  set  an example  with the
    unsupportable expectation that other countries will
    then  "see  the  light"  and respond  with  their own

•   EPA has  not studied how the individual  uses of each
    of the CFCs  would be  affected by the proposed rule
    — how  much would  emissions  be  reduced?,  to  what
    degree   would   this   potentially  benefit   the
    environment?, would  the  cost  be  justified  by  this
    incremental  environmental benefit?,   and would this
    reduction in  risk be  justified by  the  increase  in
    risks  incurred  through  the  use   of   substitute
    products and processes?

•   EPA proposes  regulating  all  CFCs,  yet  only CFC-11
    and CFC-12  have been studied  to  any extent.   The
    potential impact  on  the  ozone of CFC-113, CFC-114,
    CFC-115  and CFC-22  has  not been adequately studied
    or assessed.  These  latter CFCs should  be studied,
    not only to determine if they are of potential risk
    to the environment  (and  if so to what degree), but

                          Executive Summary -
                          Assessment & Conclusions
also to determine to what extent  they  could  contri-
bute to a solution  should evidence  show that CFC-11
and CFC-12 are depleting stratospheric  ozone.

                                           Executive Summary
                                           Du Pont Position

         Given the preceding conclusions,  it  is  the position of
the Du Pont Company that:

         •   Time-trend analysis  of  actual  ozone  measurements
             provides an early warning system for any developing
             problem with  stratospheric ozone.    It  should  be
             immediately adopted and  efforts undertaken to refine
             the  technique even further.   The existence  of this
             system  permits deferring any  further  regulation
             while the  needed  remaining  research  is  performed.

         •   Regulation should  be  based on scientific facts, not
             unconfirmed  theory.    Imperfect  computer  calcula-
             tions,  premised  on  numerous  questionable  assump-
             tions, many  in conflict  with  actual  measurements,
             are   not  an  adequate  basis  on which  to undertake
             major regulation.

         •   The  key uncertainties and discrepancies  surrounding
             the  theory can be  resolved  with  very  low potential
             risk  to health or  the  environment.   Regardless of
             the   results  from  ozone   trend  analysis,  major
             research  efforts  should  continue   to  resolve  the
             underlying science  definitively.    Du Pont wilj,
             continue to support these  efforts.

         •   As  the potential  problem  of  ozone  depletion  is
             global,  solutions  must be global.  Global solutions
             hinge on objective global assessment and resolution
             of the science.  Maximum  effort  should be  given to
             ^obtaining  such assessment rather than  the political
             efforts being made  by  EPA.   Further  unilateral U.S.

                                   Executive Summary
                                   Du  Pont  Position
    regulation as proposed by  EPA  will not help obtain
    the needed global  assessment  and  resolution.

•   The  United  States  already  has  taken  actions  far
    beyond those of other major  industrialized nations.
    Further  unilateral  regulation as  proposed  by  EPA
    will  be  exceedingly  costly  and  unfair to  U.S.
    industry and consumers,  but will  not have any  major
    potential environmental  benefit for the U.S. or  for
    the world.

•   Therefore,  absent  the demonstration  of  any  risk,
    especially any meaningful short-term risk, absent a
    resolution of the science leading  to a  confirmation
    that  CFCs  will deplete  stratospheric   ozone  to an
    extent harmful to  public  health and the  environment,
    and  absent  an  international resolution of  what
    restrictions, if any, are appropriate,   there should
    be no further regulation  of CFCs.

•   In the face of these conditions,  if EPA  continues to
    proceed  with  a regulatory  program on  CFCs,  there
    should be a  Congressional  Oversight  Hearing  on  the
    entire issue and EPA's actions.

•   After  a  proper resolution  of the science,  should
    regulatory restrictions  prove  necessary to  protect
    stratospheric ozone,  such regulation should focus on
    the  net  change to  ozone  from   all  anthropogenic
    causes,  not  on  just  one  potential perturbation in

•   Should further regulation be  necessary,  it should be
    limited  to  CFC-11  and  CFC-12  (approximately 90
    percent  of  the  theorized  problem),  thus allowing


                                  Executive Summary
                                  Du Pont Position
    less potentially harmful CFCs,  such  as CFC-22,  to
    contribute  to  the  solution  through   their  use  as

•   Should  further U.S.  restrictions  on  CFCs prove
    necessary,  they  should be  based  on  a  balanced
    assessment  of  risk  and  benefit  from CFC  use, and  on
    the risk of continued CFC use  versus  the  risk  from
    the  use of  available  alternative   products  and

•   Any further regulations determined to  be  necessary
    should  consider  the  energy   impact  of   reduced
    availability of  CFCs.

•   Any  further  regulation   should  consider  that,
    excepting  other  currently available CFCs,  there are
    no suitable,  safe  alternatives  for most  CFC  uses  at
    this time.

    Du Font's  program  to  develop  suitable commercially
    viable  fluorocarbon alternatives is  continuing but
    we are  no  longer optimistic of success.

•   Should  any  further  U.S. regulation  of CFCs prove
    necessary,  the regulation   should  be  reviewed
    opposite the ongoing justification on  a prescribed
    periodic basis.

•   The  economic   incentives  regulatory  proposals
    currently  advanced  by EPA  are  not well thought-out.
    There  are  significant  problems in  the  areas  of
    legality,   economic  impact,  and balance  of trade
    which  must  be  addressed.   Performing  an  untried
    regulatory  experiment on such an important industry,

                                  Executive Summary
                                  Du Pont Position
    absent the necessary thorough thought and analysis,
    is unwise.

•   The  ability  of   industry  to  provide  meaningful
    comment on  EPA's  economic  incentives proposals  is
    limited by EPA's failure to  present a description of
    how  these  concepts  would  specifically  be  designed
    and applied,  and how they  would function.

•   Any  further  consideration of  a  production  cap  in
    conjunction with  production or  use  allocation  or
    auction of permits should  provide for: 1) exemptions
    for  non-emitting  uses  (such  as  intermediates  for
    production  of fluoropolymers),  2)  exemption  for
    exports,  3)  a restriction  on  imports  parallel  to
    domestic   restriction,  4)   a  minimum of  10  years
    advance notice of  allocation system change to reduce
    uncertainty,  5)  yearly reviews  of the effectiveness
    of the cap  as a   control  measure,  both  environmen-
    tally  and  economically,  6)   yearly  reviews  of  the
    justification  for  the level  of  the  cap based on the
    most   recent  depletion  measurements   and  model
    calculations,  and  7)  a  clear  statement  of  the
    guidelines to be  used  to  decrease  oj:  increase  the
    permissible production  level.

                                      Executive  Summary  -
                                      Problems with  EPA's
        •   EPA  has  limited  its  assessment  of  atmospheric
            science to  one  report  [NAS,  1979a] ,  and  has not
            considered  other  reviews,  for  example  the  United
            Kingdom Department of  the Environment's report  [UK
            DOE,  1979]  or  the   European  Economic  Community
            Council's  report [EEC,  1980]  which  reach  conclusions
            at variance with NAS.

        •   EPA's  ANPR  assessment  of  the science does not
            include developments  since  the 1979  NAS report  —
            developments  which  cut   the  NAS  predicted  future
            depletion   estimate  in half.   Scientific knowledge
            relevant to this issue is  changing  rapidly.   Yet  EPA
            indicates   no  plans  for updating  its assessment  of
            the science or for arranging for periodic reviews  by
            qualified  outside bodies such as NAS.   Major efforts
            should be  made to include  current  information in  the
            decision-making process and  to review  periodically
            such decisions opposite ongoing  developments.

        •   Ozone depletion, should it  occur,  would  be  a global
            problem requiring a global  response.   Such  response
            has  not  occurred due  to  scientific assessments  by
            other  nations  that  the  problem   does  not   warrant
            regulatory  response  at this  time.   Therefore,  the
            key need  is for a global assessment and resolution
            of the science  leading  to a  global response policy.
            However, EPA seems to  be concentrating  on advancing

                          Executive Summary -
                          Problems with EPA's
its views through unilateral regulation,  rather  than
working  to  meet  the  underlying  need  for  inter-
national scientific assessment.

EPA  consistently  focuses on  an  extreme  worst  case
scenario.    This   focus grossly  overstates   the
potential  risk  involved   in  continued  emissions  of
CFCs.   The  worst  case  scenario  has no  reasonable
probability  because it  would require  business  to
operate  as  if  there  were  no  environmental  or
regulatory concern.  Further, this  scenario  ignores
recent  CFC  production  history,  and  ignores   the
effect of  CFC  aerosol  phase-downs now occurring  in

A  further  problem  with EPA's   treatment  is   the
failure to assign  any  ranking or  probability  to the
scenarios.   Worst  case  scenarios  are  treated  with
equal  (and  in  some cases higher)  emphasis  than the
most probable scenarios  indicated  by the facts  and
common sense.  In EPA's treatment,  uncertainties are
ignored and low probabilities become "fact".

The  problem  is  theorized to  evolve gradually  over
70-100 years.  However, EPA  limits its  discussion to
an "either-or"  choice —  either action  must  be taken
now or we  will  have to  suffer  the  consequences  of
major  ozone depletion.    This  "either-or"  choice
ignores the  facts  that:   1) time-trend  analysis  of
ozone measurements already  is available  as  an early
warning  system,  2)  no  ozone  depletion  has  been
detected  to date, and 3)  even if  the theory  should

                              Executive Summary -
                              Problems with EPA's
    prove  to  be  quantitatively  correct,  a  regulatory
    deferral  of even  five  years  would not  result  in a
    significant incremental  increase  in risk.

•   EPA has not yet addressed the risks associated with
    a  limitation  on  the  availability  of  CFCs,  for
    example,  the  flammability  and toxicity of  the
    available  non-CFC   alternatives  which  would  be
    forced  into   use.    No   attempt  has  been  made  to
    balance speculative  long-term risks from continuing
    use of CFCs versus known  risks from alternatives.

•   EPA  has  not   adequately  developed   the  regulatory
    options it  proposes  to use.  The theory of economic
    incentives  options  has  been  presented, but  as  yet
    there has  been no  fleshing-out  of how the options
    would  look,  how  they would  be  implemented  or  how
    they  actually would  function.    The  ANPR  is  the
    second time   (the Draft  Rand  Report  [Rand,  1979]
    being  the  first)  that  industry  has  been  asked  to
    comment  specifically  on  the   same  non-specific

•   EPA has not adequately assessed the economic  impacts
    which would  result  from  its  proposed  restrictions.
    The  economic work done  to  date  is  a   limited
    comparative  study  of  regulatory  options,  not  an
    impact assessment of these options  applied  to  the
    real world of CFC production and use  (of  all pro-
    ducts and all applications).

    Nor  has  EPA  yet  addressed  the  impact  of  its pro-
    posals  on  the nation's  energy  use,   present  and


                          Executive  Summary -
                          Problems with  EPA's
The  Agency  has  prematurely  decided  in   favor  of
economic incentives  options  — prematurely because
alternative,  options,  such  as  emission   reduction,
have  not  been adequately  examined  by   EPA,  and
because EPA has not given adequate attention to the
impacts of  the economic  incentives  proposals.

EPA's  stated  preference for  economic  incentives
options seems to  be based on  the Agency* s  perception
the options would  be easier  to  design,  implement and
enforce; not  upon  whether the  the  incentives options
would  be  better  for the  affected  industries  and
consumers.    Experimentation  on critical  industrial
segments of the nation's economy  is unwise.

                                       Recommendations for Action
                                       By EPA

         The following are Du  Font's  recommendations  for  actions
to be taken, or at least  initiated, by  the  EPA,  which we  believe
will lead  to  a proper  resolution  of  the CFC/Ozone  Controversy.
Should this resolution  dictate the need  for  further  regulation,
such actions as  outlined  herein will  help  ensure a  balanced  and
cost-effective  regulation.

         •   EPA should promptly arrange  for an updated  assess-
             ment of ozone trend analysis by a  qualified  outside
             body,  such as the NAS.   If  an outside  review  body
             cannot be employed, a  joint industry/government/
             academia   symposium  should  be  held  to  review
             objectively the  method opposite  the questions:   How
             sensitive is  it?  What is the confidence range?   How
             and when can it  be further  improved?    A  companion
             recommendation  would  be   for  EPA  to   support   the
             further development of trend  analysis.

         •   EPA should  arrange for an objective, thorough review
             of the  science  (both  the theory itself  and  effects
             of ozone  depletion)   by  an  international  panel  of
             qualified scientists.   A joint NAS/UK  Royal  Society
             effort  would  be a logical starting point.   Inter-
             national political organizations such  as the  Organi-
             zation  for  Economic  Cooperation  and  Development
             (OECD)  are not  adequate  for  this assessment due  to
             the  limited   participation  of scientists  and   the
             political pressures present in  such groups.

         •   Even  if  an  international  review cannot  be promptly
             arranged,  EPA  should  recontract  with  NAS  for  an
             updated review of  the science,  followed  by a yearly


                              Recommendations for Action
                              By  EPA

    reassessment.   The predicted  problem is a long-term
    problem.    The  science  is  changing rapidly.   Any
    regulatory decision  based on  the  science   at  any
    point in  time  must  be  reassessed as the scientific
    justification  for that decision changes.

•   Between NAS reports, EPA  should  meet quarterly with
    the  Chemical   Manufacturers   Association   (CMA)
    Fluorocarbon   Project  Panel    (FPP) ,  and   other
    appropriate scientific  advisors,  to  stay  current
    with the  broad  spectrum  of scientific developments.

•   The Agency needs  to publish  the  parameters  of its
    decision  making on the issue:

         i.   What  specific level  of ozone depletion does
             EPA  consider to  pose  an unreasonable risk
             to health and the environment?

        ii.   What  will it take to convince EPA there is
             or is  not a serious  problem, e.g.,

             a. What sensitivity of ozone trend analy-
                 sis  is  accepted  (and  on what basis)?;
                What ozone  trend analysis  results would
                 be viewed  as a  significant indication
                 of a developing  problem?

             b. What other science  developments would
                 be viewed as  significant?

             c. What criteria does EPA  use to judge the
                 credibility  of sources and  reported
                 developments, and  which  sources  meet
                 these criteria.


                          Recommendations for Action
                          By  EPA

         d.   What  will  EPA  do  to  ensure  staying
             abreast  of  developments?
         e.   What is  the  process  EPA  uses  to  get
             developments   assessed  and   to   the
             attention of the  regulatory  decision-

         f.   What must  happen  internationally  to
             convince  EPA of  the  need  or  lack  of
             need for further U.S.  regulation?   By
             whom?  In what  time period?

   iii.   How does  the specific  proposed  regulation
         result  in reduction of  risk on  this issue
         and what  is  the  magnitude of this  reduc-
         tion?    If  in the  periodic  reviews  of  the
         science,   it  is  determined the  risk  has
         decreased  significantly,  what  are  the
         parameters of regulatory response?

The Agency  needs to  redefine the   problem of ozone
depletion generically  and  then determine and justify
whether   CFCs  should   be  treated  in  isolation  from
other potential  depleting  compounds  and in isolation
from  potential   ozone  increasing  compounds.    The
charge to EPA of the  1977 Clean  Air Act  Amendments
is  protection  of  stratospheric   ozone,  not  the
regulation of CFCs.   What  is  the justification  for
including CFC-22  under  the  regulation when  methyl
chloroform  represents  a  greater  total  potential
problem?  Conversely, modelers  now  include the CC^/
ozone  augmentation   effect.    This  needs  to  be
factored into EPA's assessment.

                             Recommendations for Action
                             By EPA

•   On the international level, EPA  should  abandon its
    excessively political strategy in favor of an effort
    to help obtain the needed global scientific assess-
    ment  and  resolution.   The Agency should publish its
    plans  for  furthering  the  scientific  resolution  of
    this  issue.

•   As pointed out   in  previous  sections,  EPA  must
    complete  a  significant -body  of work  before  it can
    support the  proposed  regulatory options.   Further
    assessment  and study are  needed  in the areas of:

         i.  Emission reduction and alternatives.   What
             is achieveable,  in what time-frame  and  at
             what  cost?

        ii.  Impact  of  economic  incentives  options.
             What  would be the  actual impact to industry
             and consumers  if  the  options were applied
             to all CFCs and  all CFC uses  as proposed?

       iii.  Energy penalty of  regulations.

        iv.  Risk  from  alternatives  substituted  for
             CFCs,  and  a   risk-risk   assessment  of
             continued CFC  use  versus  use  of  alter-

         v.  A  detailed  fleshing-out of  the  incentives
             options  for comment  — specifying exactly
             how  they would  be  structured,  how  they
             would be  implemented  and  how  they  would

                              Recommendations  for  Action
                              By EPA

••   We recommend that EPA hold a series  of  informational
    exchange meetings around  the country to discuss  its
    proposals,  hear  concerns  and gather information  to
    help its studies of  i.-iv. above.

•   EPA needs to employ  a more realistic timetable.   The
    current timetable shows  a completion date of  Janu-
    ary, 1981 for the final draft of the proposed  rule.
    The  ANPR comment  period  closes  January  5,   1981.
    Further, we  question how EPA can digest  and  evaluate
    ANPR comments and submissions  in  time  to publish  a
    formal proposed  rule  in  March,  1981.  The  proposed
    timetable appears   unrealistic  unless  EPA has   no
    interest in  the  ANPR comments  and  has already made
    up its mind  on how  to  proceed.  Given the  magnitude
    of the  issues which remain to be addressed,  parti-
    cularly on the economic  incentives  options, we fail
    to see how a reasonable proposal can be  finalized in
    this period.   We ask for  clarification.

•   Due to the untried  nature of the economic  incentives
    options, the  numerous  questions and concerns  which
    have  yet  to  be answered,  and the total  lack   of
    experience with  these regulatory options  in  the real
    world, if EPA elects  to  proceed with their use,  we
    would  strongly   urge  that  a pilot  test  first   be
    undertaken.   The options  should first be  applied to
    a carefully  monitored  industry  or industry  segment,
    and  the  impacts thoroughly  evaluated,  rather than
    immediately applying  this theoretical regulatory
    approach to  the  CFC industry which has such  broad
    and major impacts on the total  economy.

                         Recommendations for  Action
                         By EPA
If EPA decides to promulgate  a  rule,  (regardless  of
which  regulatory  option  is  selected)  the  Agency
should issue  an  annual report detailing:

     i.   Results of actual ozone measurements.   Has
         depletion  been  detected?   If so,  how  much
         and  at  what  rate?

    ii.   Computer  calculated  or  estimated  ozone
         depletion based on  best current infor-
         mation.   What  are  the  current  model

   iii.   Status  of  U.S.  versus world  regulatory
         situation.     Has   the  U.S.  regulation
         achieved the Agency's  goals?   Have  other
         countries  followed  EPA's  lead   or is  the
         U.S.  example being ignored?

    iv.   The  continued   need  for the   regulation  as

     v.   The  economic   impact  of  the  promulgated
         regulation,  particularly  if  new  regulatory
         concepts are   involved.   This  should  be
         compiled  by  major  market  segment   and
         business size,  as well as a summary report.

                      Recommendations  for Action
                      By EPA

vi.   The  identity  of  substitutes  employed   in
     place of  CFCs by  use  category.    For all
     substitutes  (and  especially  new  substi-
     tutes)  safety data,  toxicity data, energy
     efficiency,  development  cost  of replacement
     substances and  redesign  cost for  manufac-
     turers  should  be monitored for a period  of
     10-20 years to  determine  the true cost  of
     regulation  for  guidance  in  future   rule-
     making  efforts.


         In 1974 a theory was advanced [Molina and Rowland,  1974]
that the family of  chemical  compounds termed chlorofluorocarbons
(CFCs),  also commonly known as fluorocarbons,  upon  their  release
into  the   lower  atmosphere  (the   troposphere),  were  eventually
transported to  the  upper  atmosphere  (the   stratosphere),  where
they entered into a complex series of reactions which resulted in
the gradual decrease  (depletion)  of  ozone.   A decrease  in  ozone
is  expected to  result in  an  increase in solar  ultraviolet (UV)
radiation  reaching  the  Earth's  surface.    Over  time,   such  an
increase in UV is theorized to result in various adverse effects,
including  an  increase in human skin cancer, possible  damage  to
certain crops and marine species, and  potentially  even  a  small
modification in  the climate.

         In  1978,  the   Environmental Protection  Agency   (EPA),
together with the Consumer Product  Safety  Commission  (CPSC)  and
the Food  and  Drug  Administration  (FDA) ,  acting on  this  theory,
promulgated a rule which prohibited the  use of  CFCs  in  aerosol
propellants in  all  but  a few essential applications (43  Federal
Register 11301  ejt  seq.,  March  17,  1978,  40  C.F.R. Subsection 762
e_t  seq.) .   Although  there were many uses of CFCs  in  the United
States,  the aerosol  propellant  use  was  singled out  because  it
represented approximately  half  of the  consumption of  CFCs,
resulted  in  prompt  and  complete  release   of  the  CFCs  to  the
atmosphere, was generally considered  to be a "non-essential" use,
and alternative products were available.

         In April  of  1980, EPA announced  [Jellinek, 1980a; EPA,
1980a]  that it  intended to proceed with  further  regulation of
CFCs in the United  States.

         In October of  1980,  EPA published  an  Advance Notice of
Proposed Rulemaking  (ANPR) to outline its regulatory thinking and
to  solicit  comment  on various approaches to  regulation of

non-aerosol propellant uses of CFCs (45 Federal Register  66726  et
seq.) .    All  non-aerosol  uses  are  covered  in the  proposal
regardless of essentiality of use.

         EPA cites  as  justification  for this  further  regulation
reports  released  in November and  December  1979 by  the  National
Academy  of Sciences  [NAS,  1979a;  1979b].   No  scientific  studies
published more recently than the 1979 reports are cited  by EPA  or
listed as supportive of the Agency's  position.

         EPA  plans  to promulgate  CFC regulations  under the
authority  of Section  157(b)  of  the  Clean  Air  Act  (42  U.S.C.
Subsection 7457)  or under Section 6(c)(l)  of the Toxic  Substances
Control Act  (15 U.S.C. Subsection 2605).

         In  choosing  a regulatory strategy for  non-aerosol CFC
regulation, EPA stated that a primary concern will be the "effect
the choice [of strategy]  will have on other nations'  decisions  in
this  area"   [45  Federal  Register  66728].    Within this  overall
concern, EPA identified three different strategies for  regulating

         1.  Wait-and-See
         2.  No Growth
         3.  Substantial Emissions Reduction

         Under  the  Wait-and-See  approach,   EPA  would  take  no
action  until  better evidence  of  the  ozone  depletion  theory  is
obtained.   EPA rejected  this  approach because it believes  that
were it  adopted, the great  majority  of other  producing  and using
nations  will  follow  suit.    Therefore,   they  believe  that   a
domestic strategy of wait-and-see is  likely to be equivalent to a
world strategy of wait-and-see  (45 Federal  Register 66728-66729).

         Under the  No Growth  scenario,  the EPA  states  that  it
would limit  CFC  production to  present  levels  and would take  no
further  action  until  warranted by  international  conditions  or
further  evaluation   of the  credibility  of the  theory.    This
strategy is  acceptable to  the  Agency on a  short-term because  it
will "convince other  nations to agree  to  concerted  international
action"  and  because  it is a "signal  to other CFC-producing  and
using nations  that  the United  States  is  concerned enough  about
the risks entailed in the  depletion of  the ozone  layer  that  it is
willing    to  take   serious  action  on  the  basis of  present
knowledge."  On a long-term basis, however,  a  no  growth  strategy
is considered  unacceptable  because it  "would  still result  in an
unacceptable level of risk" (45 Federal Register  66729).

         Under the Substantial  Emissions  Reduction  strategy,  the
United States would  reduce its  production  to some fraction  of the
level predicted  to  be necessary on a worldwide  basis  to achieve
an  acceptably  low  level  of ozone depletion.    As a  short-term
option,  this  strategy  was  rejected  by  EPA  because  "it  could
strengthen  the  Wait-and-See   attitude  abroad  by  creating  the
impression that other  nations  could  afford  to  wait  before  taking
action."   However,  on a  long-term basis,  this is  considered  the
only  acceptable  option because of  the  "extreme caution"  which
must be  exercised on account  of the "substantial"  evidence that
ozone depletion is occurring (45 Federal Register 66729) .

         Du Pont believes  that  none  of the  three options  above
are  truly  adequate at  this  time to  deal  with  the  problem of
potential ozone depletion.  We reject  the  wait-and-see  approach
because  it  ignores  the fact that CFCs may  present  a problem and
implies  that nothing  need be or will be done to  learn  more  about
the potential  problem  and  means of making responsible  regulatory
decisions concerning it.   And,  at this  time, we reject  both  the


No Growth and  Substantial  Emissions Reductions alternatives
because  both  entail  costly  regulation  at  a  time  when  the
scientific basis to support regulation  is questionable.

         Instead,  we  have  identified  a  fourth  option,  not
mentioned by  EPA,  but  one  which  we  believe  is  the  only
appropriate  one  at   this   time.    This  option  may  be  called
"Assessment and Surveillance".

         Under  the Assessment  and  Surveillance   approach,  the
research  currently being  funded  by the  Chemical Manufacturers
Association Fluorocarbon Project Panel (CMA/FPP),   individual CFC
producers, government  and others will continue.  This research is
directed toward reducing the uncertainties  in  the  ozone depletion
theory, and toward a  more accurate  and  thorough  evaluation of the
quantitative  validity  of  the   theory.   The  research  is  being
conducted under   the  umbrella of  analyses  of  actual  ozone
measurements  —  called  ozone  time-trend  analysis —  which  is
capable of  providing  the surveillance necessary  to  warn  of any
developing  problem   in   stratospheric  ozone  levels.     The
availability  of  ozone  time-trend  analysis  as  an early warning
system  in  ozone  changes,  coupled with periodic reassessments of
the  need  for regulatory action, provides  EPA with an assurance
that  regulation  of CFCs  can be  deferred,  without unreasonable
risk  developing.   Should the results of ozone  trend analysis or
ensuing research  results  indicate  that ozone is  being depleted,
the  wisdom  of  further  deferral  can  be  reassessed.     It  is
important to note  that at  this  time ozone time-trend analysis is
not  capable  of  proving  or  disproving the theory of CFC catalyzed
ozone  depletion per se.   It  can, however,  indicate whether ozone
is  being   impacted from  any source.   Regulation appropriately
should  focus on protection  of  the, ozone,  not  just  on  what one
anthropogenic  effect   might be.    To  date,  no  net depletion has
been  detected.

         Our comments throughout are  directed  toward  support for
the Assessment  and Surveillance option.   Specifically,  we  note
that  the  uncertainties  in  the  science make  regulation  at  this
time unwise and unwarranted.  As pointed out,  the availability of
the early  warning  system  allows  EPA  to  monitor  stratospheric
ozone  while the  research  and  assessment  is  being conducted.   The
risk of waiting  until the science  is  more completely  resolved is
therefore minimal.   In  addition,  if  ozone depletion  is indeed a
problem, it  is  international in scope and  unilateral  action by
the United States  will  have no  appreciable  environmental impact.
Given  the  Agency's goal  to stimulate  foreign  action  with  this
regulation, it is  difficult to  see how non-aerosol regulation in
this  country  will  stimulate  foreign  regulation in light  of the
failure of the U.S. aerosol  regulation to stimulate action abroad
of equivalent scope.  (As a  result  of the U.S. aerosol ban, total
domestic use of  CFCs was  reduced by approximately 50%.   No major
country has to date announced equivalent regulation).   Throughout
the comments,  therefore,  we  provide  support for  the Assessment
and Surveillance approach.

         The submission body is divided into nine sections:

         In Section  II  we  discuss the uses  and  essentiality of
CFCs.   Here we note  the various major applications in which CFCs
are used and  the reasons for their use.   We also  point out the
limitations of  the currently  available substitute products and

         In  Section III  we  discuss  the   legal   issues  of  CFC
regulation.  We note that EPA has  no  authority to regulate at
this  time.   We  also point out the   many  problems  of economic
incentives  regulation,  and  we. suggest additional  studies  which
must be conducted before regulations  can issue.

         In  Section  IV  we  discuss  the  science  of  the  ozone
depletion theory.  We note the uncertainties surrounding the 1979
calculations and  the advances  that  have  been  made since  those
calculations.     Particular  attention   is  given  to   recent
developments  (and  their  significance)  in  efforts  to  detect  a
trend in actual ozone concentration measurements.

         Section V  evaluates  the risk from  continued  production
and use of  CFCs  and  from  deferring  regulation  for  several years.
The bottom line, of course, is that the risk is not developing as
predicted, and with  the availability  of an  early  warning system,
deferral of  costly  regulation  to obtain better information  is a
defensible  option.    We  also  discuss  the   risk  which  would  be
associated with  regulation of CFCs  at  this  time and the need for
risk-risk evaluation.

         In Section VI we discuss the international ramifications
and  implications of  CFC  regulation.    Ozone  depletion,  if  it
occurs, is  an  international  problem and unilateral action by the
United States will have no appreciable environmental benefit.  We
also  discuss  the need  for  a true  global  assessment,  resolution
and  cooperative  action plan, and  point out that  EPA's proposed
program will not advance such a goal.

         In  Section VII  we  discuss  economic considerations  of
EPA's  proposed  regulation of CFCs.   We note  that the  impact of
economic  incentives  regulation are  far  greater  than  EPA has
realized, and that, therefore, the Agency must conduct additional
studies to support such regulatory initiatives.

         Section  VI I.I contains  a  discussion  of   the search for
alternatives to  the currently used CFCs.  We note  that  research

has been on-going  almost  since the  inception  of the  theory  but
that for the most part, no viable  alternatives  have  emerged.

         Section IX contains a general  summary  and  conclusions,,
including our recommendations for  action by EPA.

         Section X contains appendices which in  general  are  more
detailed and more  technical  discussions of portions of  the  main
body of  comments.   Where  appropriate,  we  have  indicated  in  the
text  those  places  where  an  appendix   provides  additional

         Section XI lists  references.  Throughout the submission,
extensive use is made of references,  both to previous reports and
submissions  and  to numerous articles,  papers,  etc.,  by  outside
researchers.   Copies  of  all cited  references  are  submitted  as
part of Du Font's formal response  to  the ANPR.

         In  addition,  due to the  fact  that the  CFC/Ozone  issue
has been on-going  since 1974,  a  large  body of  reports  has  been
generated   by  CFC  producing  and  using   companies  and their
contractors.  Most  of these have  been  submitted to EPA  or  have
formed  the  basis  for previous submissions  to  EPA  by industry.
However, due to  changes  in personnel  at  the  Agency  and to  a
desire  to  issue  an  up-to-date and  complete  official  record  on
which decisions can be  made, we are  incorporating as part of our
response to the ANPR those previous reports and submissions which
remain pertinent.  We  also  include copies  of a  number  of reports
prepared by  EPA contractors which we  believe  contain important
data and analyses not as yet given adequate attention by EPA.  A
list of  the  above reports and submissions  with  a brief descrip-
tion of each may be found  in Appendix A.

         Last, Du  Pont  is an active  member  of the  Alliance  for
Responsible  CFC   Policy.    We  participated   extensively  in  the
formulation of the Alliance's comments which  are  being forwarded
to the Agency.  We incorporate the Alliance's comments as our own
and they should  be considered as part of the  Du  Pont submission
on the ANPR.

         A.  INTRODUCTION                                    2


         C.  MOBILE AIR-CONDITIONING                         7

         D.  SOLVENTS                                       10



             ETHYLENE AND PHENOLIC FOAMS                    21

         H.  FOOD FREEZANT                                  25

         I.  STERILANT GAS                                  28



         L.  SUMMARY                                        44

                                       CFC  Uses  and  Essentiality


         Historically,  discussion of  the  Chlorofluorocarbon/Ozone
Depletion Issue has centered  on three questions:

         1.   To what extent,  if any,  will emissions  of  the  family
             of  chemicals  known  as  chlorofluorocarbons   (CFCs)
             lead  to  an  eventual  depletion  of  the  earth's
             stratospheric  ozone layer?

         2.   If  this   were   to  occur,  what  would  be  the
             consequences to human health  and the  environment?,

         3.   If  there  would  be  adverse consequences,  to what
             extent  should  the  production  or  use  of CFCs  be

         Often  forgotten  in  these discussions  is  the key fact
that CFCs play  a  wide,  and in many  instances essential, role in
modern society.  Perspective  is needed on:

         1.   The nature of  these chemicals.

         2.   Where they are used.

         3.   Why they are used.

         4.   Why they  can't  be  readily  replaced  with  something

         Consequently,  we believe it  is  appropriate to  begin our
submission with  a  review of the  major uses of CFCs.   For each

                                       CFC Uses and Essentiality
use, we  provide a  brief  description, a  highspot of  the  essen-
tiality or benefits of the use and a review of the limitations of
existing alternatives.

         For more detailed information on the uses of CFCs (where
used and  why)  and  the  competing  available alternates,  we  refer
the reader to the March, 1978 Du Pont Submission to EPA  [Du Pont,.
1978],  a copy of which is attached.  Although this submission was
based on 1976 data  (the most  recent  full-year for which  data was
available  at  the  time  of the  1978  submission  preparation),  it
remains  pertinent  in its  descriptions  of CFC  uses  and non-CFC
alternatives.   (Details on Du Font's program to develop  suitable
alternative  fluorocarbons  appears in Section VIII  and  Appendix

         In addition, because energy conservation has become such
an  important  national  objective,   and  because  CFCs  generally
provide a  significant  energy advantage  over  their  alternatives,
we  discuss  CFCs and energy  conservation  in  Section  II-K.   (De-
tailed  support for our energy discussion appears in Appendix C).

                                       CFC  Uses  and  Essentiality

     1.  Description

         Chlorofluorocarbons   (CFCs)   are   used  widely  as
refrigerants  in  mechanical  refrigeration  and  air-conditioning
systems.  In these systems, for instance in a  home  refrigerator,
the  refrigerant  alternatively  is  expanded  and  compressed  to
dissipate heat from a cooling  chamber.

         In 1979  approximately  270  million pounds  of  CFC were
used in refrigeration and air-conditioning  applications, or very
roughly 33 percent of total  domestic CFC  production.

         For simplicity, the ensuing  discussion  will be limited
to refrigeration.

     2.  Essentiality and Benefits

         Refrigeration is essential  to today's  way  of life.

         Meat,  poultry, dairy products,  fruits,  and  vegetables  -
from processing to storage,  to transportation,  to  the consumers'
tables -  require  refrigeration whether the  product  is sold  fresh
or  frozen.    More than  three-fourths of  all  food  .consumed  by
Americans is processed, shipped,  or  marketed under  some  degree of

         Nearly all households in the  United  States have one or
more refrigerators and freezers.   Bulk shipments  of  food products
are made  in 178,000  refrigerated  vans  and 27,000  refrigerated
freight  cars  for eventual distribution  through  over 40,000
supermarkets and  nearly 180,000  other  food stores,  as well  as
250,000 restaurants and other  commercial  and institutional  eating
establishments  -  all of which  require  refrigeration equipment.


                                      CFC Uses and Essentiality
This vast array  of  refrigeration  equipment  and  facilities helps
ensure that  food  reaches  the  nation's tables with minimum loss of
food value  and  minimum risk  to  health  because  of  spoilage  and

         Refrigeration also  is critical  in other activities which
are  esential  to  public  health.    Blood,  bone,  and  tissue  are
stored  under  refrigerated  conditions in  most  of  the  8,000
hospitals in the  United  States.   In other medical applications,
refrigeration of  biological  matter is  used either  to preserve or
to  destroy  the  viability   of  the  material  and  to   prevent
degeneration.    The  manufacture  and  storage  of   lifesaving
Pharmaceuticals require refrigeration.

         Virtually all such  refrigeration  equipment is  designed
for, and exclusively uses, CFC refrigerants.   Other  refrigerants
cannot  be  substituted  in  this equipment.   In  fact,  other
refrigerants generally are considered too hazardous for use, even
if  suitable  equipment to use  them  were available.   Therefore,
there is considerable concern for  the public safety in the use of
non-CFC alternatives as indicated  below.

         More  recently,  energy concerns  have   resulted  in many
consumer appliances receiving energy efficiency  ratings.  All the
high-efficiency  refrigerators  and freezers  developed  under this
energy-conserving program utilize CFC  refrigerants and CFC-blown
thermal insulating foam (see  Section II. - E) .

     3.  Limitations of Alternatives

         Prior to 1931, refrigeration equipment  used refrigerants
such  as methyl  chloride,  ammonia  and  sulfur  dioxide.   These
materials are toxic and some  are  flammable or explosive.

                                      CFC Uses and Essentiality
         CFCs  were developed specifically  to  overcome  these
serious hazards.   Their  widespread  use attests to how well they
have met the requirements  for  safety.   Incidents of  refrigerant
toxicity  and  fires   are   almost  unknown  in  CFC  refrigeration
systems.   On the  other  hand,  the  literature  contains numerous
reports of  deaths, injuries,  and  fires  attributed  to ammonia,
sulfur dioxide, methyl chloride,  and other non-CFC  refrigerants.
Efforts to date to develop safe alternatives  for  CFC  refrigerants
have been unsuccessful.   (See Section VIII  and  Appendix B).

                                       CFC Uses and  Essentia1ity

     1.  Description

         Chlorofluorocarbon 12 is the refrigerant used  in  mobile
air-conditioning in automobiles,  trucks,  and farm tractors,  etc.
the  refrigerant  alternately  is  expanded and compressed  to
dissipate heat from the inside of the vehicle.

         In  1979  approximately  105  million pounds  of  CFC  were
used in mobile  air-conditioning  applications,  roughly 13 percent
of total domestic CFC production.

     2.  Essentiality and Benefits

         Air-conditioning  plays a  key  role   in reducing the
debilitating  effect  of   heat stress  on  human  activity.     It
contributes to improved safety, health and  productivity.

         For  example,  driving under  the  heat  stress conditions
commonly experienced  in  many parts  of  the United States  during
the  summer months  has  been  shown  to  adversely  affect  driver
alertness.   Lack of  alertness has  been  ascribed a key  factor  in
many of  the  47,000  fatalities  and  1,800,000 disabling  injuries
experienced annually  in  traffic  accidents  in the United States.
A  recent study  of  the effect  of heat stress in  driving perfor-
mance conducted for the National Highway Traffic  Safety Adminis-
tration concluded  that  "suitable  air-conditioning  equipment  or
other  effective  countermeasures  should be available to drivers
who will be exposed for extended periods  of time to  [heat stress]

         Virtually all such mobile air-conditioning  equipment  is
designed for  the exclusive  use of  CFC-12.    Other  refrigerants
cannot be substituted in  this equipment.     CFC   air-conditioning

                                       CFC Uses and Essentiality
refrigerants are thus an  important  asset in current programs  to
increase passenger  safety in transportation.

     3.  Limitations of Alternatives

         Chlorofluorocarbon 22, the refrigerant used in  residen-
tial and commercial air-conditioning,  although  now  under  regula-
tory consideration by the  EPA,  is  not as great an  environmental
concern as CFC-12 because most of it  is  removed naturally  in  the
lower atmosphere.

         Chlorofluorocarbon 22, therefore,  has  been  considered  as
an  alternative  refrigerant  for  use   in  auto  air-conditioning;
however, it necessitates higher equipment operating pressures  to
achieve  proper  operation.   To  obtain  these  higher  pressures,
stronger and heavier equipment  than  that  currently used is  needed
for safety reasons.

         Since automobile makers have  identified weight reduction
as  an  important means  to help achieve  mandated  energy  conser-
vation  goals  by  1985,  weight increases  to  accomodate air-
conditioning would  waste fuel.  Further, the development of this
equipment would be  an expensive  and   time-consuming task.    For
example, one  auto  company  reports  the development of  necessary
new compressors would require  an  investment  of $150 million  and
five to seven years  of development  effort.

         Systems which  use  air  as  the  refrigerant   (air  cycle
systems) are  being   investigated  for  auto  air-conditioning  but
major  questions  concerning their  energy efficiency,  effective-
ness, and reliability still must be answered.   Air  cycle  systems
also are likely to  add considerable  weight  to the  vehicle  and

                                       CFC  Uses  and  Essentiality
require more power  to  operate.   Further,  there  is no  assurance
that the current concerted development effort -  which  also  would
require five to seven years - will  result in a workable air  cycle
system for use  in mobile air  conditioners.

                                      CFC Uses and Essentiality

     1.  Description of Use

         Chlorofluorocarbon  solvents  are  based  on CFC-113.   They
are  used  mainly  as high-quality  cleaning  solvents  in  special
equipment that  purifies and  recycles  the solvent  for  multiple

         The  equipment  contains  the  vapor  from  the  boiling
solvent.    Parts  to  be  cleaned   are  lowered  into  the  vapor.
Freshly distilled  solvent condenses on  the parts, rinsing off the
contaminants.    The  vapor heats  the  cleaned  parts  so  they  dry
rapidly as they are  removed  from the  vapor.

         Solvents  serve  many  purposes,  including  the  removal  of
soldering fluxes  from  electronic  components,  the  cleaning  of
metal,   plastic  items,   and  glass,  and the drying  of parts  by
displacing  water.  Chlorofluorocarbon  solvents are most  fre-
quently used where high-reliability cleaning is essential,   such
as  in   the  manufacture  of   semiconductor,  aircraft,  computer,
medical and  military devices.

         For certain special  uses,  CFC-113 is blended with other
solvents.    Such formulations  preserve  the  low toxicity  and  non-
flammable characteristics of  the CFC  component.

         In  1979  approximately  130  million  pounds  of CFC  were
used  in  solvent  applications,  roughly  16  percent of  total
domestic CFC production.

                                       GFC  Uses  and  Essentiality
     2.   Essentiality and Benefits

         The nonflammability and low toxicity  of  CFC-113  solvent
provide  a major contribution to worker safety.

         No  implications  of   carcinogenicity,  mutagenicity,  or
teratogenicity have  been  found after extensive toxicity  testing
and  after  many  years  of  use.    No organic  solvent  has  a  lower
toxicity rating that CFC-113.   It has high  chemical  stability  and
does not  require the  addition of stabilizing  chemicals.   This
permits  repetitive recovery and reuse without danger  of decompo-
sition leading to acid formation which can  damage  the  items  being
cleaned.   Many  other  nonflammable  solvents  do  require  such
stabilizing additives.

         This same chemical stability also means  that CFC-113 is
photochemically  stable,  and  hence,  does not  contribute  to
photochemical  oxidant levels  in  smog  -  a major  national  air
quality  concern with many alternative solvents.

         Other important advantages result  from the  thermodynamic
properties  of  CFC-113.    The  low boiling  point and low heat of
vaporization  result   in  unusually low  energy  requirements  for
vapor cleaning equipment  operations,  thus  contributing  to energy
conservation.  The low temperature and high density of  the  vapor
in  vapor  cleaning   equipment   also  permit  unusually  efficient
recycle, typically well in excess of  99  percent.   The  low  boiling
point also  permits  safe  handling  of parts as  soon as they  are
taken from the vapor cleaning equipment.

                                      CFC Uses and Essentiality
     3.  Limitations of Alternatives

         Other solvents might be  used  in  some applications,  but
at a penalty.

         Replacement of  CFC-113  by hydrocarbon  solvents,  which
are  flammable,   would  require   major  plant  investment   in
explosion-proof equipment.   Chlorinated solvents  are more toxic,
and can damage many plastics  and  elastomers that are compatible
with CFC-113.   Vapor emissions of  hydrocarbons and chlorocarbons,
with few exceptions, result  in  elevated  levels  of  photochemical
oxidant in smog,  and are implicated in concerns  over  the safety
of the work environment.

         Water is  an alternative  for  some  cleaning operations,
but critical cleaning of electronic, medical, space program,  and
defense items  require  extremely  low   levels  of  residual  soil.
Water  cleaning  systems can  leave behind  trace  amounts of  the
chemical  surfactants  necessary   in   the  water  process.    On
electronic  circuit boards  and   components,   these   residual
surfactants can cause electrical leakage, equipment malfunctions,
and  reduced  reliability.    Solvent  cleaning  processes also
concentrate removed  soil for  proper  disposal as the  solvent  is
recycled,   while  water  cleaning  disperses  the  soil  in  large
volumes of  water.   Additionally, there  are increasingly stringent
requirements for discharge  of  contaminated water.    Cleaning  up
water to meet  the standards  generally is quite energy intensive.

                                       CFC  Uses  and Essentiality

     1.  Description of Use

         Rigid  polyurethane foams  are  formed  by   reaction  of
suitably formulated  chemicals.   The  inclusion of chlorofluoro-
carbon 11 as  a  "blowing  agent"  permits  the formation of a light
foam by "inflating" the reacting chemicals.   The  foam formulation
and reaction  conditions  can be  controlled so  that  the walls of
each minute  bubble or cell  remain  intact,  trapping  the blowing
agent in the foam.  This "closed-cell"  structure  also contributes
to the rigid character of the foam.

         Formulation changes permit the manufacture  of  open-cell
or  flexible  polyurethane  foams for other  uses.    (See Section

         Rigid polyurethane foams are used primarily  for thermal
insulation,   for  example,  in  home  construction paneling  and
roofing, and  between  the  walls of  refrigerators  and  freezers.
Efficient insulation uses  trapped gas to keep  heat or  cold where
needed, as  a down-filled jacket  keeps  the  wearer  warm by trapping

         Because  of  its  low thermal conductivity, CFC vapor is
much more  effective than  air  as an  insulating  gas.   Actually,
CFC-blown polyurethane foams provide  the best insulation possible
using today's materials and technology.    The energy  savings
 In the insulation industry,  insulation may  be  measured  as  the  "K
 factor."   Lower  K factors  signify  lower  heat loss  and  thus
 better  insulation.   For  example,  K  factors  for  chlorofluoro-
 carbon-blown  polyurethane:    0.12;  for  fiberglass:    0.25
 btu/hr/in/degrees  F/ft  .   Therefore,  the  polyurethane foam  is
 twice  as  effective per unit  thickness.    (See Section  II-K).

                                      CFC Uses and Essentiality
associated with this use are extremely large (See Section II-K).
Additionally,   compared  with other  blowing  agents,  CFC  blowing
agents permit a lighter weight,  more uniform,  high quality foam,
with greater adaptability  to many  insulating tasks.

         Rigid  polyurethane  foam  is  manufactured  in  several
forms.     Approximately  one-quarter  of  the  production  is
boardstock,  used   in  residential,  commercial,   industrial,  and
transportation construction.

         Alternatively,  foam may  be  prepared   in  a  preformed
cavity.   Such  "poured-in-place" foam  constitutes  almost  half  of
rigid polyurethane foam production and is particularly important
in refrigerator and freezer  manufacture.

         Additionally,  the foam  can be sprayed  on the surface  to
be  insulated.    Tanks  and  pipelines  can  now  be  insulated
economically   by  such  techniques;  whereas  the high cost  of
alternative insulating procedures  could not be  justified  by the
energy  savings  realized.    The   same spray-on  technique  is
replacing the expensive paper felt and hot asphalt technique for
sealing  and  insulating  roofing  on  industrial  and  commercial

         Spray-on  application accounts for  about  one-quarter  of
rigid polyurethane foam production.   The  application of  sprayed
foam  typically  is  performed by hundreds  of small,  local  busi-
nesses.    Minor  additional  uses   are  in  packaging  and  marine
flotation devices.

         In 1979  approximately  75  million  pounds  of  CFCs  were
used  in  these  applications,  roughly  9  percent  of total domestic
CFC production.

                                      CFC Uses and Essentiality

     2.   Essentiality  of C F C  B ,lo w lng__Ag_ e^n JL^_AJl_C lg.jj.gjj. _C e_ l_ 1
         Polyurethane Foam

         Rigid  polyurethane  foam  insulation  made  using  CFC
blowing  agents has .physical advantages which are unattainable by
other insulation materials.

         Rigid polyurethane foam using CFC blowing agents:

         •   Provides  excellent insulation  in  thin  amounts,thus
             conserving  energy  and  increasing  usable  space  for
             household  refrigerators and freezers.

         •   Provides  the  most  energy-efficient,  commerical
             refrigeration  display  and   storage  facilities

         •   Imparts  structural  integrity  as well  as  insulation
             for walk-in refrigeration storage,  refrigerated
             railroad cars, refrigerated delivery trucks,
             refrigerated  truck   trailers,   and  public   and
             commercial  roofing  and paneling -  both  interior  and

         •   Permits large foam  sections and filling applications
             to  be  made  without overheating and charring the foam
             core,  by moderating the effect  of  the  heat from  the
             chemical  reaction  in  which the polyurethane  resin
             itself  is  formed.

         •   Gives  excellent adhesion to metal surfaces.

         •   Promotes uniform  density  throughout  the  entire foam

                                      CFC Uses and Essentiality
         •   Permits  the application of spray-on insulation over
             a wide  range  of weather conditions.

     3.   Alternatives  and  Limitations

         With  present  technology  and materials,  there  is no
available substitute  for CFC blowing agents in rigid polyurethane
foams..  If, due  to  regulation,  rigid  polyurethane  foams  were to
be  replaced  with such  alternatives  as fiberglass, other  foams
made without  CFC blowing  agents,  or  wood  pulp  products,  then
deficiencies  must  be  accepted  in  such  factors  as  insulation
effectiveness,  weight,  cost  of  materials  and  application,
structural  integrity,  and energy conservation.   These  are,  in
fact,  the  reasons  for  selecting  rigid polyurethane  foams  over
competitive technology.

                                       CFC Uses and Essentiality

     1.  Description of Use

         Flexible polyurethane  foams are  formed  by  reaction  of
suitably formulated  chemicals.   The manufacturing  processes  are
varied  from  those used for  rigid  polyurethane  foam  manufacture
(See Section II-E)  to  ensure  breakage of  the polymer  walls which
initially  separate  the minute  bubbles  or  cells  created  by  the
"inflating"  action   of the   blowing  agent.    The  result is  a
three-dimensional network  of  cells,  open  to  each other,  which
contribute to the flexibility of the foam.

         Water, methylene chloride and chlorofluorocarbons (CFCs)
are  used  as  blowing  agents  to  control  some  of  the  physical
properties of the final foam.  These three agents are  partly,  but
not  fully,  interchangeable.   The  extent  of  interchangeability
depends on the formulation and foam characteristics desired.

         Flexible polyurethane foam is prepared either as a large
"bun"  (which has  the appearance of  an  enormous loaf  of bread) ,
which is subsequently  cut  into "slabstock," or in  a  mold  of  its
ultimate design shape.

         Flexible polyurethane  foam is  utilized  in  padding  for
furniture,  and for  seats and  interiors  in transportation.   It is
used for bedding,  textile  laminate, carpet  underlay,  gasketing,
sound deadening,  and packaging.

         In 1979 approximately 50 million pounds of CFC .were used
in  these  applications, roughly 6  percent of  total domestic  CFC

                                       CFC  Uses  and Essentiality
     2.   Essentiality and  Benefits

         Flexible  polyurethane  foam  products  essentially  have
replaced the  cotton/steel  spring  construction used in  furniture
manufacture.   The  use of  foam  contributes  to  the comfort of the
user resulting in high customer  demand.   Use of  polyurethane foam
also simplifies furniture  construction,  reducing costs.

         This combination  of  advantages has  held down  furniture
costs  to  the  homeowner  and  has  resulted  in  almost   complete
conversion of the industry to  this  improved construction.

         The  automotive industry  uses  substantial quantities of
polyurethane  foam,  both molded  and slab,  not only to offer the
customers the benefits  of  greater  comfort  and  superior  styling,
but  also to  achieve the  weight  reductions  necessary  to  meet
mandatory  government  specifications  on  fleet fuel consumption.
Soft foams with  high  resilience also provide  lightweight  padding
to satisfy mandated  crash  protection  requirements in automobile

         There are  a number  of properties  of  CFCs  which  make
them  ideally  suited  as  blowing  agents.    They  are  odorless,
nonflammable,  have  low  toxicity  and   are  nonreactive.   These
properties are particularly significant  since blowing agents are
released relatively rapidly  from  open-cell  foams  into  the
workplace  enviroment  during  foam  preparation, cutting,  and
curing.   These properties  are  a  major  asset  in maintaining a safe
working  environment.    CFC blowing  agents also help  assure   a
consistent high quality  in foam  production.

                                      CFC Uses and Essentiality
     3.   Alternatives  and  Limitations

         The extent to which additional water may be  used  as an
alternative blowing agent  is  severely  restricted since it impairs
the essential flexibility  of  the  foam.

         Numerous  studies  have  been   undertaken  to  find  other
substitutes for  CFC  blowing  agents  in  the manufacture  of
polyurethane  foams.    Methylene  chloride  has  been  used  as  a
substitute  in  a  number  of  polyurethane  foam  formulations.
However,  concessions must be made  in  the physical properties of
the manufactured foam.  Methylene chloride  also requires special
polyols   and amine  catalysts  in  almost  all  foam formulations.
Users have said CFCs are  "forgiving" blowing  agents, meaning that
less  strict  control  is necessary  versus methylene  chloride,  or
alternatively,  that  less  off-specification foam  product  is
produced  than is the case  with methylene chloride.

         There is not the toxicity concern with  CFCs  that there
is  with  methylene  chloride.     The  substitution of  methylene
chloride  for  chlorofluorocarbons,  by  some  foam  producers,  has
required  additional ventilation  for the  curing  tunnels  in which
the foam bun is formed to ensure safe working conditions for the
foam-line operators.
 The Threshold Limit Value (TLV)  is  a  conventional measure of the
 maximum  acceptable average  exposure during  a  workday.    CFC
 blowing agents with a TLV  of  1,000  ppm  have the highest (least
 toxic)  value assigned to  any  chemical  except carbon dioxide (a
 natural product of  respiration)  and  simple  asphyxiants such as
 nitrogen.  The TLV for methylene  chloride  is 100 ppm or onetenth
 the  value  for CFC  blowing  agents.   Current toxicological
 concerns  could  result in  the allowable  exposure  to  methylene
 chloride being lowered further in the future.

                                       CFC  Uses  and  Essentiality
         Some polyurethane foam  manufacturers  have  been able  to
substitute methylene  chloride  for  CFC  in  certain  high-density
foam  formulations,  but  not  in  all  low-density  formulations.
(Low-density   ("supersoft")   foams  are  finding  growing  use  in
quality furniture manufacturing).  Low-density  polyurethane  foams
are substantially more difficult to  make using  methylene chloride
and require extensively-modified formulations compared  with  foams
using CFC  blowing agents.   Therefore,  a  direct across-the-board
substitution  of methylene chloride  for  CFC cannot  be  made  with
existing technology.

                                       CFC  Uses and Essentiality

     1.  Description of Use

         When chlorofluorocarbon  (CFC)  blowing  agent is blended
with molten  polystyrene resin  and  extruded through  a  die, the
blowing agent vaporizes and a  sheet  of foamed polystyrene forms.

         After a  short  aging  period,  during which air permeates
into the cells, the  sheet  is  "thermoformed"  (shaped  by heat)  in
hot  presses into the final  product form.

         The thermoformed products are everyday  items  such as egg
cartons, meat trays, produce and fast-food  containers,  disposable
dinnerware, and many  industrial containers.   The containers are
sanitary,  nonabsorbent,  esthetically attractive and  readily
decorated.    Modifications  of  the  process  give  molded and
loosefill packaging,  insulation  products,  and  even  a filler for
lightweight concrete.

         Analogous  processes  use the  same  blowing   agents   to
manufacture polyethylene foams,  which are  unmatched by any  other
packaging material for lightness and  high  compressive  strength.

         Comparable  techniques   yield  hard,  porous   foams   from
phenolic  resins.   The  foams  are used  in  diverse applications,
from pipe  insulation  (where the inherent flame  retardancy of the
resin is required), to packaging for  fresh-cut  flowers.

         In 1979 approximately 40 million  pounds of CFC were used
in  these  applications,  roughly  5 percent  of  total  domestic CFC

                                       CFC Uses and  Essentiality
     2.  Essentiality and Benefits

         CFC  blowing  agents  are  nonf lammable  and  have  an  ex-
tremely low toxicity  rating.   Since  substantial  blowing  agent is
emitted during  manufacture  of these  foamed  plastics,  these  two
properties  are  a  major  asset  in  maintaining  a  safe  working
environment.  Ventilation requirements are reduced with  attendant
heating and cooling energy savings.

         CFC  blowing  agents  have  a  unique  combination  of  addi-
tional properties.   They are:

         •   Compatible with,  and soluble  in,  resins  for  easy
             formulation  and  excellent  control  of  the  charac-
             teristics of the  final foam.

         •   Inert, which provides  nonreactivity with the  resin
             and equipment during  high-temperature  extrusion

         •   Excellent  contributors  to  needed physical  charac-
             teristics in the  extruder  and  die,  such as  surface
             tension and viscosity.

         •   Inherently good nucleation agents - a  term  describ-
             ing the   ready  formation  of numerous  and  uniform
             small  bubbles throughout the expanding  foam.

         •   Provide  the  excellent  insulation properties  needed
             in thermal insulation uses.   (See Section II-K).

                                       CFC Uses and Essentiality
     3.   Alternatives and Limitations

         Two possible alternatives to CFC for blowing polystyrene
foam are pentane and chemical blowing agents.

         Pentane  blowing  agent  is  used  by some  manufacturers.
However, the  flammability  and  explosion hazards of  pentane  must
be  minimized  by  explosion-proofing  all  equipment  and  rigorous
elimination of  static  electricity.   Costs  of  $500,000  per  plant
are estimated   for ventilation and roll  storage  area alterations
required for pentane use.  Heating costs are estimated thereafter
to  increase 25  percent due to  the higher  ventilation required  to
limit fire and  explosion hazards.    The  hazard  to worker  and
property cannot be  eliminated,  as  the history  of  pentane  use
clearly  shows.

         Although  pentane  is  cheaper  than CFCs,  basic  material
costs are  nevertheless  increased  by  pentane use  since more  resin
per article  must be  used  to  match  the properties  of  CFC-blown
polystyrene foam products.

         Alternatively,  chemical  blowing  agents  could be  used
which decompose  to  give  off  nitrogen  under  the  hot  extruder
conditions.  Chemical blowing  agents  currently are expensive and
limited   to certain  specific uses.    The chemical  blowing  agent
concentration necessary to produce light foam would raise product
costs, making the  product  noncompetitive.   Chemical residues are
left from  chemical blowing agents, and high  residue levels create
stability  problems in the product.
 Information provided to EPA by Du Pont [Du Pont, 1978].

                                       CFC  Uses  and  Essentiality
         Low-density polyethylene  foam and  phenolic  foams  with
high thermal insulation value cannot  be produced  today with  other
blowing agents.

         Elimination of these foam products would force a  return
to such alternatives as  wood pulp products for packaging.   Wood
pulp products largely  have been  superseded  due  to the  improved
sanitary and  esthetic  properties  of plastic  foams.   Wood  pulp
food containers  absorb moisture and grease from food contents,  a
sanitary and esthetic disadvantage.

         One area where costs would clearly increase  is  in  hospi-
tals where  the  replacement of sanitary and  germ-free disposable
foodware with chinaware would add  labor and energy  costs assoc-
iated with  adequate washing and cleaning for  reuse.

                                       CFC  Uses  and Essentiality

     1.  Description

         The liquid food freezant (LFF)  process of freezing food
consists of spraying the food with,or  immersing the food directly
in, liquid food-grade CFC-12, which boils  at  -22  degrees  F (-30
degrees C) .   This  results  in  very  rapid freezing.   It  is used
only  to freeze  fragile, difficult-to-freeze,  and  relatively
expensive food products.

         The  primary  products  frozen  in LFF  are  cob  corn,
french-sliced green beans, seafood  (primarily shrimp and clams),
berries, and  small  portions of  meat.   Vapor  from the freezing
bath  is efficiently  condensed  and  recycled by a  secondary
refrigeration unit.

         In 1979  approximately 10 million  pounds  of  CFC-12 were
used  in  this  application,  very  roughly  1   percent  of  total
domestic CFC production.

     2.  Essentiality and Benefits

         Freezing of food is an  important  and growing  method of
food  preservation  and  an  important  alternative  to  canning  and
preserving  with  chemical  additives.    Approximately  7  percent
(about 20 billion pounds per  year) of  all food consumed in the
United States is frozen at some time in the distribution channel
   from  production   to   storage,  to  transportation,   to  retail
display cases, to consumers'  tables.

                                       CFC Uses and Essentiality

         There are three basic methods of food freezing:

                                                Percent of Total
                   Method                       Frozen Food
Air Blast                                           88
Cryogenic (Liquid nitrogen
  or carbon dioxide)                                 10
LFF                                                  2
         Since LFF and cryogenic freezing of food are more expen-
sive than air-blast  freezing,  they  are  used only when considera-
tions of product quality, processing, or other advantages dictate
their use.   An  example  is  frozen  corn-on-the-cob.    The  recent
retail availability  of  this product  is due to  the  high-quality
product made possible by the LFF process.

     3.   Limitations of Alternatives

         For specialty  products where  considerations  of product
quality, processing  ease,  and  yield are important,  either LFF or
cryogenic systems can be used.  Air blast  could  be  used, but the
quality of  the  frozen food  product is  reduced.  Therefore,  the
LFF process  always  is compared and  evaluated  opposite cryogenic

         The major advantages of LFF over cryogenic  systems are:

         •   Due  to  the ability  of LFF systems to  recycle  the
             freezant for repeated use  (which is not practical in
             cryogenic freezing), there  is  a bottom-line savings
             in cost of freezing when using LFF.   Typically, this
             amounts  to  approximately  a three cent  savings  per


                              CFC  Uses and Essentiality
    pound of  food  frozen,  depending  upon  the specific
    frozen food.

•   Due  to  the  recycle of  the  refrigerant,   the use of
    LFF  is  more  energy-efficient  than cryogenic freez-

•   Products  are crust-frozen almost  instantly  and,
    consequently,  product dehydration  is  lower  (almost
    zero) for  LFF.   This  results in a  cost savings and a
    quality  advantage  over cryogenic freezing.  Products
    also are completely frozen more rapidly in LFF which
    results   in   a  further  quality advantage.    (Slow
    freezing allows  the formation  of  large ice crystals
    which damage the  cell  structure   of the  food;  this
    results  in the food becoming mushy when thawed).

•   Small food items,  such as shrimp  or berries,  can be
    "individually   quick-frozen,"   since    they   are
    separated  automatically  when dropped  into  the
    boiling  freezant.   Other processes result in frozen
    clumps of the  food items unless  separated  by  hand
    prior to  freezing - an  expensive,  labor-intensive

                                      CFC Uses and Essentiality
     1.   Description  of  Use
         Ethylene  oxide   (EtO)  is  an   extremely  effective
sterilizing agent.   However, its flammability,  in the pure form,
severely  limits  its  use.    Consequently,  where  the  sterilizing
ability  of  EtO  is  required  but  its  flammability  cannot  be
tolerated, EtO is mixed  with  an  inerting agent, such as a chloro-
fluorocarbon or  carbon  dioxide.   The inerting agent  most often
used is CFC-12.   The  most  common mixture of EtO and CFC-12 is 12
percent EtO and  88  percent CFC-12.

         The principal  markets  for  the mixture  are hospitals and
manufacturers who  prepare  specially sterilized  equipment  and
devices for pharmaceutical and medical use.  It also is used as a
fumigant and pesticide for granaries, warehouses, and ship cargo

         In gas  sterilization,  a  specific concentration  of  the
gas  is introduced into  a  specially  constructed sterilizing
chamber wherein  temperature, humidity,  and time  of  exposure can
be  readily  controlled.   These  parameters  must  be predetermined
for each  sterilization  cycle and  are dictated by  the  nature of
the items to be  sterilized.

         Items commonly sterilized by the  CFC/EtO  blend include
catheters,   gloves,,  syringes,   tubing   for  anesthetic  and
respiratory units,  and anesthetic  and  respiratory equipment
(nebulizers, humidifiers, mouthpieces, manifolds).  Sterilization
of  inhalation therapy equipment is a major use of the  blend as
this   equipment  has  the  potential   for  patient-to-patient
contamination and infection.

                                       CFC  Uses  and  Essentiality
         In 1979 approximately 15 million pounds  of  CFC  were  used
for  this  application,  very roughly  2  percent  of total domestic
CFC production.

     2.  Essentiality and Benefits

         Gaseous sterilization,  in  particular  methods  utilizing
the  CFC/EtO  blend,  has  grown  to be  increasingly  important  in
recent years.

         Materials  of   construction   (such   as  plastics  and
elastomers) in many medical devices  are not  compatible with steam
autoclave conditions, radiation,  or  chemical sterilization,  thus
creating a need for gaseous sterilization.

         Additionally,  the  use  of  sterilizing  gas  enables  the
sterilization of medical supplies and  Pharmaceuticals after  they
have been packaged, thus eliminating any danger  of  contamination
caused by handling  in packaging.

         Other  benefits  of using  the  CFC/EtO mixtures for  gas
sterilization are:

         •   Flammability and  explosion hazards are  eliminated.

         •   CFC-12 is of  such low toxicity that the toxicity  of
             the blend is only one-twentieth that of pure EtO,  an
             additional  safety benefit  for workers.

         •   Much  lower  pressure  (60 pounds per  square inch)  in
             shipping containers  than  blends with carbon dioxide
             (750 pounds per square  inch).   The CFC/EtO  blend can
             utilize  lighter  weight,  less  costly   and   more
             easily handled shipping  and storage  containers.

                                      CFC Uses and Essentiality
         •   Sterilizing  cycles  are  shorter than those needed for
             blends with  carbon  dioxide.

         •   A constant  composition  is  obtained  whether  the
             supply cylinder  is  full  or almost empty.  For blends
             with  carbon dioxide,  some  fractionation  occurs,
             which can  lead to inconsistent sterilization.

         •   Sterilization  at lower  chamber pressures  results in
             the  need  for  less  costly  sterilizing  chambers than
             is the case  for  carbon  dioxide/EtO blends.

3.  Alternatives  and Limitations

         Nonflammable  blends of carbon dioxide  and EtO  can be
prepared  but  have  the major practical  disadvantages  discussed

         The use  of CFC-12/EtO has grown rapidly because previous
sterilizing techniques  employing heat,  steam or chemicals are now
limited due to deleterious  effects  on certain instruments and
equipment.  Today,  medical  devices  contain electronic,  plastic,
or  easily  damaged  components.    Thus,  the   gas  sterilizer  is
becoming   common  in  hospitals  alongside  autoclaves  which
previously handled most sterilizations.
 The composition of the  nonflammable  blend with carbon dioxide is
 10 percent  EtO.    Sterilizing  effectiveness  is  proportional to
 the number  of EtO  molecules  present.   To  achieve  comparable
 sterilizing  rates and  effectiveness,  the   pressure  necessary
 using  the  carbon  dioxide  blend is  three  times  as high  as the
 pressure using the CFC  blend  (due  to the difference  in partial
 pressures of CFC-12 and carbon  dioxide).

                                       CFC  Uses  and  Essentiality
          Aside from  irreparably  damaging some  items,  autoclave
sterilization  conditions  (moisture  and  high  temperature)   may
cause premature deterioration of  items constructed  from  plastics
and elastomers, resulting in higher replacement costs.

         Cold  chemical   sterilization  (glutaraldehyde)   has   the
limitations  of long  exposure  times,  inability  to  destroy  all
organisms, and poor efficacy.   An item sterilized in a  chemical
bath  must be  removed,   dried,  and packaged.    The  rinsing  and
handling necessary in packaging can recontaminate the  item.

         Radiation sterilization  is  limited  by  the  cost of  the
apparatus  (which  may  be hundreds  of  thousands of dollars) ,  the
adverse effect upon certain elastomers  and plastics, and  the  lack
of  information   on   exposure  time  and  dosage  for  specific
sterilization problems.

         Presently manufactured  alternative  fluorocarbons  (not
implicated in  the ozone depletion theory)  do not have  suitable
flame suppression  properties  or pressure characteristics.   They
cannot be substituted for the presently used CFC-12.

                                       CFC  Uses and Essentiality

     1.   Description of Use

         In this  application,  CFC-22  is first  chemically con-
verted to  the monomers,  tetrafluoroethylene  and hexafluoropro-
pylene,  which,  in  turn,  are reacted  to  form fluoropolymers and
fluoroelastomers.  Both steps in this process are carried out in
tightly  sealed  process  equipment,  from which emissions are
negligible.   The final products  are  non-volatile polymers from
which CFCs  cannot  be  regenerated.  Neither  the  monomers nor the
final polymers have any potential  for  ozone depletion.

         Fluoropolymers and  fluoroelastomers  are ultra-perfor-
mance polymers which  are  used widely  in industry in very  harsh
environments or very demanding service.   Use of  these materials
is growing  rapidly to  meet new high standards for safety, pollu-
tion  control,  equipment  life,   equipment  utility  and  energy

         In 1979 approximately 60 million pounds of  CFC-22 were
used in this application,  very roughly 7  percent  of  total domes-
tic CFC  production.

     2.   Essentiality and  Benefits

         Fluoropolymers have the  outstanding chemical, electri-
cal, and  high  temperature  properties,  plus resistance to burning,
needed by  industry to  meet new high standards for safety, pollu-
tion  control,  and  energy  conservation, and  to  minimize  cost
through better utility and  long  equipment life.   They are also
used  as   replacement  parts  in  the  human  body,  in  energy
exploration and  production,  and  have  space program  and military
applications.    In  some cases  fluoropolymers are  irreplaceable.
In  many  cases fluoropolymers could  only be  replaced  by  exotic


                                       CFC Uses and Essentiality

metals or other special materials, or  by  a  substantial  sacrifice
in  equipment  life,  utility,  safety  and/or energy  consumption.

Since fluoropolymers are used so widely in  industry,  the  overall
cost to society of replacing fluoropolymers would be very  large.

         The  following  list  of  Du  Pont  products  provides  an

indication  of  the wide  range and  importance  of  fluoropolymers
made from CFC-22:
    • "Teflon" and "Tefzel" Resins
    • Hexafluoropropylene Monomer

    • "Viton" Fluoroelastomers

    • "Kalrez" Perfluoroelastomers

    • "Teflon" Film & Tubing

    • "Teflon" Heat Transfer Products

    • "Nafion" Products

    • "Teflon" FEP Coated "Kapton"

    • "Delrin" A/F Acetal/Fluoro-

    • "Armalon" Felts and Fabrics
• "Dulite" Finishes
• "Silverstone" Non-Stick
• "Teflon" Non-Stick
• "Zepel" Fabric
• "Zonyl" Fluorochemical
• "Krytox" Oils and
• "Vydax" Fluorocarbon
• "Teflon" Fibers
• "Tefzel" Film
Some uses for these products follow;

    • Valve and pipe liners

    • Packing

    • Bellows

    • Bearing pads

    • Seals
• Thermoplastic compounds,
  industrial greases.

• Fibers, metal coatings,
  and impregnates (such
  as packings and glass

                                       CFC Uses and Essentiality
    • Rings
    • Insulators
    • Tape
    • Thread seal tape
    • Film, tubing.
    • Heat exchangers
    • Chemical equipment liners
    • Moldings for semiconductor
• High performance wire
  insulation for the air-
  craft,  computer, utili-
  ties, rapid transit,  and
  nuclear industries.
• Membranes for the
  chlorine industry
• Roof structures
• Filtration (anti-air
  pollution)  equipment
     3.  Limitations of Alternatives
         There are no  acceptable  alternatives  for  fluoropolymers
in many applications, because fluoropolymers are chemically inert
to virtually  all chemicals,  can  be used  at very  high  tempera-
tures, and have good electrical properties.  Where  they  could  be
replaced, the  cost would  generally be very  high  due to  higher
initial cost of available substitutes,  reduced utility,  decreased
safety, or  shorter  equipment life.   For  example,  wire  insulated
with "Teflon"  resin  is  acceptable as a fire alarm  cable and  for
use in plenums,  but  wires insulated with  non-fluoropolymer  must
be put in conduits because they are not as heat-resistant.   These
savings  make  it  easy  to  retrofit buildings  to  improve  fire
safety.  Another  example  is  the use of fluoropolymer lined  pipe
and  vessels  to   replace   glass-lined  equipment  which  is  more
expensive and easy to break.   In  many  cases,  fluoropolymers  have
replaced much  more  expensive parts machined from  exotic metals,
with considerable reductions in energy  consumption  and cost.

                                      CFC Uses and Essentiality
         Despite   extensive  research  on alternative  routes  to
tetraf1uoroethylene  and  related  fluoromonomers,  there is  no
practical process for manufacture  of tetrafluoroethylene  and the
related  monomers  other than the route based on CFC-22.

                                      CFG Uses and Essentiality
     1.  Summary

         The  use  of  chlorofluorocarbons  (CFCs)  in  air-condi-
tioning,  refrigeration,  insulating foam and other uses results in
a  large   energy  savings  compared   with   systems  using  non-CFC

         Based on a study  by  Battelle  Columbus Laboratories for
Du Pont,   [Battelle,  1980 — See Appendix  C]  if such  uses of CFCs
were banned and the  next-best non-CFC alternative technology was
forced  progressively  to  replace   CFC  technology,  the  energy
penalty  would  grow.    Calculated in  terms  of  gallons of  fuel
equivalent,  the  first  year  penalty  of  847  million gallons
increases to over 9.5 billion  gallons at  the  tenth  year and the
total  for  the first decade  is  almost  50 billion  gallons  (See
Table 1) .

         Prior to this  study  the  value  of  CFCs in  conserving
energy  resources  had  been  neither  thoroughly  assessed  nor

         The study concluded  that a  ban on the use of CFCs would
have "an adverse and serious impact  on an already serious energy

         Although  the  study examines the effect of  a  ban  on the
use of CFC-11  and CFC-12, and a ban  is not now contemplated, the
Environmental  Protection Agency  has announced  its  intention  to
limit  CFC  production  to  current  levels,  and  a  longer-term
interest in a  phase-down of United States CFC production by 50-70
percent.    Such  regulatory  action would affect  all uses of CFCs,


                                       CFC Uses and Essentiality
Table 1
                      [FROM BATTELLE, 1980]
                                  Using Next Best Non-CFC Alternative
Automotive Air-Conditioning
Home & Store Refrigeration
Insulating Foams
Liquid Food Freezing
(a)  Includes losses due to outdoor compressor when using ammonia, and
     incremental effect of elimination of CFCs in both refrigerant and

                                      CFC Uses and Essentiality
those examined  in  the study.   The  energy  penalty,  to  a  first
approximation,   may  be  expected  to  be  proportional  to  the
percentage phase-down of  CFC  production.

         The above  energy  penalty would  stem solely  from cur-
tailing   the availability  of  CFCs   for  existing  uses   and  the
projected growth of  these  uses.   The  penalty as calculated did
not  include the  impact  of  expanded CFC use  in current  applica-
tions without  growth in  the application  itself.  As an example of
this later  type  of  penalty  we note  that  the  U.S.  Department of
Energy  (DOE)  recently  published rule proposals [45  Federal
Register 43976-44086] setting  forth  energy efficiency standards
for household  appliances.  In  its support documents [DOE, 1980],
DOE  concludes   that  meeting  these  standards would  entail  an
increase in the  use  of CFCs.   (This  is discussed in more detail
in  section 4).   So  the  energy penalty  of  CFC  regulatory
restriction would be  tied not only  to  the impact of restricting
CFCs from current applications but also from future expanded CFC

         A  related  energy  impact would  stem  from  the   unavail-
ability  of  CFCs for  new  applications  —  uses of  CFCs  that are
only in  their  infancy or,  in some  cases,  only  on  the  drawing
board.   Several  of  these  are  discussed  in  Section VII-C.

                                      CFC Uses and Essentiality
     2.   General Conclusions  and Methodology

         For each use  studied,  various  alternative technologies
were  evaluated.    Since  only uses of  CFC-11 and CFC-12  were
studied,  incorporating other uses  and other CFCs (as EPA intends
to do) would increase  the penalty.   As an  example,  domestic
air-conditioning,  which  uses CFC-22,  was not  included.   Liquid
Food Freezing,  which uses CFC-12,  was not included  as  an example
of the energy conservation  for  even  minor CFC uses.
         The study noted  that  the  energy  penalty would undoubt-
edly continue  to  grow for  many  decades beyond  the  first since
displacement by obsolescence of the more efficient CFCs would not
be  complete  for  several  decades  in  such  uses  as  thermal
insulating foam.

         In conducting the  study,  Battelle compared  the energy
consumption of CFC-using  systems and equipment  currently in use
versus the  best  of several alternatives,  even  if  such alterna-
tives have  not yet been  demonstrated  as commercially practical.
Predetermined criteria were used,  Such  as  equivalent safety-in-
use, comparable cooling  values and continued  compatibility with
existing space parameters.

         The actual penalty would be  a  composite of increases in
gasoline, fuel oil, coal,  nuclear  and  hydroelectric  power,  etc.
To total the penalty,  Battelle  converted each penalty to a common
denominator,  equivalent  gallons   of  fuel,  assumed  to  have  an
energy content of 140,000 BTU/gallon.   The tenth year total, 9.5
billion  gallons,  is almost  incomprehensibly  large.   To  aid in
understanding,  equivalents  in   national  energy  sources  and
consumption terms were calculated by Battelle  (Table 2).

                                       CFC Uses and Essentiality
Table 2
                 HOW MUCH IS 9.5 BILLION GALLONS?
                      [FROM BATTELLE,  1980]
         The Battelle  report  describes  this energy penalty  of  a
hypothetical ban on CFCs in the tenth year as equivalent to:

         •   The fuel  required  to  drive 12  million average  cars
             (about  10  percent  of  all  autos  on United  States
             roads) for one year.

         •   About 45  percent of  current  annual oil  production
             from Alaska's North Slope.

         •   The energy  (excluding gasoline) required  to  supply
             11 cities of 500,000 population each for  one year.

         •   The energy output of 29 nuclear plants.

         •   Eighteen times  the  petroleum savings envisioned  by
             use of gasohol in 1978.

                                       CFC  Uses  and  Essentiality

         Subsequently, in a  report  to the Environmental  Protec-
tion Agency (EPA), on the economic implications  of CFC  emissions,
Rand Corporation  [Rand,  1980]  estimated  the 1990 energy  penalty
for  avoiding  CFC  use just  in  insulating  foam at 6.4  billion
gallons, or twice that estimated by  Battelle,  possibly  reflecting
the conservative assumptions used throughout  the Battelle  study.

     3.   Specific Applications

         a.  Refrigeration and Automotive Air-Conditioning

         Ammonia  or  propane  were  selected  as  the  non-CFC
alternatives  with  least energy  penalty.    In  each   instance,
complete redesign of  equipment  is necessary:    heavier  equipment
is needed  for  the higher pressures,  and special design  consid-
erations  must   avoid  otherwise  unacceptable  toxicological  and
flammability hazards to  building or  vehicle occupants.

         Air cycle  and  absorption systems were disqualified  due
to even greater potential energy penalties.

         The non-CFC  alternatives may  prove  economically  imprac-
tical,  warned  Battelle,  even  if  the  energy  penalty  could  be

         b.  Insulating  Foams

         CFC-blown closed cell  foams  provide  the most  efficient
insulation  available  from today's  technology.   The low  thermal
conductivity of  the  trapped CFC vapor  in  the foam  yields  an
insulation about twice as efficient as non-CFC  alternatives,  for
instance  fiberglass,  for a  given  thickness.    Foams  blown  with
alternative blowing agents such  as  pentane or carbon dioxide  may
be comparable in appearance,  but not in insulating performance.

                                      CFC Uses and Essentiality
         c.   Liquid Food  Freezing

         Certain delicate foods, for  instance shrimp and berries,
are too fragile for normal air blast freezing and must be frozen
by direct contact with  liquid  CFC-12  or cryogenically with liquid
carbon dioxide or  liquid nitrogen.  Since the CFC-12 freezant is
efficiently  recycled,  substantial  energy savings accrue compared
with the cryogenic  alternatives.   Although  liquid  freezing  is a
minor application  for  CFC-12,  it  too  plays  its part  in energy
conservation due to CFC  use.

     4.   U.S.  Department  of  Energy Standards

         In  June  of  1980,  the U.S.  Department  of  Energy (DOE),
responding  to an act of Congress  (PL 95-619), published proposed
rules  [45   Federal  Register  43976-44086]  setting   forth  energy
efficiency  standards  for  nine  household  appliances.    These
standards which will become final in February  of 1981, necessi-
tate improved insulation efficiencies,  as well  as other changes.
Specifically,  DOE  states   that  replacement  of   fiberglass
insulation  with  polyurethane foam  is "cost-effective"  and
"technically  feasible"   in  freezers  and refrigerators;  design
option No.  1 states:
         "Fiberglass  insulation  is  replaced with  polyurethane
         foam insulation.   Since polyurethane foam has a thermal
         conductivity of about one-half that of fiberglass, this
         option greatly reduces cabinet heat leak."   [DOE, 1980,
         p.  C-2] .
For hot water heaters, DOE's  No.  1  option  is:

                                      CFC Uses and Essentiality
         Improved insulation  -  Improved  insulation involves using
         thicker   fiberglass  insulation,  denser   fiberglass
         insulation,  or substituting  polyurethane foam insulation
         for fiberglass.   This  option may  require changing jacket
         sizes."   [DOE, 1980, p.  C-6].

         As stated earlier, CFC-11  is the  only blowing agent used
in producing insulating polyurethane  foams.

         Some  10-15%  of refrigerators,  10%  of  freezers  and

essentially all  hot  water heaters  presently  being  manufactured
use fiberglass insulation,  so conversions  will be necessary.

         In  its  accompanying  Environmental  Assessment  Document

DOE concludes:

         "An increase in the  use  of chlorofluorocarbons  (CFCs) is
         expected as  manufacturers  seek  to improve the insulating
         characteristics of  refrigerators, refrigerator-freezers,
         freezers and water heaters.  Compared to projected U.S.
         consumption  of  CFCs  in 1990,  however,  these  increases
         are expected  to  be  small,  representing  less  than 4% of
         projected U.S.  consumption of  CFCs in  1990."   [DOE,
         1980, p. S-4].

         While the  4%  figure  cited  above,  of  itself,  is  not
large,  it  constitutes  another  specific  instance  of  an  upward

pressure on CFC  demand which has not been taken  into  account by
EPA in  its proposed  production  cap.   Furthermore,  it creates a

classic "Catch 22" situation, wherein one  Federal regulation runs
head-on  into  another,  with  business  firms  caught  right  in


                                       CFC  Uses  and  Essentiality

         Six major chlorof luorocarbons  (CFCs)  are  manufactured  in
commercial quantity in the United States:

              CFC-11              (CC13F)
              CFC-12              (CC12F2)
              CFC-22              (CHC1F2)
              CFC-113             (C2C13F3)
              CFC-114             (C2C12F4)
              CFC-115             (C2C1F5)

         These compounds play an important  role  in the  welfare  of
society and  in  the national economy.   The  most common CFC  uses

         •   The  heat  transfer  fluid  in  residential and  almost
             all commercial refrigeration  and  air-conditioning.

         •   The heat transfer fluid in all automobile  and  truck

         •   The foaming agent used to  manufacture plastic  foams,
             used   for   thermal   insulation,  cushioning  and
             Cleaning agents for precision electronic and  mechan-
             ical equipment, and also for  military hardware.

             Fire and  explosion suppressant for  sterilizing  gas
             in hospital and industrial  uses.
         •   Liquid food freezant.

         •   Intermediate for f luoropolymer production


                                       CFC Uses and Essentiality
         An  approximate  distribution  of  total  1979  U.S.   CFC
production by end use follows:
(Million Pounds)
Percent of total
U.S. Production
Refrigeration and
 Ai r-Cond it ioning

Auto Air-Conditioning


Blowing Agent for
 Polyurethane Rigid Foam      75

Blowing Agent for
 Polyurethane Flexible Foam   50
Blowing Agent for
 Other Foams

Liquid Food Freezant

Sterilant Gas
Other (Miscellaneous
 Uses, Export and Use as
 Chemical Intermediate)

                                       CFC Uses and Essentiality
         CFCs are ideal for these uses because they have a unique
combination of  physical  and  chemical properties.   These  proper-
ties result  in  very important  benefits,  including high  safety-
in-use, low energy  consumption  and  high  compatibility  with other

         Because the uses are dependent upon the specific  proper-
ties of the  individual CFC employed,  the  compounds generally are
not interchangeable among applications.

         Unlike the  case  with  CFC aerosol  propellants, the  uses
of  CFCs  currently  at  issue  generally cannot  be  replaced  with
other  compounds  or processes  without creating severe  and often
unacceptable tradeoffs.  The  most important limitations of avail-
able alternatives are  toxicity,  flammability,  energy  efficiency,
performance and,  of course,  economics.   Consequently,  any deli-
beration on the need for, and degree of,  potential restriction of
CFCs  should be  undertaken  in  the  context  of  their  critical
importance  and  the  problems  which  would  be  created  by  their


      A.   INTRODUCTION                                     2

      B.   AUTHORITY TO REGULATE                            4


      D.   RULEMAKING PROCEDURES                           29

      E.   CONCLUSION                                      45
                             III -  1

                                                     Legal Issues


          In the October 7, 1980  Federal  Register,  EPA published
an Advance  Notice  of Proposed  Rulemaking (ANPR) to  outline its
regulatory  thinking  and  to  solicit  comment  on  the  various
approaches to regulation of non-aerosol uses of CFCs.  To support
its current initiative against CFCs,  EPA  is  relying upon reports
prepared  in 1979  by  the  National  Academy  of  Sciences   [NAS,
1979a;  1979b] .   No  studies  more  recent  than  the  1979  NAS re-
ports are  cited  by the Agency  or listed  as supportive  of EPA's
action.   EPA's  ANPR indicates  that  the CFC regulations  will be
promulgated under  the  authority of Section 157  of  the Clean Air
Act   (42  U.S.C.   §7450-7459),   unless  the  Administrator  deter-
mines that  it  would be in  the  public  interest  to  proceed under
Section  6(c)   (1)   and  Section   9(b)   of  the  Toxic  Substances
Control Act (TSCA) (15 U.S.C. §2601).

          This  regulatory  effort   by  EPA  raises  matters  of
serious  concern  to  Du  Pont.   This  portion of our  comments is
divided  into three different  sections.  In the first section, we
question  the  Agency's  legal  authority to proceed  with further
regulation  of  CFCs.   Specifically, we  question whether  there is
an  adequate scientific  basis  to  regulate  and whether  EPA has
sufficiently considered  all  of  the  scientific  evidence before
moving  ahead  with regulation.   In  the second  section,  we share
with  the Agency some of our  concerns and  perceived problems  with
the  Agency's  preference for  economic  incentives  regulation, or
more  accurately,   economic  disincentives  regulation.   We point
out areas where the  Agency's  legal  authority is questionable and
areas where it  appears  as though its  analysis  has  not been  very
carefully  thought  out.   We  also  discuss some  very  complicated
questions  related  to the  economic  and  competitive  impact of the
economic  disincentives  regulation  outlined by the  Agency.   In
the  third  section, we outline  for  the Agency  the  procedures it
must  follow before proposing  a formal  rule.   Both  the Clean Air
                              III - 2

                                                     Legal Issues

Act  and  TSCA  impose   upon  EPA  the  requirement  to  set   up  a
rulemaking  docket.   In  addition,  there  are  certain  further
scientific  studies which  EPA  must  conduct  before  proposing  a
rule.   And,  there  are  considerable  economic   impact  analyses
which must  be performed  before proposing a  rule.  Particularly
if  EPA  goes  forward   with  economic  disincentives  regulation,
these economic  impact  analyses become very  important.   For  that
reason, they must  be extensive  and they must be complete.
                              Ill - 3

                                                     Legal Issues


      1.  Findings to Support Regulation May Not Be Made

          In its ANPR,  EPA singled out two  statutes  under  which
it could proceed  should it determine that  further  regulation of
CFCs at this time is  desirable.   One  is  Section 157 of  the  Clean
Air  Act,   as   amended  (42  U.S.C.  §7450-7459).   The  other  is
Section 6(c)(l)  of  the  Toxic  Substances  Control Act  (TSCA). (15
U.S.C. §2601 e_t seg.).

          Section  157(b)  of   the Clean  Air  Act  provides,  in
pertinent part:
              [A]fter   consideration   of   the   research   and
          study  under  Sections   [153  and  154]  of  this  title,
          ...  the Administrator  shall  propose  regulations  for
          the  control  of  any  substance,  practice,  process  or
          activity  (or  any  combination  thereof) which  in  his
          judgment may  reasonably be  anticipated to affect  the
          stratosphere, especially ozone  in the stratosphere, if
          such  effect  on the  stratosphere  may  reasonably  be
          anticipated to endanger public health or welfare.
It  would  appear,  therefore,  that  once  the  requisite  studies
under Sections  153 and 154 have been completed,  and  the results
analyzed,  EPA  may  regulate  CFCs  under  157 (b)  jj:  CFCs  may
reasonably  be   anticipated  to affect  the ozone  in  the  strato-
sphere,  and if^ such  effect may  reasonably  be anticipated  to
endanger public health or welfare.

          On the  other hand, Section  6 (a) of TSCA provides,  in
pertinent part:

              If   the   Administrator  finds   that   there   is   a
          reasonable  basis  to   conclude  that  the  manufacture,
          process, distribution  in  commerce,  use, or disposal  of
          a  chemical   substance   or   mixture,   or   that   any
          combination  of   such   activities,   presents  or  will
                              III  - 4

                                                     Legal Issues

          present  an  unreasonable  risk  of  injury  to  health  or
          the  environment,  the  Administrator  shall  [regulate
          such chemical substance or mixture].
Thus,  under  TSCA,  the  Administrator  has  authority  to regulate
CFCs,  if CFCs  now present an unreasonable risk of  injury,  or  if
they definitely  will  present an  unreasonable  risk of  injury  to
health or the  environment.   This finding  is to  be  distinguished
from the "may present an  unreasonable  risk"  finding necessary to
support testing under Section 4  of  TSCA.   Whereas,  EPA need only
find that a  chemical may  present  an unreasonable  risk to subject
it  to  testing   requirements,  it  must  find  that  a  chemical
actually  does  or  will  present  an  unreasonable  risk  before
subjecting it to  a control regulation.

          As shall be demonstrated below, it is clear that, given
the  available scientific evidence,  the  findings  necessary  to
support  further   CFC  regulation under  either  Section  157(b)  of
the Clean Air Act, or Section 6 of TSCA, may not be made.

          Knowledge  of  the   stratosphere  is  a  science   in  its
infancy.  Although much already  is  known  about the  chemistry and
physics of  the  stratosphere,  and new results  are  being added at
a  rapid  pace, much work  remains to be  done.   As  a  result,  any
study  of  the stratosphere must  not be viewed  as  the  "last word"
on  stratospheric  knowledge.   Rather,  it must  be  viewed as   a
"snapshot"  —  a   freezing of  the  stratosphere  and  what is known
about  it when  the study was conducted.^

          The  NAS  report of November,  1979  [NAS,  1979a] ,  was
such  a  snapshot.  Regardless   of  the  validity  of   criticisms
leveled  against   the  report  upon  its  release  (overstatement  of
conclusions,  under-estimates of  uncertainties, missing  chemis-
try) ,  the  fact remains  there  have been  significant  advances  in
the  science since  publication  of  the  report  —  advances which
throw  into   further  question the  utility of  the  NAS  report  in
                              III  - 5

                                                     Legal Issues

supporting a  regulatory  determination.   As  an example,  recent
studies of  the reaction  of  key  chemical  species  indicate  that
the predictions of  future ozone  depletion  made by  the  NAS  were
overstated by at least a factor of two.

          Another  consideration  is the  computer models  used  in
an  attempt   to simulate  the  atmosphere  and   to  calculate  the
future ozone  depletion  numbers.   It  should  be  emphasized  that
the models  employed by  the  NAS,  and  relied on to this  day  by
EPA,  are  simplified  (one-dimensional)  mathematical  representa-
tions.  Similar models were used to predict damage to the strato-
sphere from  SST aircraft.   Such predictions were  proved  to  be
wrong based on subsequent scientific information.

          A one-dimensional model was  also used by  the research
team  employed  by  the United  Kingdom's Department of  the Envir-
onment in  its  assessment of  the  issue —  an  assessment roughly
concurrent with  the NAS  effort.   In  the  UK report  the authors

          "These  findings,  together  with  other  discrepancies
      between  model  calculations  and  measurements  bring  into
      question  the   validity   of  the  models  presently  used  to
      predict ozone perturbations." [UK DOE, 1979, p.5]

          A comparison of  some of the principle findings of the
November,  1979 National Academy of  Science's  report  and  the
October,  1979  United  Kingdom  Department  of   the  Environment's
report appears as Appendix D.

          More recently  (June,  1980) ,  a  report   by the Commission
of  the European Economic Community  (EEC) concluded in part:

          "As  they  [the  models]  are  simplified,  they  cannot
      fully  describe  the behavior  of  the  atmosphere  and  its
      minority constituent parts."  [EEC, 1980,  p.8]
                              III - 6

                                                      Legal  Issues

          We  further  note that  at  a  recent  (September,   1980)
 meeting  between  EPA,  EPA's scientific consultants  and representa-
 tives  from  the  industry  scientific research  program,  EPA  was
 warned  against  placing  too much reliance  on  the predictions  of
 the  one-dimensional models  and  using these  predictions to  make
 regulatory  decisions.

           In   the   past  year   advances   have   been   made  toward
 developing  more  sophisticated   two-dimensional   models.   These
 models  more  accurately represent  the  conditions found in  the
 real  atmosphere.   The  NAS report  suggested  that   some of  the
 known   discrepancies  between  the   one-dimensional   models  and
'atmospheric measurements  would  be  eliminated  by  two-dimensional
 models.   However,  this has  not  been  the  case.  Discrepancies
 remain.    EPA   should   exercise   extreme  caution   when  basing
 regulatory  decisions  on  models  known  to  be  incomplete and  at
 variance with   actual  measurements.   (These  discrepancies  are
 discussed  in  more detail  in  Section  IV  -  The  Science and  in
 Appendix E).

           These  recent changes  in  the  chemistry, and continuing
 discrepancies between models  and measurements, provide  evidence
 that  the theory of depletion  of  stratospheric  ozone  by  CFCs has
 not  been  proved.   The  changes   and  discrepancies also  indicate
 that  there  is  substantial uncertainity surrounding  the  whole
 issue of the  reliability of computer models as  predictive tools.

           A  further  problem  is  that  EPA  has  not   founded  its
 regulation  upon actual  measurements of  the stratosphere.   It is
 clear  that Congress  intended  that any regulation promulgated be
 designed to  protect  the  over-all  stratospheric  ozone,  and that
 the  regulation  be based  upon actual measurements  of  the  ozone
 layer.   in fact, it directed the Administrator  to:
                               III -  7

                                                     Legal Issues

      rely  upon  reputable  scientific  and   medical   data  and
      measurements from  both  the laboratory  and the  field (see
      H.  Rep.  No.  94-575, 94th Cong., 2nd Sess.,  part 1 at 14)
before proposing regulations.

          Industry and  its  contractors have  for some  time  been
analyzing the measurements of stratospheric ozone  taken over the
past twenty years.  This statistical  and  analytical technique is
commonly  known  as "ozone  time-trend  analysis"  or  "ozone  trend
analysis".  This  technique,  sensitive  to an  approximate  change
of + 1  to + 1.5 percent ozone  concentration  over  a  period  of a
decade,  has  detected  no  ozone  depletion.    EPA's  rejection  of
these results,  while  failing to provide  any  countering analysis
of its own, is  in  direct conflict  with Congress1 intent that the
scientific  basis  for  CFC regulation  be  predicated  on reputable
measurements from the field.

          The above arguments illustrate  the uncertain  scientific
basis of  EPA's  regulatory decision-making.  As  will be shown, it
is clear  that substantial uncertainties  remain in the  scientific
theory.   The  computer models  used by  EPA  have too  much  uncer-
tainty associated  with their calculations to  make  them reliable
predictors  of actual  ozone  depletion.   (A more detailed discus-
sion of  the scientific uncertainties surrounding  ozone  and  the
1  Time-trend  analyses  of   ozone  measurements   are   being  per-
formed by a  number  of  independent  groups.   The studies and their
results are  discussed  in detail in Section IV  and Appendix E.
   These  results  show that  there  has been a  slight  increase  in
average ozone  levels  over  the last  ten years.  The  95 percent
confidence   limits  of  these  analyses  are   approximately  +   1
percent  to  +  1.5  percent.   In  other  words,  with   95  percent
confidence,  a  decrease or  increase in ozone of  1 to  1.5 percent
over  a  decade  can  be  detected by  these analyses.  The  range  of
sensitivity, i.e.,  the limits of  the ability  to detect  a change
in  ozone,   reflect  the  slightly  different  results  from  the
applicable individual  studies.
                              Ill - 8

                                                     Legal Issues

impact of CFCs on  stratospheric  ozone  is  presented  in Section IV
and Appendices E and F).

          Moreover,  CFCs  are  extremely  useful  chemicals.   They
are noncorrosive,  nonflammable,  virtually  nontoxic  and they have
a  unique  combination of  properties  which  make  them  ideally
suited for use in  a  wide variety of  products  and processes.  For
these reasons, they  touch  the life of every  American.  They are
used  in  food  freezing,  food  transportation  and  storage,  home,
commercial  and  vehicle  cooling,  furniture,  packaging,  insula-
tion, cleaning of precision components and fire  retarding.

          It  is  apparent,  therefore,  that the findings necessary
to support  regulation  under  Section  157(b) of the  Clean Air Act
or  Section  6 of  TSCA,   may  not be  made.   A  summary of  the
evidence shows that:

          a.  The  computer   models   used  by   EPA  to  predict
depletion have too many uncertainties  associated with them to be
reliable  predictors.  Recent  developments   in   many  scientific
areas  throw  into  question the  computer   models'  data  base  and
conclusions drawn  from it.  There is  simply  too much  uncertainty
for the requisite  finding of Section 157 or Section 6  to be made.

          b.  The  availability  of  analysis  of actual  strato-
spheric  ozone measurements  (ozone  trend  analysis)  provides  an
early warning system which would,  if the results  so indicated,
give  EPA  the information  necessary  to proceed  with   regulation.
EPA  has   not  considered  the   ozone  trend  analysis  results,  in
direct  contravention  with  its   statutory mandate   to  consider
ozone measurements.   (See  Section IV  and  Appendix E  for  a more
detailed   discussion   of   ozone   trend    analysis   and   its
                              Ill  -

                                                      Legal  Issues

          c.  The  evidence   that  increased  solar   ultraviolet
radiation —  should  ozone depletion occur  as predicted --  would
cause harm  to human health  or  the environment  is too  uncertain
to  make  conclusive  inferences.   (See  Section  V  and Appendix  F
for a  more  detailed  discussion  of  the effects  of   solar  ultra-
violet  radiation).   Again,  there  is   too  much  uncertainity  to
declare conclusively  that CFCs may  reasonably  be anticipated  to
endanger  public  health  or  welfare,  or  that  CFCs  present  an
unreasonable  risk to health  or  the environment.

          Thus,  EPA is  without  statutory   authority to proceed
with this rulemaking.

      2.  International Concerns

          EPA's  expressed  intent  witn  respect to  exports is  that
exports will  be  subject  to the  conditions  of  regulation  under
the proposed  rule.   Under  Section  12(a)   of TSCA,   EPA may  not
regulate  chemicals  which  are  manufactured  for  export  from  the
United States.   The only  exception  to  this rule is if the  EPA
can find  that the chemical  will  present  an unreasonable risk  of
injury to health within  the  United States,  or to  the environment
of  the United States.   Accordingly,  before  EPA may   regulate  CFC
exports it  must take  an  affirmative  finding  that these exports
present an  unreasonable risk of  injury to health  or   the  environ-
ment in the United States.

          The   issue   of   exports cannot   be  considered   in  a
vacuum.   It  bears  more  broadly  on   the  overall  issue  of  the
international   concern  surrounding   ozone   depletion   and   CFC
regulation.   Ozone  depletion,  if it  occurs,  is   truly  an  inter-
national  problem.   CFC   emissions  anywhere  around  the   world
contribute  equally  to the  potential  for ozone depletion.   This
ozone depletion in  turn would  affect  all areas of the globe.   As
a  result, to  be effective in reducing potential  ozone depletion,
                              III  -  10

                                                     Legal  issues

CFC  regulation  must  be  international  in  scope.  For  reasons
outlined below,  EPA's  unilateral action in  the  United States  is
unlawful under  the Clean  Air  Act,  TSCA and general principles  of
administrative  law.    (Non-legal  aspects   of  the international
character of this issue are taken up  in Section VI).

          Congress recognized the  international   significance  of
the  stratosphere and  ozone  when   it  passed  the  Clean  Air Act
amendments.    Section   156   of  the   Amendments  reflects   this
Congressional  concern  and  provides  that  EPA  and the President
must   "develop   [international]   standards   and    regulations
which  protect  the stratosphere."   It is  thus  apparent that EPA
should regulate  CFCs in  this  country  only  when the international
consensus   and  basis   for   regulation   is   established.    The
requirement   that   regulation   to   limit  ozone   depletion   be
internationally  based  is  corroborated in the legislative history
of the Clean Air Act:
          In view  of  the  worldwide impact of any ozone  depletion
      and  the  fact that  half of  the world's  halocarbon use  is
      outside   the  United   States,   research  efforts   must   be
      established  and a  base  established  for  international  or
      regional  regulation,   if  it becomes  necessary.   (emphasis
      added) Sen.  Rep.  No.   95-127,  95th Cong.,  1st  Sess.  at  64
          In addition,  it  is  questionable whether the Agency  has
the  authority  to promulgate  regulations which  have  as much,  if
not more, benefit  abroad as they do in  the United States,  yet at
the  same  time  force  the United States  industry to shoulder  the
entire  burden   of   regulation.    That   is,   it  is   questionable
whether,  in  the  absence of international consensus  and  agreement
on  regulatory  steps,  TSCA or  the Clean Air  Act  gives EPA  the
authority  to promulgate a  regulation  whose potential  benefit is
only  minimally  aimed   at  protecting  U.S.  citizens  but  whose
burden  will  fall entirely  on  U.S.  citizens.
                              Ill - 11

                                                     Legal  issues

          Furthermore, promulgating  regulations  in  this country
(under  the  pertinent  sections  of  TSCA  or  the  Clean  Air Act)
which are designed  to stimulate  action  by other  nations  is  not
valid  regulatory action.   The  regulations  must  have  as   their
purpose and effect  the  protection of  humans  and the  environment
against unreasonable  risk.   This is  required by the  legislative
history of the Clean Air Act:

      [CFC  regulation  must]  be  necessary   to  assure  protec-
      tion  for  health  and   the  environment  and  to  protect  the
      stratosphere.  H. Rep.  No.  95-29,  95th  Cong.,  1st  Sess.  at
      102, n.  2.

          Courts  construing  other   environmental   and   health
statutes  have  come  to  similar  conclusions regarding  an admini-
strative  agency's  authority  to regulate  absent  a  showing   of
substantial or  significant   risk,  and absent  a  showing  tnat  the
proposed  regulation is reasonably  necessary  to  protect against
the risk.   In  Industrial  Union  Department, AFL-CIO,  et. al. ,  v.
American  Petroleum  Institute, et. al.  48 U.S.L.W.  5022, 	US	
,   (June  24,  1980)  (hereinafter  cited as  the Benzene case),  the
Supreme  Court  held  that  the  Occupational   Safety   and  Health
Administration  (OSHA)   is  required  to  find   that  a   significant
risk  to  worker  health  exists  before  promulgating   a  standard
seeking  to  reduce  the  risk, and  that  the standard  will  indeed
reduce  the  risk to acceptable  levels.  At issue  in  Benzene  was
the  interpretation  of  Section 3(8)   and 6(b)(5)  of  the Occupa-
tional  Safety  and  Health  Act.   Section 3(8) permitted  OSHA  to
promulgate  standards  that  are  "reasonably  necessary  or  appro-
priate to provide safe or healthful employment."  OSHA attempted,
under  Section   3(8),  to lower  the workplace exposure  threshold
limit value  (TLV)  for benzene from 10 ppm to 1 ppm.  Nowhere in
the rule-making  record  was  there an  explicit finding that expo-
sure  to  10 ppm  benzene  presented a significant risk   to human
healtn, and likewise  there  was not a  finding  that a new  standard
                              111  -  12

                                                     Legal Issues

at 1 ppm  was  reasonably necessary to protect  against  a signifi-

cant risk.  In striking down OSHA's standard, the Court said:

      We   agree   ...   that   [Section]   3(8)    requires   [OSHA]
      to  find,  as  a threshold  matter,  that the  toxic substance
      in  question poses  a  significant risk  in  the  workplace and
      that  a  new,  lower   standard   is   therefore   'reasonably
      necessary  or   appropriate  to   provide safe  or  healthful
      employment  and  places  of  employment'   ...  Congress  in-
      tended,   at    a    bare   minimum,   that    [OSHA]   find   a
      significant risk  of  harm and  therefore  a probability  of
      significant benefits  before  establishing a  new standard.
      48 U.S.L.W. at 5024 (1980).
          In  Aqua  Slide   'n'  Dive  v.  Consumer  Product  Safety

Commission,  569  F.2d  831  (5th Cir.  1978),  the Fifth  Circuit

Court  of   Appeals  held   that   the  Consumer   Product   Safety

Commission  (the  Commission)  was  required  to show  substantial

risk  and  protection  against  the  risk  before regulating  under
Section 9 of  the  Consumer Product Safety  Act  (CPSA).   Section 9
of the CPSA requires a  finding  that  a new standard or regulation

be "reasonably  necessary  to eliminate or  reduce  an  unreasonable
risk  of   injury"   before  the  Commission  may   promulgate  a  new

regulatory  standard.   The  Commission  had   sought  to  require
manufacturers  of   swimming   pool  sliding  boards   to  post  signs

around the boards  warning of possible  harm from improper  sliding
into  pools.   Plaintiff  sued,   claiming  that  the warning  signs

were  not,  under Section 9  of  the CPSA,  reasonably  necessary to
protect  against  an ostensible  unreasonable   risk.   The  court
agreed with the plaintiff,  holding:

          In   evaluating    the   'reasonable   necessity1   for  a
      standard, the  Commission has a  duty to  take a  hard look,
      not only  at the  nature and severity  of  the risk,  but  also
      at  the   potential  the   standard   has  for  reducing  the
      severity  or  frequency of the injury....
      569 F. 2d at 844.

           'Of  course,  no  standard would  be  expected  to impose
      added costs or inconvenience to the consumer  unless there
      is  reasonable  assurance  that the  frequency or  severity of
                             III - 13

                                                     Legal Issues

      injuries  or  illnesses  will  be  reduced.1  Id.,  at   839
      (citing  H.R.  Rep.  No.  1153,  92nd  Cong.,  2nd  Sess.,   33
As  with  the  Aqua  Slide  situation,  the  EPA  admits  that   the
proposed  CFC  regulations  will  have  little or  no environmental
benefit (45 Federal Register 66729).

          3.  Scope of Proposed Regulation

          The  ANPR states  that  the  regulation  will  cover   all
chemicals with the following general  formula:

              CnC1xFyH2n + 2-x-y

where  x  and  y  are  each  greater  than   zero  (0) .   (45 Federal
Register  66728)  .   Under  this   general   formula,  EPA  plans   to
include all  alkanes  that contain  at least  one  chlorine and  one
fluorine  atom.  The  proposed  formula  is   too  broad  for  three
reasons:  (1)  it  includes  many  CFCs  which,  were ozone  depletion
to occur  as  predicted, are  considered part of  the solution  and
not  the  problem;  (2)   it  excludes  some  non-CFC  compounds  which,
were  ozone  depletion  to  occur  as  predicted,  are  greater con-
tributors to  stratospheric chlorine  than many CFCs;  and  (3)   it
includes  even  high molecular weight  polymeric  compounds with  no
potential for CFC emissions.
          The NAS  report on  the  science of  the ozone  depletion
theory  [NAS,   1979a]  was  limited  to the  study  of  CFC-11   and
CFC-12  and  reached no  supportable conclusions  on  the  potential
effect  on  the  ozone   of  other  CFCs.   In  fact,  none of   the
assessments  of  potential  future   stratospheric  ozone  depletion
has  included  any  CFCs except  CFC-11 and  CFC-12.  Furthermore,
CFC-113,  CFC-114,  and CFC-115,  all  included  under the  Agency's
proposed  regulatory  formula, have  never  been studied  thoroughly
opposite  their potential  for stratospheric ozone  depletion.   And
                              III  -  14

                                                     Legal Issues

CFC-22  has  been  given  only a  cursory  examination.   This  was
acknowledged  by  EPA  in  the  ANPR  (45  Federal Register  66728) .
The Agency stated:

          "NAS  also briefly  considered  CFC-22  (chlorodifluoro-
      methane) but  excluded it from  analysis  because as  a  par-
      tially  halogenated compound,  its  likelihood of  reaching
      the  stratosphere  before  dissociating  is much  less  than
      that  of fully  halogenated  compounds."   (emphasis  added).
      45 Federal Register 66728.
          Not  only  is  there  little  or  no  evidence  to  support
including all  CFCs  in a  regulatory  formula,  but  by  so attempt-
ing,  the  Agency  will hinder  and possibly  stop  altogether  the
development  of potential alternatives  to  those  commercial  CFCs
theorized  to  create  the greatest  risk.   For   example,  CFC-22,
CFC-141b  and  CFC-142b  all   show promise  as   replacements  for
CFC-11  and  CFC-12 in  refrigeration  equipment and  blowing  agent
applications.   Due  to  a different  chemical   structure,  these
three compounds  all   show less  calculated  potential  than CFC-11
and  CFC-12  for  stratospheric   ozone  depletion.   However,  by
including  these  in   the  regulatory  scheme,  EPA will  severely
reduce  incentives  for  conducting   the  design   and  development
necessary to make those chemicals viable  alternatives to CFC-11
and CFC-12.   So  long  as the  potential  alternatives  are included
in  the  cap  proposal,  users  will   be  extremely  reluctant  to
convert  to  their use lest  those  chemicals be more  severely
restricted  in  the future.  (See  Section VIII and Appendix  B for
a  more  detailed  discussion  of the  research  and  development  of
CFC alternatives).

          The  second   problem  with  EPA's  regulatory  formula  is
that  it  excludes  some  non-CFC  compounds  which,  were  ozone
depletion  to  occur   as  predicted,  are  greater   contributors  to
stratospheric  chlorine,  and  hence   potential   ozone  depletion,
than many CFCs.   A good example of this is methyl chloroform.
                             Ill - 15

                                                     Legal Issues

          With the  molecular  formula, CH3 CC1,   (1,1,1-trichloro-
ethane), methyl  chloroform does  not  fit  within EPA's  proposed
formula.   Yet under  a  true  application  of   the  permit  pound
concept  (see  Appendix  G  for  a  detailed  discussion  of  the
relative  ranking  of  compounds by  their  potential  for  strato-
spheric  ozone depletion  — the  permit  pound   concept),  methyl
chloroform  is a  greater  potential  ozone  depletor  than  CFC-22.
The NAS recognized this:

          "Atmospheric measurements  indicate  that methyl chloro-
      form  is contributing  between  a quarter and a half  as many
      chlorine  atoms  to  the   stratosphere  as   are  CFC-11  and
      CFC-12.  If  it gains increased  usage as  a substitute for
      other  solvents in  degreasing  and  coating operations,  it
      may   well  become   the   largest  source  of  stratospheric
      chlorine."  [NAS, 1979b, p. 45]
          Moreover,  information   on   the  potential  effect  of
methyl  chloroform on  stratospheric ozone  is available  from an
EPA  sponsored  conference   [EPA,   1980b]  specifically  on   this

          The  third problem with  EPA's  regulatory  formula is
that  it  includes  even high  molecular  weight polymeric compounds
if  they  contain  any trace  of chlorine  (as  defined,  x  >0 and n
is  unlimited),  e.g.,  fluoropolymers.   This  is  true  even though
such materials have no potential for CFC  emissions.

          Accordingly,  the  formula  proposed  by  EPA for   this
regulation  is  so  broad  that   its  proposal  would   exceed   the
Agency's statutory  authority.   (The question of  regulatory scope
is  taken up in more detail  in Appendix  H).

          4.  Regulatory Focus

          In  the  ANPR EPA  states that  the  problem  associated
with  CFCs results from their emissions into the  lower  atmosphere
                              III  -  16

                                                     Legal  Issues

which eventually make  their  way to  the  stratosphere  (45 Federal
Register  66726).   As such,  any control  features  implemented  by
the Agency  must  be designed  to eliminate or  reduce  in some  way
CFC emissions.   However, lacking  from the  ANPR's  discussion  is
any consideration  of  those  CFCs  which,  although  manufactured,
are never emitted  into  the  atmosphere.  The most notable example
of this  is  that portion  of  CFC-22 production  used  as a monomer
intermediate   in   the  manufacture   of   fluoropolymers.    These
polymers  have  a  variety  of   beneficial   uses.    (See  Section
II-J).  Because the monomeric CFC  used in their manufacture  does
not result  in  any  emission, EPA is  without authority  to include
this use of CFC-22 in any regulation.

          By including CFCs  used as  monomers in a proposed  rule,
EPA will  have greatly  magnified  the  impact  of  the  regulation.
Not only  will  the CFC   using  and  producing   industries  be  im-
pacted, but  also  the fluoropolymers  industries — manufacturers
and users.   Thus,  the Agency's  regulation  will impact the  paint
industry  (where  fluoropolymers are   used  as  dispersants) ,  the
coating  industry  (where  fluoropolymers   are  used   as  coating
insulation   for  wire  and  for  plumber's   tape),   the cookware
industry,  the  hardware   and  tools  industry,  the   industrial
fabrics  industry,   and   a host  of  other  industries  where  the
unique  characterisitics   of   fluoropolymers   provide   excellent
products.   Hence,  EPA  must  exclude  from  regulation   those  CFCs
which are used as monomers in  the  manufacture  of fluoropolymers.
                             Ill - 17

                                                      Legal  Issues


          In  the  ANPR,  EPA  discusses  several  control options
available  to it  for regulating  CFCs.   Several  are  traditional
"mandatory   control"  options   which  include   technology-based
controls, as  for  example,  the recovery and  recycle of  CFCs  from
flexible  urethane or  rigid  non-urethane foam  production  using
carbon  absorption techniques,  performance  standards  on solvent
degreasing equipment, conversion  to CFC-502  in retail  food  store
refrigeration and the use of CFC-22 or  helium as  a test gas  in
refrigeration  equipment   manufacture.   Other  control options
considered are  selected  product bans  and a  use ceiling combined
with a  significant new use rule  (SNUR).

          The  Agency  also  discussed  what   it   calls   "economic
incentives regulation".  And  it is  clear  from  the  ANPR and  from
subsequent discussions  with Agency  personnel that  some form  of
economic  incentives  regulation  is  the preferred mode for further
CFC regulation.

          Economic incentives  regulation, or more  appropriately,
economic  disincentives   regulation,  would function  by  directly
restricting CFC production.   The  restriction of production  would
come via  some sort of "cap"  on  manufacture or on use.   As  demand
for CFCs  outstrips  the  available supply,  the  price of  CFCs  will
rise.   As the price  rises, firms must decide  whether to pay  the
higher  price of CFCs, to switch to  a less attractive alternative,
to  better  conserve  CFCs  during use,  or, barring  ability  to  do
any of  these,  to go out  of  business.  According  to the Agency,
it  is the forced  use of these control  options which may be  avail-
able  to companies which makes  economic  disincentives  regulation
so  attractive.   (45  Federal Register 66730).

          However, there  are very  serious problems attendant  to
using  economic  disincentives  regulation.    (These  problems  are
                              III  -  18

                                                      Legal  Issues

discussed  in  detail  in  Section VII  and Appendix  I) .   Below  we
discuss legal concerns with economic  disincentives  regulation:

      1.  There  is  questionable authority  under  TSCA for  EPA  to
          implement  such  regulations;   and  the  authority  under
          the Clean Air Act is  not at all clear or  unambiguous;

      2.  EPA  has  not  provided  direction  as to  how  it  would
          implement  such  a program  or  how  such  a  program  would
          operate   once   implemented.   We  foresee   significant
          equitable   and   implementation  issues  which   must   be
          addressed in such a program;

      3.  There  are very  complicated questions  relating to  the
          economic  and  competitive  impacts  of   the   proposals
          which  must  be  resolved before  EPA proposes  a  final

      1.  Authority

      Section  157 (b)  of   the  Clean  Air Act  authorizes  EPA  to
promulgate  "regulations  for the  control"  of  any  chemical  which
ostensibly may harm  the  ozone.   It  would appear,  therefore,  that
an economic disincentives  approach would be authorized  under  the
Clean Air  Act if  it  could be  considered  a "regulation for  the
control" of  CFCs.   However,  no  cases   have  been  decided  under
Section 157(b)  and  therefore we  have no judicial  interpretation
which would shed  any  light on  this  issue.   The relevant  legisla-
tive history, however, indicates  that Congress did not  intend  to
limit  EPA  to  traditional  mandatory   control   technology  when
implementing  regulations  to  protect the  stratosphere.   See  H.
Rep. No. 95-294, supra, at  102, n. 2.

          Under Section 6  of TSCA, once the requisite finding  of
unreasonable risk is  made  (which, as noted  above, cannot be  made
                             III - 19

                                                     Legal Issues

in  this  case) ,  EPA   may   then  choose   among   the  following
regulatory options:

      1.  A ban on manufacturing;
      2.  A limitation on the amount manufactured;
      3.  A ban or limitation on manufacture  of  the chemical for
          a particular use;
      4.  A  requirement  to  label  the  chemical  and  instruct
          customers of possible health hazards;
      5.  A  requirement that manufacturers maintain  records  of
          manufacture and process;
      6.  A prohibition on any method of use of the chemical;
      7.  A prohibition on any method of disposal; and
      8.  A  requirement   that   manufacturers  give   notice  to
          distributors  and  to  the public  of unreasonable  risk
          associated with the chemical.

          To  be   lawful,  any  economic  disincentives regulation
must fall under one  of  the  above eight categories.   In addition,
any regulatory  options under TSCA must be the  least burdensome
of  the  above   options,  but  the  option   shall   nonetheless  be
sufficient  to  "protect  adequately   against   such  [unreasonable

          Since economic  disincentives regulation is  essentially
a  limitation  on  the amount manufactured or  used,  a "cap"  could
conceivably  fall  under option  No.  2  or  No.  3  of  the  above
eight.   However,  the  cap,  as proposed  in  the  ANPR, is  also  a
quota.   Earlier draft bills of  TSCA  specifically authorized EPA
to  set  quotas  for   regulating  chemicals.   Significantly,  these
provisions  for  a  quota were deleted  from the final  bill.   TSCA,
therefore,  does not  provide  explicit  authority for EPA to impose
quotas,  and Congress1  deletion of the authorization for  a  quota
from  the final bill could mean  that  they did not intend  for  EPA
to have  the authority.
                              Ill -  20

                                                     Legal Issues

          It  is  interesting to  note  that  the  provision  in  the
Senate  bill  providing  for  the  establishment  of  quotas  was
removed at the recommendation of the EPA itself:
          Another  difficulty  we   have  with  [the  Senate  bill]
      concerns  the requirement  that  the Administrator  provide
      for  the  assignment  of  quotas  in  any  regulation  limiting
      the  amount  of   a  substance  which  may  be  manufactured,
      imported, or  distributed.   The mandatory requirement  of  a
      quota system would make  the  regulatory  process  vastly more
      cumbersome and difficult to administer.   Thus, we recommend
      that  the  quotaprovisionBedeleted.  The  act  already
      provides  that  when  it  is  necessary to adopt a  rule with
      respect  to  a  chemical  substance  to   protect  against  an
      unreasonable  risk,  the  Administrator  shall  select  the
      least  stringent  requirement  practicable,   consistent  with
      protection  of  health  and  the  environment.  In  our  view,
      restrictions  limiting  the  amount of  a  substance  that may
      be  manufactured  would  be  the most  stringent requirement,
      other  than  a total  ban, and  the  establishment  of  quotas
      would  seldom  be  necessary.   Nevertheless,  we  strongly
      recommend  against  becoming  involved  in the establishment
      of  quotas Tor  various manufacturers, even  in such limited
      situations.    (emphasis  added).LetterfromJohnRT
      Quarles,  Jr.,  Acting Administrator  of  EPA,  to  Sen.  Warren
      G. Magnuson, Chairman of the  Senate Committee on Commerce,
      June  23,  1975,   reprinted  in  BNA,   The  Legislative History
      of the Toxic Substances Control Act, at 367.
          Though  this  letter  from  Administrator  Quarles  was

referring  to TSCA,  its  rationale and  logic are  equally appli-
cable to EPA's  authority  under  the Clean Air Act.   A quota would
make  the  regulatory process  as cumbersome  and  difficult to ad-
minister under  the Clean  Air Act as  it would  under  TSCA.   And
the  recommendation against  becoming  involved in  the establish-

ment  of quotas under  TSCA  is equally  compelling  to   becoming

involved in  the establishment of quotas  under the Clean Air Act.

          Aside from  the  legal questions of  whether  EPA has the

authority  to implement economic  disincentives  regulation, there
are  other   very  serious   legal  problems  surrounding  the whole

concept  of  this  sort  of   regulation.   One such problem  is with

the  "permit  pound  concept"  as described  in  the ANPR.

                              Ill - 21

                                                     Legal Issues

          The permit  pound  concept involves a  complex  series of
calculations  designed to  establish  a  system  which  would allow
those  CFCs  considered  by  the  Agency  to  have  the  greatest
potential for ozone  depletion  to be more  heavily regulated  than
those  with   less  potential  for  depletion.   EPA's  calculations
allow  that   for  every pound  of  one CFC   (CFC-11)  that  can be
manufactured or used,  up to 5.6 pounds of  different  CFCs  may be
manufactured or  used.  The relative  ranking advanced  by  EPA is
correct.  However,  the absolute  values  assigned  by  EPA are in-
correct and  misleading as  to the relative  depletion potential of
the various  CFCs,  and reflect  the Agency's  basic lack  of knowl-
edge  about   the  ozone  depletion  potential  of  CFCs other   than
those  specifically  studied by  the NAS.   (See  Appendix G for  a
more detailed discussion of the  permit pound concept).

          As  noted  earlier, EPA is without  statutory   authority
to  regulate  CFCs  based  on   the  current   state of   scientific
knowledge.   And,  if  evidence  validating the  theory is  obtained,
EPA is  without  authority to regulate  any  CFC  other  than CFC-11
and CFC-12.  However,  should  EPA persist  in  this regulation and
should  it persist  in  including  in the  regulation CFCs other  than
CFC-11  or CFC-12,  it  must  consider implementing some form of the
permit  pound concept.  But the  Agency  must use  a more accurate
permit  pound  ranking.   (See  Appendix  G  for   a more accurate

      2.  Implementation and Operation

          There are  also legal  questions surrounding the  design,
implementation   and   operation   of   an  economic  disincentives
regulation as outlined in the ANPR.

          According  to the  Agency's ANPR,  economic disincentives
regulation  would  be  implemented by  means of   a  "cap",  either
directly  on  CFC  users or on CFC producers.   That is,  the Agency
                              III  -  22

                                                     Legal Issues

would place a ceiling on  the  total  amount of chlorofluorocarbons
that may be used by  an  individual CFC  user,  or  on a total amount
that may be produced by a producer.

          The Agency outlined  two  different methods  of  distri-
buting  the  rights  to available CFCs under  a  "cap".  One  is by
direct  allocation  to the  users and producers.   The  second is by
means of an  auction, whereby permits to  produce  or  use  CFCs are
auctioned  by  the  government  to  the highest  bidder.  EPA  will
encounter serious problems with both approaches.

          a)  Direct  Allocation.    Under  a  direct  allocation
program, EPA would be required to promulgate a  TSCA Section  8 (a)
rule or  use some other information gathering tool  to gain  data
from  the CFC producing and  CFC using  firms.   This  data would
then  be used to  establish a  government allocation  system.   In
the  ANPR,  EPA  discusses  production  as  the benchmark  by which
this allocation will be made.   EPA  must also consider whether it
would be more equitable to  use another  factor such as production
capacity,  total investment  in CFCs,  or  some  other  measure by
which to determine an allocation program.

              A  direct  allocation  program   will   essentially
freeze  producers'  or users'  market  shares to the historical  base
used in  the  allocation  program.  How will the Agency  justify  the
freezing of market  shares  —  perhaps  the most  drastic  form of
market  interference  available  to the government?

              Another  problem  with a  direct  allocation   program
concerns  new entrants  into  the market.   How  does  the Agency
propose  to  deal with them?   Will   it take  one  company's  produc-
tion or  use  rights  from it  and give them to the new  entrant?  On
what  basis will  this  determination  be  made?   Will  the Agency
allow new  production or use rights for  the  new entrant?  Or, as
yet  another alternative, will EPA  merely allow the  new  entrant
                              III  -  23

                                                     Legal issues

to  purchase  rights  from existing  companies?   The Agency  must
provide guidance to the industry on this issue.

              EPA  must  also  consider  the  problem of  a company
dropping out of  the  market.   What will  happen  to the drop-out's
production or use  rights?   Will they  be  redistributed among  the
existing producers or  users?  On what basis will  this  be done?
Will  the  withdrawing company  be  permitted to  sell  its leftover
rights?   If  so,  will  that  sale  be   binding  on  the  government
during  the next  round  of distributing CFC  rights?   Or suppose  a
company has  a  major  problem  (such  as  a plant  breakdown)  and  is
unable  to produce  all of  its  allocation.   Will  it be entitled  to
carry over its production rights until the  next permit period?

              Finally,  under  a  direct   allocation program   EPA
must  consider the  length of  time  a  distributed  production or  use
right   will  be  effective.   To  allow  for  rational   planning,
businessmen  will  need a minimum  of  ten  years.    If  it chooses  a
shorter time span, EPA must explain why  its choice  is  preferable,
legally and  economically, over  one  which minimizes the  impact  on
business planning.

          b)  Auction.  A second  option  to EPA is the auctioning
of  available  CFC production  or   use  rights.    Under   such   an
auction EPA  would  establish  a limited  quantity  of CFC rights  and
sell  them to the highest bidder.  At this  auction,  only  producers
could  be  invited,  only users,  or  both  producers  and  users,
depending on the  system EPA sets  up.   The  price  EPA would  obtain
for  the  rights  would  be  the  highest  price  it  could  possibly
obtain.   The  price  would   therefore  reflect   what   businesses
thought it was  in  their own economic  interest to pay  for  the  CFC

              We  note  first  of all  that   a  true auction,  where
the   price  paid  for  the  CFC  right  is  a  reflection  of  the
                              III  -  24

                                                     Legal Issues

businessman's  profit incentives,  would  be  unlawful  under  the
Independent  Office  Appropriation  Act  (31  U.S.C.  §483a  (1970))
and cases decided under it.

              There  are other  legal  problems  attendant to  an
auction.  How often  would  the auction be held?   Will  it include
foreign  companies  as well  as U.S.  companies? An  auction  would
create property rights  in  the permits  auctioned  off.   A question
arises  as  to who owns  these permits.   Does  the  government own
them?   Do  the  producers own  them?  Do  the  users own  them?  If
the government owns  them,  will  this constitute  a taking without
due compensation in  violation of  the  Fifth  Amendment? What  will
EPA do  with  the money  it  receives in an auction?  How  will the
Agency  monitor  participation at the  auction?  As with  a direct
allocation  program,   these  questions  on   the auction  must  be
answered before EPA proposes a formal rule.

              EPA must  also consider  that  a  futures  market may
develop for  auction permits.  If such  a  market does develop, how
will EPA deal  with  it?  Will  it  require  registration  with the
Securities  and  Exchange   Commission?    Will   it  be  subject  to
coverage under  the  1933 and  1934  Securities Acts?  What is the
nature of this coverage?   If  it  is not subject to such coverage,
will it  be subject to  scrutiny  under another securities law?  Is
the creation of  a  futures  market with the  potential  for attrac-
tion of  non  CFC-producer or  user speculators consistent with the
premise  that the auction  will allow the more  essential  users to
obtain  required  amounts of CFCs?  These  are  all questions which
EPA must answer in a proposed rule.

              In addition, there  is  no  guarantee that  under   a
cap  those  industries in  which  CFCs  are essential will  get all
the  product  they  need.   The  Agency  merely  assumes  that the
essential  industries will  be able  to afford the  higher prices
for CFCs.  Yet,  EPA  provides no support  for  its assumption, nor
                             III - 25

                                                      Legal  Issues

has  it  analyzed  the price  elasticity  for  the  various  uses  to
determine  if  the  assumption  is  valid.  For  example,  has  EPA
considered  the  national  security  implications  of  CFC  regula-
tion?   CFCs  are used  in  a  variety  of  ways  in  our  national
defense  effort, for  example,  in cleaning  of  missile  guidance
systems.   Has  the  Agency considered  a  means of  assuring  con-
tinued  availability  of  CFCs  to  the   defense  industries,  parti-
cularly if  it  turns  out  that those industries cannot  obtain what
they need, when  it is needed?

      3.  Competitive Impacts

          As  the largest domestic  producer  of  CFCs,  Du Pont  is
quite concerned  about  the potential  for anticompetitive  effects
from  economic  disincentives  regulation.   EPA  may  not  dismiss
these concerns.   Economic disincentives  regulation on the  scale
being proposed  by  EPA  may force  a  disruption in the  marketplace
in a way never  seen  before by  American business.

          As mentioned earlier,  under  a direct allocation  system
there is  a problem  in distributing  production or  use rights  to
any potential  new  market entrant.  In its  ANPR,  EPA  states that
it will  handle this by  allowing  existing producers  or  users  to
sell  their  shares to  new entrants (45  Federal Register  66730).
Guidelines  from EPA are needed  to  insure  that   such  a  system
would operate  equitably.  Further, under such a  system a  means
to  adequately  compensate producers   who  would  be  required  to
decrease production  would have to be established.

          Under  an  auction  system,  would  non-CFC producing  or
using  companies  be  allowed  to  purchase   permits  and  thereby
disrupt the  planning of  the  CFC industry?  What factors  will EPA
consider  in  balancing  the benefits of competitive  bidding,  while
at  the  same time  insuring  that existing producers and  users  of
CFCs  are  able to obtain  and utilize  allowed CFC production most

                              Ill  - 26

                                                     Legal Issues

              A further problem  with a cap  and  its accompanying
artificial shortage is that  spot  shortages  of  CFCs  are likely to
arise.  Has the Agency considered a way to handle spot shortages,
especially  if  a  critical  industry  is  affected?   Under  a  no
growth  in  demand  market,  businesses  would  not   be  likely  to
maintain  excess  capacity.   Thus,  the  problem of  spot shortages
would become  very  real if no  excess in  capacity  is maintained.
EPA  should  provide an  incentive for  the maintenance of suffi-
cient capacity and should  establish  procedures  for  any short-
term increase  in CFC capacity needed to meet essential demands.

               EPA must also  be  aware of  the  antitrust decree to
which the five producers  are  now  subject.  This  decree provides,
among other things, that:

      a.  Each  CFC  manufacturer  is  required  to  sell  to anyone
          who  is  engaged  in the business  of reselling refri-
          gerant  gas   and   who   satisfies   the   manufacturer's
          customary credit requirements.

      b.  In  the  event  a manufacturer  has  insufficient refri-
          gerant  to supply  all   resellers  who seek  to   purchase
          the  refrigerant,  the  manufacturer  "shall,   in  such
          circumstances,   determine   unilaterally   and   without
          consultation  with  any  other   [manufacturer]  or   any
          groups of  purchasers  of refrigerant gas, in  a manner
          in  which  demand  shall  be   met  on a   basis  of   any
          allocation,  reasonable  and  equitable   under   all   the
          circumstances ...."

This decree,  of course, will have a  very substantial  impact upon
any   governmentally-imposed   allocation   system.    It   directly
limits  a producer's  discretion  in  designing  his   own system to
allocate  scarce  refrigerant gas.  This  decree runs contrary to
any  allocation system which would  be  designed by  EPA to imple-
                              III -  27

                                                     Legal Issues

ment  an  economic  disincentives  regulation.   Has  EPA  consulted
with the Department of Justice on  this  issue and on other issues
raised in  the  comments to determine  the scope  of  its  authority
in regard to these sensitive areas of its regulatory proposals?
                             Ill -  28

                                                      Legal Issues


          An  ANPR is  a  relatively new  procedure of  administra-
tive  law.   It  is  designed  to  allow  the  Agency  to  solicit
comments  in  a forum  where  the  Agency  has  not  yet  committed
itself  to one  particular  regulatory  action.   Since  an ANPR  is
essentially  an information-gathering  tool,  extensive  rulemaking
procedures need not  be followed before publishing one.   However,
before   EPA   publishes  a   proposed   rule,   there   are   certain
procedural  requirements  it  must  follow.    Many  of  these  are
outlined  below.

          1.   General  -  Clean  Air  Act

          Section  307 (d)  of the Clean  Air  Act,  which  applies  to
subtitle  B  of  subchapter  I (relating  to stratosphere  and  ozone
protection),  as noted  in Section  307(d) (1)  (h) , requires  publica-
tion  of  a   notice  of  proposed  rulemaking,   accompanied  by  a
statement of  basis  and purpose.   This  statement  of basis  and
purpose must,  at a minimum,  include a  summary  of:

          a.   The  factual data on  which a proposed rule is based;

          b.   Methodology  used  in  obtaining  the  data  and  in
               analyzing  the  data;  and

          c.   The   major   legal   interpretations   and   policy
               considerations underlying the  proposed rule.

This  statement must  also   contain  a   summary of  the  findings,
recommendations   and   comments   of    EPA's   scientific   review
committee  and  the  National   Academy  of   Sciences.   If  EPA's
proposed  rule  differs  in  any   important  respect   from  the
recommendations  of  these  scientific  bodies,  an  explanation  of
the   reason   for   such  differences  must  be  included   in  the
                              III  - 29

                                                     Legal Issues

statement.   All data,  information  and documents  referred  to and
relied upon by  the  Agency shall be included  in  the  docket as of
the date of publication of the  proposed  rule.   The docket should
begin with  the publication  of  the ANPR and should  include all
documents  underlying  it.   The  docket  should  also  include  all
comments  on  the  ANPR  which  the  Agency  receives   as  well  as
letters  from   Congress   and  from   other   interested  citizens
concerning EPA's proposed Phase II regulation.

          During rulemaking,  EPA  must afford  interested parties
the  opportunity for  the  oral  presentation  of  data, views and
arguments  in  accordance  with  Section   307(d)(5)  and must  keep
such oral  record open for thirty  (30) days  after  the hearing to
allow an opportunity for submission of rebuttal and supplementary
information.    Implicit  in  this  is  the  opportunity  for  any
interested party to cross-examine any witness.

          2.  General - Toxic Substances Control Act

          Under Section 6(c) of the  Toxic Substances Control Act
(TSCA), before  EPA  may  issue a proposed  rule,  it  must publish  a
statement with  respect to:

          a.  The effects of CFCs  on  health and the magnitude of
              exposure of human beings to CFCs;

          b.  The  effects of  CFCs  on   the  environment  and the
              magnitude  of   the  exposure of  the  environment to

          c.  The benefits  of  CFCs for  the  various  uses and the
              availability of substitutes for such uses;  and

          d.  The  reasonably ascertainable  economic  consequences
              of the  rule,  after consideration  of the effect on
                             III -  30

                                                     Legal Issues

              the national  economy,  the environment,  and public

EPA's proposed rule must contain the following information:

          a.  A  draft  finding that there  is a  reasonable basis
              to  conclude   that   the   manufacture,  processing,
              distribution in commerce, use  or  disposal of CFCs,
              or any  combination  of  such  activities  presents or
              will  present  an  unreasonable  risk  of   injury  to
              health or the environment; and

          b.  A  document  which  states with  particularity  the
              reasons  for  the  proposed  rule,   together  with   a
              statement   of   why  the  proposed   rule  protects
              adequately  against  the risk(s) involved using the
              least burdensome requirements  authorized  by  TSCA.

              40 C.F.R. &750.2.

          In  light  of  the  "international motivation"  of EPA's
pending  regulation,  and  the  fact  that unilateral  action by the
United  States will  have little  or  no  measurable environmental
benefit,  EPA  must explain  why a  cap  or  other  regulation "ade-
quately  protects  against  the risk" involved, and why  adoption of
the Assessment  and  Surveillance strategy  is  not  a viable alter-
native.   The  Agency must  set forth its  reasons  for  regulating,
and if  the  reason  is  stimulation  of  foreign regulation, EPA must
explain  why  stimulation  of  foreign  regulation  is   a  proper
motivation  for regulation  in  this  country.

          And  finally,  the  proposed  rule  must  contain a state-
ment  with respect to the  four issues  mentioned  in Section  6(c)
of  TSCA, i.e.,  the  effects  of  CFCs on  health,  the  effects of
CFCs  on the  environment,  the benefits  of CFCs  for  the  various
                              III  -  31

                                                     Legal Issues

uses and the availability of  substitutes  for  these  uses,  and the
reasonably ascertainable economic consequences  of  the rule after
considering  the  national  economy,  small  business,  innovation,
the environment and  public  health.   The  proposed  rule  must also
contain  an  analysis  of  the  impacts of  alternative courses  of
regulatory action.   40 C.F.R. &750.2.

          If the  Administrator  of  EPA  decides to  proceed  with
Phase II regulation  under  TSCA instead of  the  Clean  Air  Act,  it
must in  the  proposed rule  include  a brief statement describing
such findings.   This statement must discuss, at a minimum:

          a.  All relevant aspects of the risk;

          b.  A comparison  of  the   estimated  cost  of  complying
              with actions  taken under TSCA  and  under  the Clean
              Air Act; and

          c.  The relative  efficiency of actions  under  TSCA and
              the Clean Air Act  to protect  against the risk.

          40 C.F.R. &750.2(5).
          These statements may  be  combined  in the same narrative
for efficiency of exposition,  but  they  must contain a discussion
of  the  factual,  analytical,   policy   and  legal  considerations
behind the  Agency's  decision to  issue  the  proposed  rule  in the
form  chosen.   All factual materials  and each  analytical  metho-
dology seriously  considered  shall be fully disclosed.  Signifi-
cant  areas  of  uncertainty  known to the  Agency under each  heading
shall  be  identified  and the manner  in  which  the Agency  intends
to deal with them shall be specified.
                             Ill -  32

                                                     Legal Issues

          In light  of  the substantial  uncertainties surrounding
the  ozone  depletion theory,  EPA  must address  in  its  proposed
rule  the  research  projects  it  has undertaken  to  help  resolve
some  of   the   uncertainties.    Compliance  with   the  research
provisions  of  the  Clean  Air Act  may  suffice  in  this  respect.
This is discussed in Section 3 on the next page.

          Under TSCA, EPA  must  in  its  proposed  rule provide for
an  informational  hearing  at  which  any person  may  submit  oral
comments.  This hearing shall come  not  less  than two weeks after
close of  the  public  comment period.   Under Section  6(c)(3)  of
TSCA, if  there are disputed  issues of material  fact  which will
require  resolution,  as  is certainly the case  when dealing with
the  highly  uncertain ozone depletion theory, EPA  is required to
allow cross-examination  of witnesses.  This is necessary  for  a
full and true  disclosure with respect  to  the controversial ozone
depletion theory.

          Finally,  any  rulemaking  docket in  any  proposed  rule
must  contain the  results  of the  additional research  which EPA
must  conduct  in  accordance  with  the  Clean Air  Act  (discussed
below)  and  the results  of the  further economic  and regulatory
impact studies which EPA must do  (discussed  below).

          3.   Research

          A  reading of  part  B,  subchapter  I,  of  the  Clean Air
Act  amendments leaves  one  deeply  impressed  with  the  Congres-
sional concern that the stratospheric ozone  problem be researched
thoroughly.  Both  the statute  itself and its legislative history
indicate  quite clearly  that EPA  is  commanded  to look  at  the
stratospheric  ozone problem  more  broadly  than just  the potential
effects  of  CFCs.    For  example,  in  Section  150 of  the  Act,  the
Congressional  Declaration of  Purpose, Congress  delineated four
purposes  in  passing the  Clean Air Act amendments relative to  the

                             III -  33

                                                      Legal Issues

          a.  To  provide  for  a  better   understanding   of   the
              effects   of  human   actions   on   the  stratosphere,
              especially the  ozone in  the  stratosphere;

          b.  To  provide  for  a  better   understanding   of   the
              effects of  changes  in the stratosphere,  especially
              the  ozone   in   the  stratosphere,   on  the   public
              health and welfare.

          c.  To  provide  information on the  progress of  regula-
              tion of activities  which may reasonably  be  antici-
              pated  to  affect  the  ozone  in  the  stratosphere  in
              such a  way  as   to cause  or contribute  to  endanger-
              ment of the  public health  or  welfare.

          d.  To  provide  information on the  need for  additional
              legislation  in  this  area,  if  any.

The  legislative  history   echoes   this  general  concern  for   the
stratosphere  as  a whole,  and not  just  the effects CFCs may  have
on it:
               [It]   should   be  pointed  out  that   the   strato-
          spheric  ozone layer  is  also  threatened  by other  sub-
          stances   [than  halocarbons].    Of   course,   the  prob-
          lem  of  emissions  of pollutants  from  high flying  air-
          craft is  well-known.  There could also be  ozone deple-
          tion  caused  by:   bromine compounds,  other  sources  of
          chlorine  than halocarbons, or  oxides  of  nitrogen  from
          fertilizers  or  combustion of  fossil   fuels.    H.  Rep.
          No.  94-1175,  94th  Cong.,  2nd  Sess.,  at 76.
          While  it  is  true  that  halocarbons  (halocarbons  is  a
term  which  includes, but  is not  restricted  to,  CFCs)  were  in-
cluded in the potential problems listed by Congress,  it  is clear
that  EPA was directed to study  the  issue  broadly.
                              Ill  -

                                                     Legal Issues

          Other sections of  part B of  the  Clean Air  Act amend-
ment  confirm  this  Congressional  concern.    For   example,  in
Section 153(a), EPA is directed  to  study  the  effects not only of
fluorocarbons on the ozone, but also of:

          a.  The release  into  the ambient air  of  other sources
              of chlorine;

          b.  The uses of bromine compounds; and

          c.  The emissions  of  aircraft  and  aircraft propulsion
              systems  employed   by  operational  and  experimental

          Section  153(a)  further  directs   EPA  to  study  any
physical,  chemical,  atmospheric,  biomedical  or other   research
and  monitoring data  which  may  be  necessary  to  ascertain any
direct or indirect effects upon  the public  health and welfare of
changes   in   the   stratosphere,   especially   ozone    in   the

          Under  Section 153(b),  EPA  is  required   to   undertake
research on:

          a.  Methods  to  recover  and  recycle  substances   which
              directly  or   indirectly  affect  the   stratosphere,
              especially ozone in the stratosphere;

          b.  Methods   of   preventing   the    escape   of    such

          c.  Safe substitutes for such substances;  and

          d.  Other  methods   to  regulate  substances, practices,
              processes, and  activities which  may reasonably be
                              III -  35

                                                     Legal Issues

              anticipated to affect  the  stratosphere,  especially
              ozone in the stratosphere.

          Section  153 (d)  requires  EPA  to  direct  the  National
Academy of Sciences  to  study,  not just CFCs,  but  the  effects of
all  substances,  practices,  processes and  activities   which  may
affect the stratosphere, especially ozone in the stratosphere.

          Under Section  154, EPA  is  directed to  receive infor-
mation from  the  National Oceanic  and Atmospheric Administration
on  detection of  changes  in  the  stratosphere  and  the  climatic
effects of such  changes.   Section 154(b)  requires  EPA to obtain
from  the  National  Aeronautics  and  Space  Administration infor-
mation  on the  physics  and chemistry of  the  stratosphere  for
early  detection  of potentially  harmful  changes in  the  ozone in
the  stratosphere.    Section  154(c)   directs  EPA  to  ask  the
National  Science  Foundation for information  which  will  increase
scientific  knowledge of  the  effects  of  changes  in  the ozone
layer  in  the stratosphere  upon  living organisms and  ecosystems.
Section  154 (d)  requires  EPA   to  obtain  information  from  the
Department   of  Agriculture   which    will   increase  scientific
knowledge  of  the  effects  of  changes   in   the  ozone   in  the
stratosphere  upon  animals,  crops  and  other plant life.   Section
154(e) requires EPA  to  obtain  information from the Department of
Health  and  Human  Services  (formerly the  Department  of  Health,
Education  and Welfare)  which  will  increase scientific  knowledge
of  the effects  of changes  in  the  ozone  in the stratosphere  upon
human health.

      It  would have  been  helpful for EPA to have discussed these
studies  in  the ANPR.  At  this time,  it  would  be beneficial for
the  Agency  to publish a supplement  to the ANPR discussing these
studies.   This supplement  could  also explain  how  these  reports
were used in  EPA's decision-making process.
                              Ill -  36

                                                     Legal Issues

          And  very  importantly,  Section  156  requires  EPA,  in
conjunction  with  the  President,  to  undertake  to  enter  into
international  agreements to  foster   cooperative  research  which
will  complement or  augment  studies  or  research  done  in  this

          To date, EPA's compliance  with these  various  sections
of  the  Clean Air Act  has been  notably  inadequate.   The  Agency
has received  studies  only on CFCs and  those studies have  been
flawed, as discussed in Section IV and Appendices E and F.

          There  have  been  no thorough  studies  on  the  effects
other chlorine-containing compounds  may  have on  the  ozone.   The
Agency has done  insufficient  research on methods  of recovery and
recycling CFC emissions;  they have done  insufficient  research on
methods  of  preventing   the   complete   emission   of   CFCs;   the
Agency's  research on  substitutes  for  CFCs  has  been  woefully
inadequate.   Indeed,  if EPA  had  done adequate  research  on  sub-
stitutes, it would have  realized  that many  are harmful chemicals
and the  harm resulting  from them is  more  immediate  to persons
potentially  exposed  than is  the harm  theorized  to  result  from

          The  Agency's   international  activities  have  concen-
trated  on proclaiming  the  issue  resolved   and  underscoring the
need  for  regulation.   There  has  been little  or  no  effort by EPA
to  obtain an  international consensus  on  the science or an inter-
national  resolution  to conduct more  research to more completely
resolve  the  scientific uncertainties, as  required  under Section
156.   Accordingly,  before EPA may publish a  proposed  rule,  it
must  undertake  efforts  to obtain international resolution of the
science  so  that it  will have before  it a more complete data base
upon  which  to make responsible regulatory decisions.
                              Ill  -  37

                                                     Legal Issues

      4.   Economic and Regulatory Impact Analyses

          As noted  earlier,  EPA's  preferred form  of  regulation
is  an  economic disincentives  approach,  i.e.,  an  allocation  or
auction of production or use rights  in  conjunction with a cap on
CFC production or a cap on CFC  use.   Because such a system is an
untested  form  of  regulation,  its effects  upon  the  economy  and
individual businesses are extremely  difficult  to  predict at this
time.  Therefore,  EPA  must  conduct an  extensive  and  detailed
economic  analysis  to  help  answer,  among others,  the  questions
posed throughout these comments.

          In  particular,  EPA  must  study  how  a  cap  would  be
implemented  and  how a  cap would operate  under  practice.  Vague
generalities  in  the  ANPR are   insufficient.   In  addition,  EPA
must  also conduct  an  analysis  of   the  long-range  impacts  of  a
cap, both  in terms  of  impacts  upon the  economy  and in terms of
impact  upon  the  affected   industries.    These   requirements  in
Sections 157 and  317  of the Clean  Air  Act, and  in Section 6 of
TSCA, are discussed in more detail below.

          a)  Clean Air Act

          Section 157 of the Clean  Air  Act requires EPA to "take
into  account  the  feasibility   and   the   costs"   of  regulations
promulgated  under   its  authority.    The  legislative  history
elaborates on this requirement:

              By  [requiring  EPA  to  take  into account  the feas-
          ibility  and  costs  of  regulation,  Congress]  intends
          to  assure  that  any   such  [regulation]  is  undertaken
          only  with  adequate   awareness   of its  costs  and its
          other   economic   impact   and   social    impacts.   This
          informal   awareness   is   necessary   for   [EPA]   in
          determining  what  combination   of stratospheric  pro-
          tection  measures  are  most    appropriate.    (emphasis
          added) H. Rep.  No.  94-1175, 94th  Cong., 2nd Sess., at
                             Ill - 38

                                                      Legal Issues

The  language  of   the   bill  which  House  Report   No.   94-1175
accompanies,  H.R.  10498,   (referring  to  EPA's  requirement  to
consider  the feasibility and costs of regulation) was  adopted  in
toto  in  the bill  finally passed  by  Congress and  signed by  the

          Thus, Section  157  requires  not only an  economic impact
analysis  designed  to allow  more  informed decision-making on  the
part  of  EPA and more  informed participation  by the public,  but
also  an  analysis  of  the social impacts  of  CFC  regulation.   The
social impacts cannot  be underestimated.  CFCs  touch the  life  of
every  American.    Despite the  Agency's  assertions   to  the  con-
trary,  regulation   will  affect   some   very   basic   elements  of
American  life,   such  as   refrigeration  and   air-conditioning.
Given  EPA's  long-term  goal  to   cut  CFC  production  by  50-70%
[Jellinek,  1980a] ,  it  is likely  that  in  the  near future  U.S.
citizens  may  have  to  do without  some  of the  luxuries and  even
necessities  we have come   to  enjoy   in the  twentieth  century.
Hence, EPA's  Section 157 "feasibility  and  costs"  analysis  must
include  an  analysis  of   the  social  impacts  the regulation  will
have  upon American  life.   This  requirement  of  a  social  impact
study  is reinforced in other  sections of   the  relevant  laws.
(See e.g., Sections  2 (c)  and 6 (c) (1)  of TSCA.)

          Section  317  of  the Clean   Air  Act  requires  EPA  to
conduct  an  economic impact  assessment  before publication of  the
proposed  rule,  and  this  assessment  must  be  made   part  of  the
public record.   Included  in the   assessment  must be an  analysis

          1.  The   cost   of   compliance,    and  the   cost   of
              alternative regulations   (one   alternative  is  no
              regulation at  this  time);

          2.  The   inflationary  or   recessionary   potential   of

                              in  - 3y

                                                     Legal Issues

          3.  The effects  on competition  with  respect  to  small

          4.  The effects on consumer costs; and

          5.  The effects on energy use.

The  importance  of   the  Section  317  economic  impact  analysis
cannot  be   overstated.   It  strikes  at  the  very  heart of  the
essential  nature of  CFCs   and  at the  reasons  CFCs  present  no
unreasonable  risk  to  health  or  the environment.   One  does  not
have  to  be an economist  to recognize  that  as  CFC  prices  rise,
inflationary  pressures on  the economy will  result.   The smaller
businesses  which cannot  afford  the  higher costs of  CFCs will be
forced  out of   business.   Consumers  will  have   to  pay  higher
prices for  those articles  which contain CFCs.   (These issues and
others are  discussed in  more detail  in Section VII — Economic
Considerations — and Appendix  I) .  The  economic  impact studies
are  important also  because  of  the revolutionary,  landmark  form
of  regulation EPA   is planning  to  adopt.   Were  the  economic
studies  incompletely  done  and  the  impacts  of   the  proposed
economic incentives  regulation  not fully  appreciated, EPA could
cause a great deal of  unintentional harm to the U.S. economy.

          Finally,   CFCs   are   great   energy   savers.   Their
regulation  will  result in  what  at  times  may  amount  to drastic
energy  penalties.    (See Appendix C  for   details  on  the energy
penalty,  and  Section II   —  Uses  and  Essentiality  — for   a
discussion  of the energy saving properties of CFCs).

           It  is  pertinent  to note that the  recent Department of
Energy  (DOE)   energy  saving guidelines   [DOE,  1980]   demand  an
increase in the  use  of CFCs.  Energy conservation is, of course,
a   high  priority   national  concern.    The  DOE's   requirements
guidelines  run contrary  to EPA's proposed  CFC regulation.   The
                              III - 40

                                                      Legal  Issues

conflict  between  the  two  is  very  real.    Given  the   Agency's
long-term  strategy to  cut  CFC production  by 50  to 70  percent,
there  can  be  no  denying that  CFC regulation  will  result  in  a
substantial  energy   penalty.   EPA  merely   assumes  that   those
industries  with  the  most  energy  efficient  use  of  CFCs  will  be
able to  pay  the  higher price for  CFCs.   Yet without having done
a price  elasticity  study of  the CFC-using industries, EPA cannot
support  its assertion.   EPA  must,  therefore,  as part  of  its
social and economic  impact  analysis,  quantify the  energy penalty
from CFC regulation and must explain how  this  penalty is offset
by benefits of at least a comparable magnitude.

          We again emphasize the  importance of  the Section  317
analysis containing an assessment  of  the  social  impacts of  CFC
regulation.  It  must  be  made   clear  to  the  public exactly what
they are giving  up  in  return   for  this  ostensible protection  of
health   and  the   environment.   Congress's   purpose  in   adopting
Section  317 was:
              to  assure  that  the  Administrator  and  the  public
              would  have before  them  adequate analyses  of  the
              economic  impacts of  alternative  courses of  action
              or  inaction  under  the  Act.   The  availability  of
              such  information is  expected to  help shape  wiser
              policy  and to permit  the  public  to participate  in
              rulemaking  in a more informed and  effective  way.
              H.  Rep. No.  95-294,  95th Cong.,  1st. Sess.  at  51
The  American  people must  be  made  aware  of  the  cost  of  CFC

          b)  Toxic  Substances Control Act

          Section  6(c)  and (d)  of  TSCA  requires  EPA  to  consider
the  benefits of CFCs,  the feasibility  of  substitutes,  and  the
economic  impact  of  CFC  regulation.   In particular,  EPA  must
                              III  -  41

                                                     Legal Issues

study the  feasibility  and the consequenses  of  using substitutes
for CFCs.  TSCA Section 6(c)  and  (d)  also direct EPA to consider
the impacts  CFC  regulation  will  have on  small business  and on
technological  innovation.   Furthermore,   Section  2(c)  requires
that EPA consider  the  economic and  social impact of  any action
the Agency  takes.   Again,  as in  Section 317  of  the  Clean Air
Act,  the  requirement  of  a  social  impact   analysis   -  of  how
regulation will affect American life - is required.

          There are  other regulatory  impact analyses  which EPA
must conduct.  Some of these are discussed below.

          c)   Executive Order 12044

          Under Executive Order 12044,  signed  by  the President
on March 23,  1978, and appearing  in 43  Federal Register 12661,
EPA is  required  to conduct  a  regulatory  impact analysis  of CFC
regulation.   Under 12044,  CFC regulation must  be designed in
such  a   way  so  as  not   to  impose  unnecessary  burdens  on the
economy, on  individuals,  on public  or  private organizations, or
on  any   state  or  local   government.   To  comply  with Executive
Order 12044,  EPA  must  publish  a  statement which  contains,  at a
minimum, findings  that:

          1.   The  proposed regulation is  needed;

          2.   The  direct  and indirect effects  of  the  regulation
              have been adequately considered;

          3.   Alternative  approaches  to  the  regulation have  been
              considered   and  the   least   burdensome   of   the
              acceptable  alternatives has  been  chosen;  and

          4.   Public   comments   are  being   considered  and  an
              adequate response has been  prepared.
                             Ill -  42

                                                      Legal  Issues

          In  addition,  the regulation  must be  written in  plain
English and must  be  understandable  to those who must comply  with
it.   It  must  contain  an estimate  of the  new  reporting burdens
necessary for compliance  with  the  regulation and it  must contain
a plan for evaluating the regulation  after  its  issuance.

          The  statements must  also  include  an  analysis  of  the
effects  regulation  will  have  on  competition,  and  a  detailed
explanation of  the reasons  for  choosing one method of  regulation
over others.  In  conclusion,  EPA must explain why CFC  regulation
is  necessary,  in light  of  its negligible  environmental impact,
and why stimulation  of  foreign  regulation is an  appropriate  goal
of U.S. regulation.

          d)  Regulatory  Flexibility  Act

          EPA must also  conduct an  impact analysis in  compliance
with  the  recently passed Regulatory  Flexibility Act,  Public  Law
96-354.   The  regulatory  impact  analysis  required   by  this  Act
must include,  at a minimum:

          1.  A  description  of the  reasons why action  by  the
              Agency is being considered;

          2.  A succinct  statement  of the objectives of, and  the
              legal  basis for,  the  proposed  rule;

          3.  A  description of, and  an  estimate of,  the  number
              of  small  entities  to  which  a  proposed  regulation
              will apply;

          4.  A  description  of the  proposed  reporting, record-
              keeping  and  other  compliance  requirements  of  the
              proposed  rule,  including  an estimate of  classes of
                              III -  43

                                                      Legal  Issues

              small  entities   which   will  be  subject  to   the
              requirement   and   type   of   professional   skills
              necessary  for  the  preparation  of  the  report  or
              record; and

          5.  An  identification,  to  the  extent  practicable,  of
              all  relevant  Federal  rules  which  may  duplicate,
              overlap or conflict with the proposed  rule.

          The  regulatory  impact  analysis  must also discuss  any
significant  alternatives   to   the   proposed  rule   which   would
accomplish  the  objectives  of   the  underlying statute  but  which
would minimize any  "significant economic impact"  of  the  proposed
rule.   This analysis  of  the  alternatives  must  include,  at  a
minimum, whether the Agency  should consider:

          1.  The   establishment   of  differing   compliance   or
              reporting requirements for small entities;

          2.  The  clarification,   consolidation   and simplifica-
              tion  of  compliance  and  reporting  requirements  for
              small entities;

          3.  The  use  of performance  rather  than  design  stan-
              dards ; and

          4.  The  possible  exemption  from  the   rule   of   small
                             Ill - 44

                                                      Legal Issues


      It  is  clear  from this  section  that further CFC  regulation
at  this  time  is  neither  appropriate  nor  supportable.   Not  only
has  EPA  failed   to   fulfill   its  legal   responsibility  before
regulating,  but  regulating  such  an   essential  chemical  in  the
face of  uncertain  science is  unwise  policy.   Moreover,  the  type
of regulation  EPA  is  contemplating  has been neither  well  thought
out  nor  well  conceived.   Before  any  proposed  rule can  issue,
there must  be  substantial  additional  studies  and research  done
to support such an  action.
                              Ill  -  4b

     A.   INTRODUCTION                                        2



     D.   EPA'S ANPR ASSESSMENT OF THE THEORY                22

     E.   PRESENT STATUS OF THE THEORY                       32

     F.   RESOLUTION OF UNCERTAINTIES                        51

     G.   SUMMARY                                            56


         The Chlorofluorocarbon/Ozone Depletion Theory postulates
that CFCs,  which are  emitted  to the  atmosphere  after use  in  a
variety of applications, are eventually transported  to  the  upper
atmosphere  (stratosphere).   The  high stability of  the  compounds
has been  assumed to  preclude  reaction in  the lower  atmosphere
(troposphere).   At  higher  altitudes,  however, the  intensity  of
ultraviolet light increases and the  compounds  are  broken  down  by
photolysis,  presumably releasing  chlorine  atoms.   Chlorine  is
involved  in  the  very  complicated series  of  reactions  comprising
stratospheric chemistry.   Those  reactions include  one  pair  which
constitutes  a   cycle  by  which  chlorine  can  catalyze  the
destruction  of   ozone  (a  form  of oxygen).    Ozone shields  the
surface of the earth  from  ultraviolet  radiation which  might lead
to deleterious effects if the amount  reaching the  earth's  surface
were  significantly  increased  (see  Section V).    Other  chemical
reactions  lead to  temporary "holding tanks"  for  chlorine and  to
removal from the stratosphere.

         Scientists have developed computer programs to model the
processes  involved  in order to estimate  the  net  effect of  CFCs.
The models  are used to calculate the  time-varying chemical com-
position  of  the  atmosphere.  The  results  are then often compared
with actual measurements of the concentration of various chemical
species at  different  vertical  and  horizontal  locations.  The use
of  models to  "predict"  the effect  of  CFCs   on  ozone has been
accepted widely  because ozone depletion,  if it occurs, is a  slow,
gradual process  extending  decades  into  the  future.  Accordingly,
any change or trend  in  ozone  over the near-term  would be  small
and, presumably, difficult to detect.

         Most models used  to calculate or simulate the atmosphere
are one-dimensional  (1-D).  In  such a model,  the earth's  atmo-
sphere  is averaged  and the only movement of  chemical  species in

the model is  in  the  vertical  direction.   1-D models are  limited
inherently  by their  treatment  of atmospheric  dynamics,  their
inability to deal with seasonal atmospheric  variations,  and  other
simplifications  of  the  atmosphere  during  their  construction.
Accordingly,   it  is  essential  to  verify  that  measured and
calculated profiles of chemical  species agree  in  the present-day
atmosphere to  give assurance  that  any assumptions  and  simplifi-
cations incorporated into the  model do not distort reality.

         By its  very  nature,   the  theory is a  rapidly changing
compilation of state-of-the-art science.    The  relatively  young
field  of  atmospheric  science  is  hard-pressed  to  eliminate  the
many  large  uncertainties involved.   Nonetheless,  the  potential
for significant  changes  in  the amount of  ozone has prompted  the
Environmental Protection Agency to  consider further regulation  of
CFCs  in addition to  the  1978   ban  on  the  use of  CFCs  as  aerosol
propellents.   Justification is  cited  as  the 1979  assessment  of
the  science  by  the  National  Academy  of  Sciences  [NAS,  1979a].
Unfortunately,  this  assessment came during  a  period of  rapid
changes in the science, which  continues to develop at  a very fast
pace.   Current  assessments indicate  a large decrease  in calcu-
lated  potential   effects,   and  continue  to emphasize  the  many
uncertainties underlying the issue.

         In  the  following  discussion of  the  science, we  first
provide  an  historical  review  of  the  theory and  the  several
scientific assessments which have  been done.   Next, we  present a
detailed  discussion  of  an  area   which  has  been  consistently
overlooked  by EPA and  which  argues  strongly and  convincingly
against the  need  for  immediate  regulatory  action-the  real-world
experimental  information provided by over 20 years of  ozone mea-

         Unlike  the  theoretical  treatment provided  by  models,
available measurements provide  a  record of 'actual  ozone  concen-
tration.  Statistical analysis of  this record  is capable of iden-
tifying even very  small  (increases or  decreases)  in  the  average
ozone  concentration.   The  use of these  analyses as  an  early
warning of actual  changes in  ozone provides the ideal complement
to the theoretical treatment in the models, and permits continued
investigation of  the  theory in the absence of  detectable change
in  ozone  concentrations.    The  sensitivity  of  the  technique
provides confidence that  changes,  if they occur, will  be detected
sufficiently  early  to  allow  for  effective  responses  by  the
appropriate   governmental   bodies.    Even  allowing   for  the
calculated "overshoot",   before any potential  ozone changes were
reversed,  potential  effects  of  ozone  change  can  (even  if  the
theory  proves  to be correct)  be   limited  to  very  small  levels.
The  importance of such  an early warning system cannot and should
not be underestimated.

         As noted above,  the science of the atmosphere is rapidly
evolving, and contains major uncertainties.  Therefore,  following
the discussion of  ozone  measurements,  we present  an  analysis of
the approach to  the  science chosen by  EPA  in  its  Advance Notice
of Proposed  Rulemaking.   The theory is inadequately — and often
inaccurately — discussed.   Uncertainties and caveats concerning
these uncertainties are  downplayed or ignored.  The progress of
 "Overshoot" is the term applied to the theoretical maximum ozone
 depletion calculated by  the  models  to  occur  after CFC emissions
 cease.   The  theory  assumes  that  CFCs already  present  in  the
 lower atmosphere at the time emissions were to cease would still
 be transported  to  the  stratosphere, causing  ozone  depletion  to
 increase  to  a  peak value   before  slowly returning  to  normal
 levels.  This peak value is calculated to  be  about 1.5 times any
 existing ozone depletion at the time CFC emissions cease.

the science beyond that  included in the  NAS  report is  entirely
neglected,  treating  one  of  the most  active years of  recent
research as if it  were unimportant.

         The EPA  view  is then  contrasted, with a  discussion  of
recent developments  and  the remaining key uncertainties  in the
theory.    These  uncertainties were consistently  deemphasized  or
underestimated by  the NAS, and virtually  ignored by the EPA.

         A variety of recent evidence  suggests  that CFCs may not,
in fact,  be  completely  transported to the stratosphere  with  no
destruction in the lower atmosphere.   Any destruction represents
a decrease  in ozone  depletion  from that  currently calculated  by
atmospheric models.  The transport mechanisms themselves are not
well understood and  are  treated  only  in  an empirical  fashion  in
atmospheric models.  Yet calculated ozone depletion is sensitive
to the rate and  mechanism of transport.

         Stratospheric chemistry is also  critical to the theory.
As an example,  recent  reaction rate  changes  alone reduce esti-
mates of calculated depletion to about half that reported by the
NAS.     Those changes represent  large advances  in  our knowledge,
but at the same  time  have greatly  magnified  perceptions  of the
inherent uncertainty  in  model results.

         Finally,  we  show that the models themselves are sources
of  uncertainty.    Previous assessments have  relied  almost
exclusively  on  one-dimensional  models  which  neglect  known
atmospheric  variations  with  latitude and season  of  the  year.
Further, the models have been largely restricted to consider the
CFC  effect  in  isolation from  other  current  changes,   such  as
increases  in  carbon  dioxide  (C02)•   When tested  against other
known perturbations,  such as volcanic eruptions, the models fail

to duplicate  measured  effects.   Furthermore,  the  models do not
calculate an accurate picture of the present  stratosphere.  Major
discrepancies remain even in the most up-to-date  treatments, and
these discrepancies  involve  the chlorine species  which are of so
much current concern.

         Even in the extensive  discussions  below,  many points may
not  be  discussed  in  sufficient  scientific detail   for  the
well-informed reader.  Appendix E  will provide  a useful reference
source with  a much  more detailed  discussion  of  the scientific


     1.  General Description of the  Theory

         The earth's atmosphere to an altitude of about 50 km  is
divided into two  regions  — the troposphere or  lower  atmosphere
and the stratosphere  or  upper atmosphere.    The  two regions are
separated by the  tropopause,  which  varies in altitude  from about
8  km  at the poles  to about  16  km  at  tropical  latitudes.    In
contrast to the troposphere,  where  turbulence and  rapid vertical
mixing occurs,  the stratosphere is relatively quiescent.

         Ozone   (03)  is  the most  important  trace constituent  of
the  stratosphere.    It  is  formed  predominately  at  altitudes
between 25  km  and 35 km  in the  tropics,  where  short  wavelength
solar radiation dissociates molecular oxygen atoms  which  combine
with molecular  oxygen to  form ozone  [Chapman, 1930] .

           °2 + nv (solar  radiation) — *0 + 0      (1)
           2 [0 + 02 + M*-*03 + M]                 (2)
    Net:   3 02~>2 03
          *M is any other  molecule

Although  ozone  is  produced in  the  tropics,  highest ozone
concentrations  are found in  polar  regions  at altitudes of about
15  km,  as  a  result  of  air  motions  in  the stratosphere.   The
production  of  ozone  is   currently  assumed to- be  relatively
insensitive to  man's activities.

         Ozone   strongly  absorbs  solar  radiation  in  the longer
wavelength radiation region 240-320  nm.

           °3 + hv — * °2  + °

It  is  this  absorption  that  shields the  earth  from  ultraviolet
radiation.   In this process, ozone  is not destroyed  since  nearly
all the oxygen atoms produced recombine with molecular oxygen  to
produce ozone (Reaction 2).

         Although   the  reactions  just   described   are  the
predominant  stratospheric production  process  for ozone,  several
competitive  destruction processes exist.  The amount of ozone  in
the  stratosphere   is  maintained  by a  dynamic  balance   between
production  and  destruction processes.   The  most  important
destruction  process, one that  destroys  nearly 70 percent  of the
ozone produced, is  a  catalytic  cycle  involving nitric oxide  (NO
and nitrogen dioxide (NO-).

           NO + 03—•>  N02 +  02                       (4)
           N02 + 0—»  NO +  02                       (5)

     Net:   0 + 03 —*  2 02

Because  jet  aircraft  engines  exhaust  oxides  of  nitrogen, the
N0-N02 catalytic cycle  formed the  basis  for concern  in the early
1970s that supersonic  transports flying  in the  stratsophere would
deplete the  ozone layer [Johnston, 1971].

         Stolarski  and Cicerone  [1974]  and  Wofsy  and   McElroy
[1974] suggested  that  the chlorine cycle   may be a destruction
process for stratospheric ozone,

           Cl + 03	»   CIO + 02                     (6)
           CIO + 0 	»   Cl  + 02                      (7)
             0 + 03	*  2 02

but  only natural   sources  of   chlorine,  e.g.,  volcanoes,  were
considered.   The same year,  Molina and Rowland [1974] published


their  suggestion  that  chlorofluorocarbons  (CFCs)  provide a
significant chlorine input to the stratosphere.  In its simplest
elements, the suggestion was  that:

         •   CFC have a long  atmospheric  lifetime,

         •   CFCs diffuse to  the stratosphere,

         •   CFCs  are   decomposed  by  ultraviolet   radiation  to
             produce chlorine atoms,  and

         •   Chlorine atoms gradually reduce  the concentration of
             ozone in a catalytic cycle  (Reactions  6 & 7).

The  authors  did  not make  an  estimate  of  the amount  of ozone
depletion by CFCs.

     2.  Model Calculations - What They Are;  Why They are  Needed

         If  Molina  and  Rowland's   suggestion   —  the  ozone
depletion theory — were true,  significant effects of CFC on  the
ozone  layer  only  would occur  decades   into  the   future.    As a
result,  scientists  have tried  to  estimate  the magnitude  of  the
effects by use of time-dependent, one-dimensional  (1-D)  diffusion
models of  the  atmosphere,  which are  really  complicated computer
programs  that  attempt  to represent  mathmatically  the atmosphere
of the earth.  These  use chemical and photochemical reactions as
input data and largely ignore detailed atmospheric  dynamics.

         Some  important  points  to note   in reference to computer
model calculations are:

         •   Ozone depletion has not  been measured.

         •   All  estimates of ozone  depletion  are  computer model

             calculations  which depend  on  the model methodology
             and assumptions, and  the  accuracy and completeness
             of the input  data.

         •   High estimates of  ozone  depletion, e.g., 16 percent,
             are calculated to  occur over a hundred years in the
             future  and   are   based  on  working  assumptions
             described  blow which  are  not  likely  to occur,  even
             if the theory were  true.

         •   Computer models do not  yet represent  or simulate
             adequately  the present atmosphere.

         •   The  predictive  reliability of  computer  models  is

These points and  others will be  discussed  more fully  in section
E, "Present Status of the  Theory".

     3.   Previous Scientific Assessments of the Theory

         A number of scientific  reports by both U.S. and European
scientific bodies have appeared which  reviewed the status of the
Chlorofluorocarbon/Ozone  Depletion  Theory.    The  most striking
aspects  of the reports  is that they do not agree   as to the
validity of the  theory,	i.e., a  scientific consensus that the
theory is valid does not exist.   On the  contrary, they emphasize
the  dynamic  and  uncertain  nature  of  the  science  as  viewed  at
different times by different people.


         The first in-depth scientific  assessment  of the possible
effects   of  CFCs on the ozone layer  was the  National  Academy of
Sciences  (NAS)  report,  "Halocarbons:   Effects on  Stratospheric

 Ozone"  [NAS,  1976].   The report concluded  that continued release
 of  CFCs to the  atmosphere  at  1973  levels  would  produce gradual
 ozone depletion  in the  range of 2 percent to 20 percent about 100
 years in the  future with a most probable value of about 6 percent
 to  7.5  percent.   However, the  report  acknowledged  a  substantial
 lack of information,  and concluded:

         "Additional  improvements in our knowledge of the  atmo-
         sphere and  of  stratospheric chemistry are essential to
         permit more accurate assessments  to  be made of  the
         extent  of  potential  reductions  in the stratospheric
         ozone."   (emphasis in  the original)  [NAS, 1976,  p.  20].
 It  should be  emphasized  that these values of ozone depletion were
 calculated  with  a 1-D model.  They were not measured values.


         A  subsequent  report   by  the  National  Aeronautics  and
 Space  Administration  [NASA,  1977]   was  published  the  following
 year.    One  significant  finding   of  the  report  was  that  a
 preliminary (now confirmed)  fast rate for  the  reaction  H02 + NO
 increased   calculated  ozone  depletion  by  CFCs  from  about  7.5
 percent to 15.0  percent  (Lawrence  Livermore  Laboratory  model)
.[NASA,  1977,   p.  192].    The  report  emphasized  the  need  for
 additional  research to  better understand stratospheric science.


         Two  important  reports  were  published  in  1979  within one
 month  of  each  other  — the  NAS  report,  "Stratospheric  Ozone
 Depletion by  Halocarbons:  Chemistry and Transport", [NAS,  1979a]
 and  the United  Kingdom  Department of  the  Environment  report,
 "Chlorofluorocarbons  and Their Effect  on  Stratospheric  Ozone"
 [UK DOE, 1979].  Although the two reports used similar models,

similar input data,  and stated very similar values of calculated

ozone depletion,  they reached  opposite conclusions with regard to

the  validity  and  rejLjLa^bjLjLj.t.yo^tjigc^a^jL£Lil.^^ted  depletion

vis-a-vis actual, real-world ozone  depletion.

         The United Kingdom report  placed  low  confidence in the

reliability of the  calculations, while  the NAS report expressed

high confidence  in  them.  A brief  quotation  from  each report is

illustrative and  representative:
         U.K.  Report [UK DOE,  1979,  p.  194 and p. 6]

         "It  is  not,   therefore,  realistic  to  assign  overall
         uncertainty  limits  to our  calculated  ozone  pertur-
         bations;  deficiencies  in  our basic  knowledge of  the
         processes   establishing   the   composition   of   the
         stratosphere  and in  the modelling technology cast doubts
         on their  validity....   The  report concludes that present
         understanding  of ozone  depletion is limited and is based
         on model  assumptions  which  have  not  been  adequately

         NAS Report  [NAS, 1979a, p.  1]

         "The   uncertainty range  means  that  for   the  case  of
         continued release of  CFMs  [chlorofluoromethanes,  e.g.,
         CFC-11 and  CFC-12] at  the 1977 level there  is a 1 chance
         in 40  that the ozone depletion  will  be  less than  5
         percent and 1 chance in 40  that it will be greater than
         28 percent....    Although there are a few exceptions the
         comparisons  between  the  models  and  measurements  of
         substances  in the present  stratosphere  is  considered  to
         be  satisfactory within  the  uncertainties  of  the
         measurements.     We,  therefore,   believe   that  the
         projections for  ozone  depletion  are  valid within  the
         stated uncertainty ranges."

         A more detailed  comparison  of quotations   from  the  NAS
and U.K.  reports appears as Appendix D.

         A report published in 1979, "The Stratosphere:   Present
and Future",  [NASA,  1979]  is a detailed  review  of  stratospheric
science.  Two items in that report bear comment.

         First, the  results  of  a  modeling exercise  conducted  by
NASA are given in this report.  Ten modeling  groups  were asked  to
perform several calculations using standard  input data.   Although
the  models  differed  in  some  respects,  "most  models  employed
similar  values for  many  of  these  parameters,   and  this  [was]
reflected in the agreement between  the  different model  results."
Not surprisingly,  the different  groups all calculated  about  the
same amount  of  ozone depletion at  steady state   [NASA,  1979,  p.
340],     It must  be  emphasized  that  this agreement among	the
several modeling groups  does not enhance or  increase the validity
of the calculations as claimed often by EPA.   All the  models  are
constructed  basically  the same way,  and all  used  very  similar
input data.  That the results are  similar was  an  expected result,
and demonstrates primarily  the  absence of computational  errors.
Consensus on the model output does  not  imply  consensus  on either
model completeness, correctness of the  input  data, or validity  of
the results.

         The second key  item  in  the report  is the  discussion  on
the potential for the detection of ozone changes  or  trends in  the
record of ozone measurements.  The  report states [NASA,  1979,  p.
325] that the  "percent thresholds  for  detecting  changes in ozone
globally  in 10  years using  the  best  statistical  methods  and
Dobson network data" are:

         "+3.6   For detecting  a  true   change  in global  average
                total ozone after  allowing for uncertainty due  to
                statistical error,  instrument drifts  and spatial
                sampling  biases."

         "+5.7  For detecting  a CFM  effect  after  allowing  for
                errors  above  plus  possible  variations  due   to
                other  anthropogenic  changes."

However,  the above thresholds  were obtained  by  subjective  esti-
mate of the likely size of the uncertainty.    It  is  important  to
be aware of the subjectivity of  these  estimates when one  compares
them with more recent  results  based  on acutal  ozone measurements.
NASA acknowledges the  very high  uncertainty  of the estimates with
the statement [NASA,  1979, p.  321]  (original emphasis  retained),

         "It should  be emphasized  that the values given for  the
         individual standard errors  in estimating the threshold
         for trend detection are,  for  the most part, quite soft."
         The  most  recent  scientific  assessment  of  the   ozone
depletion theory  is the report of the Commission of  the  European
Communities  to  the   Council  of  the  European   Communities,
"Chlorofluorocarbons  on  the  Environment"   [EEC,  1980].   This
report was  based,  in  part,  on the  analysis  of  the NAS  and U.K.
reports  by  Brasseur  [1980],    The  main  conclusion  of the
Commission report [EEC, 1980,  p.  7]  is noteworthy:

         "The  foregoing  analysis   shows  the  need  for  further
         research.  But if the requisite  decision  is  delayed, the
         likely  effect of  CFCs  may be greater  and  the con-
         sequences more serious.  The  British report shows that
         by extending  the date  of  an assumed total  cessation of
         CFC emissions from  1  January 1979 to 1 January 1983, the
         maximum  amount  by which   the  total quantity  of   ozone
         would be depleted would  increase from 0.5  percent  to 0.6
         percent  since,  according  to the   model,  the  interval
         between  the  cessation  of  emissions  and  the maximum 0.,
         depletion  lies  in   the  range   7   to 15  years.   Con-
         sequently,  a  delay  of  5 years  before  any  decision is
         taken on CFCs can be  reasonably  accepted."


     1.  Overview

         Ozone  concentration  has  been measured  regularly at  a
number  of  locations  (Dobson  stations)   around  the  world  for
varying lengths of time.  Several stations have been in operation
for over  20  years.   Most estimates up to  and  including  the 1979
NAS  report  concluded  that   although  the  system  of  measuring
stations  provided  useful   information regarding  ozone  concen-
tration,  the  natural  and  experimental  fluctuations  precluded
detection  of  small  trends,  unless  the accuracy, precision,  and
internal  consistency of the  system of  stations were  improved.
Such improvements were expected to require several years.
         The statistical method of time series analysis  had been
applied to  the measurements,  but historically lacked  the scope
and treatment  necessary  to  verify and reduce  the  sensitivity of
the method.   Nonetheless,  the work  was very promising,  requiring
only  the  development  time necessary  for  any new  application.
This  development  has  been  pursued   with  fruitful  results  --
only  now   receiving  the attention  they  merit  as  an  important
contribution  to  the science  concerning  ozone  depletion.   The
current status of the technique is summarized below:
 A time series  is  a set of  measurements  in time such  that  each
 measurement may be related to the  previous  or  several previous
 measurements, e.g., daily temperatures.  Time series analysis is
 a statistical technique to analyze the time series for patterns,
 cycles, or trends and to evaluate them quantitatively.

         •   Time   series  analyses  of   ozone   measurements
             (varyingly called  time-trend  analysis, ozone  trend
             analyses,  or  OTA)  completed  after  publication  of
             NASA  [1979]  and  the  NAS  [1979a]  reports  conclude
             that ozone increased  by  a small, but  statistically
             insignificant amount over the  period  1970-1978.

         •   The very high ozone concentrations measured  in  1979
             raise that increase  to a statistically  significant
             level,   at  the same  time demonstrating  the  sensi-
             tivity  of the technique to the trend  in the  data.

         •   The studies  establish  95 percent confidence  limits
             of  +_  1.0  percent to  4;  1.5  percent  on  the  trend

         •   The 95  percent  confidence limits  will narrow  with
             each subsequent  year of data.

         •   The studies  imply  ozone trend analysis can  serve  as
             an early warning  system.

         It is  important to understand exactly  what is  meant  by
these  results.   Clearly  they could  be  explained  if  the  ozone
depletion theory is  erroneous.   The absence  of  a trend  can  also
be explained  if the net ozone  trend  from  all recent effects  is
less than the threshold of detection,  a situation  in which two  or
more effects partially offset  each  other.   Statistical  trend  ana-
lysis,  therefore,  does not  unequivocally contradict  the  ozone
depletion theory.   For  example,  increases in atmospheric  carbon
dioxide may cause increases in ozone levels.

         The  rapidly  increasing  sensitivity  of  ozone trend
analyses  must   be   included  in  the  regulatory   decision-making
process.    The results of trend analysis  should  be  given as  much

importance  as the model  predictions of  ozone depletion  them-_
selves.    Ultimately,  the  regulatory  issue  is whether  ozone  is
being depleted or not, not what  is  predicted  by  computer models
programmed around numerous assumptions.

         Throughout  the Chlorofluorocarbon/Ozone Depletion Issue,
scientists  and  regulators have  focused attention  on calculated
theoretical  steady-state  ozone  depletion rather than experimental
ozone measurements  themselves.   The  reasons  for  this unusual
situation are:

         a).  If  the  theory  is  correct,  significant  ozone
              depletion will  occur only gradually decades in the
              future.   Accordingly,  it  was  considered  necessary
              to use computer models  to  estimate the magnitude of
              the depletion that  might occur.

         b) .  The  theoretical   depletion  calculated  to  have
              occurred already  was thought to  be  about  2 percent
              (recently   revised to  about  1  percent).    The
              scientific  community virtually assumed that such a
              change could not  be detected by the Dobson network.

     2.   Detail

         Hill  and  Sheldon [1975]  first  applied  time  series
analysis  to  Dobson  measurements   taken  from  1932-1970  at Arosa,
Switzerland, and used this technique  to predict  ozone  values at
Arosa in  the  period 1971  to 1974, and make qualitative  estimates
of ozone  levels  later in  the decade.   Subsequently,  Hill _et al.
[1977]  and  Pagano and Parzen [1975] applied ozone trend analysis
(time series analysis  applied to  ozone records) to a larger ozone
data record.   In  their most recent  work,  Hill  et al. [1977] and
Tiede  et al.   [1979]   pointed  out  that  no  evidence  of  ozone
depletion exists, and concluded  that  a  trend  of  1.5 percent per

decade could be detected  by  this  technique.   The trend could be
due to "one or a combination  of  man-related  activities,  long-term
natural trends, or instrument drifts."

         More  recent  work,  since  the  publication  of  the  NAS
report,  also  agrees  that  no  ozone  depletion has  occurred.
Reinsel ejt al.  [1980] analyzed  Dobson ozone measurements  from 36
stations worldwide.   Statistical,  instrumental, and geograpical
errors  were  considered.     They  found  that  the  global trend
estimate for total ozone change was  (0.28 _+ 1.4) percent  for the
period 1970-1978.   The uncertainty  limits  of this analysis (+ 1.4
percent)  are much  smaller  than those given in  NASA  [1979].

         St.  John  [1980a;  1980b]   used  a somewhat  different
approach and obtained results very  similar  .to those of   Reinsel
et al. St.  John reports that his analysis of 14 Dobson stations
with records from 1958  through  1978  show a change of (0.3 + 1.2)
percent through 1978.   More  recently,  St. John e_t al. ,  [1980]
have extended the analysis of 14 Dobson stations to include 1979
data.   An average  trend  of (+ 1.5  +  1.0)  percent is  found  for the
period 1959-1979,  with  the method responding as  it should to the
high 1979 values.   (See  below).

         Neither  the  Reinsel  et  al.  nor  the  St.  John study
identifies  the  cause  of   the  observed  effect, i.e.,   no ozone
depletion.   At this time,  any trend  -- up or  down — detected by
the  method  could  be   caused  by  natural   forces,   man-made
perturbations,  or  a combination  of  the  two.

         In addition,  Angell  and Korshover's  [1980] studies have
also shown the lack of ozone  depletion.

         "The 1979  data suggest the highest  global total-ozone
         value  since  1970,  or  a  value  a  significant  2  percent
         above average."


Angell [1978] has reported on the analysis of ozone measurements
in  the  32 km  -  46 km  region,  a part  of  the so-called Umkehr
data, where the greatest percent change  in  ozone  is calculated to
occur.   His  analysis  showed  a 12 percent increase in ozone from
1964-1972.  Photochemical theory at the time suggested about a 5_
percent decrease  should  have  occurred.   More  recently, Angell and
Korshover [1980]  updated the  report  saying:

         "Thus,	there is still  no  evidence  of  an anthropogeni-
         cally-induced  decrease ^n  ozone  in  t,his  sens^t^ve
         layer."   (emphasis  added).
         In  effect,  the Dobson  total  column ozone measurements
and  the  Umkehr stratospheric layer  ozone  measurements indicate
that  ozone  has   increased  in  concentration.    An  important
difference is  that  the  Dobson data have  been subjected to time
series analysis while the Umkehr data have not.  It is  important
to note that the  statistical  analyses  of Dobson measurements have
uncertainty limits  (95  percent  confidence)  for  detection  of any
trend  in the  range of  + 1.0  percent  to + 1.5 percent.   For
example,  St. John £t  al. , [1980; St. John,  1980a;  1980b]  shows
that above the 14  stations  used  in  the analysis, the best trend
estimate   for  ozone from  1958-1979  is  +  1.5  percent.    The  95
percent confidence  limits of  +_  1.0  percent mean  there is  only 1
chance in 40 the  increasing  trend is less than +  0.5 percent(+1.5
-1.0), and  1 chance  in  40  it is greater  than 2.5 percent(+1.5
 Umkehr  measurements  record  ozone  concentration  in  several
 distinct altitude  layers  of  the  stratosphere rather  than the
 more common  total  column  ozone measurements  which  measure the
 ozone in a  column of air extending  from  the surface of the  earth
 to the upper limits of the earth's  atmosphere.

         The sensitivity of the method  suggests  it appropriately
may be  used	as an early warning system.    If  a  small  ozone
depletion can  be  detected,  e.g.,  -1.5 percent  +_  1.0  percent  (a
range of  -0.5 to  -2.5  percent change  in ozone),  steps  can  be
taken quickly to  reduce  emissions  so  that,   in  this  example,
maximum  depletion would  not exceed 2.25  percent to  3.75 percent,
largely  below the 3.6 percent  detection  threshold value suggested
in  NASA  [1979].     (These  values  follow  from  the  "overshoot"
concept.  The 1.5 "overshoot"   factor times -1.5 percent and -2.5
percent  gives -2.25 percent and -3.75  percent,  respectively).

         Finally, Tiao [1980]  has  reported  on preliminary  studies
to  show that  the  Dobson network does   represent a true  global
average  of  ozone  measurements.  The  study involves analysis  of
the 1970-1977 Nimbus 4 satellite ozone data.  The global  average
ozone measurements from  the satellite show a  negative  trend  of
0.5 percent  per  year which has been  attributed to  drift  in the
satellite's  instrumentation  [Cunnold,  1980;   Stolarski,  1980].
The  known  but  unquantified  drift  in   the  instrument  prevents
derivation of  a  trend  in actual ozone  from  the satellite data.
However, Tiao also shows that  the  average trend  in ozone measured
by Nimbus  4  for  the  specific geographical regions near  the  36
Dobson  stations  used in  his  ozone  trend  analysis  is also -0.5
percent  per  year.    Therefore,  the  trend in average ozone levels
above the 36 Dobson stations is identical to the trend in  average
global  ozone levels  as  measured by Nimbus 4  during an  8-year
period,  which  leads  one  to conclude  reasonably that  the Dobson
network  measures true global average ozone.

         To summarize, ozone trend analysis is  a sensitive method
to monitor ozone levels in the stratosphere.  Ozone  depletion has
not occurred.    It is unreasonable  to  suggest  that  highly uncer-
tain  computer model  calculations are  more reliable  than time
series analyses of actual ozone measurements, when the latter;

•   Show  increase  in  ozone  of  more  than  1  percent,
    rather than depletion,

•   Are sensitive enough  (+_ 1 percent  to  +_ 1.5 percent)
    to  detect  quickly  any excursion  of  ozone  outside
    normal levels,

•   Become more sensitive with time.


         The justification for proposed  rulemaking  on  CFCs  by  EPA
is stated in the opening sentence of  the ANPR:

         "Because  of  the   destructive  effect  of   chlorofluoro-
         carbons   (CFCs)   on  stratospheric  ozone,   EPA   is
         considering restricting  their  production  such that  the
         potential  for  ozone  depletion does  not  increase over
         present levels."
Clearly, the  assumption is  that  ozone  is  decreasing.   Just  as
clearly, the  tacit assumption  is  that CFCs,  in  and  of themselves
and regardless  of  other natural and man-made  long-term changes,
will cause such a  decrease  unless  emissions  are controlled.   For
a  number  of   reasons,   the   analysis  which  has   led  to   these
assumptions is inadequate.

         A very serious problem appears in defining the scope  of
the problem.  Unlike most regulatory  issues  facing  the Agency,  in
which  a single  chemical  species might  produce  a  deleterious
effect .regardless  of  other  circumstances  (e.g.,  certain  toxic
substances),  changes  in  ozone  are  controlled  by  a  variety  of
coupled  chemical  reactions.   In  order  to understand changes  in
ozone,   it  is  necessary   to   understand   all   such  effects
simultaneously.  EPA acknowledges in  the ANPR that  it  "has  relied
primarily on  the  scientific  analysis of the National Academy  of
Sciences [NAS,  1979a;  1979b]  for support of this theory as well
as for an assessment of  the  potential hazards  posed by  continued
world emissions of CFCs." The  now  already outdated  report  of  the
Panel on  Stratospheric  Chemistry and Transport  [NAS, 1979a,  p.
14] notes  that  it  is  "difficult  to project  accurately the  effect
of  increased  halocarbon  release  when  the  release  of  other
man-made  pollutants  may  also  be  increasing  in  a  undetermined
way."   However,  the  Panel does not  consider  other  perturbations
in  either  the scenarios  for  calculations  into the future or  in
the error  analysis  of  their results. The entire approach  treats

CFCs as  if  they were  the only  chemical  substances  which might
produce effects on  ozone,  i.e.,  as if the CFC perturbation were
separable  from  other  effects occurring  simultaneously.   With
regard to ozone and protection of the  environment,  the  problem  is
not that  simple.   The possibility of  CFC effects combined with
C02 or N20 changes  is well documented  by  NASA in  another  of EPA's
cited references [NASA, 1979],  Numerous  technical papers  [e.g.,
Miller  e_t  al., 1980c;   Penner,   1980a]  further  document  this
situation.   The narrow view  implicitly  ignores  the  real world
issue in  favor  of  one which seems more tractable.  As discussed
below and  in Appendix E,  serious problems  remain  even  in this
narrower approach.

         Lack of attention  to  the  real  world is also  evident  in
the  treatment  afforded  to  ozone  measurements  themselves.
Scientifically,  it  is undoubtedly  important  to understand causes
of  ozone  changes,   and  furthermore to detect  such changes with
sufficient  sensi'tivity  to assign  a  cause.    However,  this very
strong  demand  is   not  immediately applicable  to the  regulatory
problem.   Given a   theory  about  possible changes  in ozone, any
changes which might be demonstrations of that theory are cause
for concern.   This  remains  true  even  if such  changes  are not
unambiguously  related to  the  theory.   Thus,  the  important
regulatory question becomes:  "How large  must a trend  in  ozone  be
to be detected,  regardless of its cause?"   In the ANPR  EPA states
it has been motivated to  take  action  now  rather  than to  wait for
better  information  since  "validation  of  the  ozone  depletion
theory  through  environmental  monitoring  is   limited  because   a
minimum ozone change of approximately  5 percent  over a period  of
ten years would be  required before a  depletion could be  observed
with statistical  confidence."   The  analysis  is  incorrect for
several reasons.

         First,  the figures quoted represent  "best guesses"  [NAS,
1979a, p.  93]  and  "estimates" [NASA,  1979,  p.  286]  made without

analysis  to  determine  actual  statistical  significance  of  the
data.   Furthermore,  the  quoted  numbers referred to the specific
scientific question  of  demonstrating  cause and  effect,  rather
than to the immediate regulatory  question  of  identifying changes.
The  EPA  analysis  is  misdirected;   it  also  ignores   available
information.     Statistical   analyses   of  the   actual   ozone
measurements  have  been  made,  and were  available  to  EPA [CMA,
1980a].  A small trend would  be detectable,  but  it  is not  present
[St. John  e_t  al. , 1980;  Reinsel jit  al. ,  1980; Watson,  R.  T.,
1980].   Rather  than  5  percent, a trend of only 1  to 1.5  percent
would  be  detectable  over  10  years.    Any  "overshoot"  would
similarly be  reduced.  Calculations  based  on  current theory imply
an  overshoot  of  no  more than   half  the  amount  of   depletion
existing  at  the  end  of  emissions.    Thus,  even  if  the  theory
proves  correct,  responsible  action is  capable of  limiting
ultimate  depletion  to  and  below EPA's  5  percent [EPA,  1980a,
Jellinek, 1980a].  The fact  is  that  depletion which is  calculated
to have occurred already has  not  been  observed.  On the  contrary,
in  several recent  sophisticated  analyses of ozone data,  slight
increases  in  ozone  have been  noted, as  discussed  immediately
preceding this  section.  This  fact has been  ignored.  (Still more
details are presented in Appendix E).

         EPA's   inattention  to  the  capabilities   of   ozone
measurements  and  analysis  has   allowed  many   other   misleading
points   to be   made   in  the  ANPR.     Large steady-state ozone
depletion is simply  not  a viable possibility.   Even the  largest
estimates of  trend detectability  would allow for early action if
it  becomes  necessary.    Large  calculated numbers   based  on
unrealistic future situations  do  not justify  immediate  action.

         Concern over growth  in production is likewise  misplaced.
In  the  first   place,  large-scale  growth  of   7   percent or  9
percent per year  is  not  reasonable because  of its requirements
for  new  production capacity.   Furthermore,  capacity has  already

been limited  for  European producers by  actions  of the European
Economic Community, and significant production capacity has been
dismantled in the U.S.   To describe 9 percent  future growth based
on  the  recent historical  record  of production  [CMA,  1980b]   is
equally unsupportable.   In  addition, a  point  which is neglected
in  the  EPA  statement  regarding  such growth is the effectiveness
of  mere concern  as a  deterrent  to  increased  production   (see
Section VII-Economics).   A  sensible businessman simply would not
risk  a   large amount  of  investment  capital  in  a  threatened
industry for  what  could be  a very short-term  return.   In short,
the  projected  growth  represents a  naive  view  of  business
sensibilities, and  concerns  over  such  growth  are misdirected  as
are  the ANPR arguments which depend  on growth.    (For further
discussion on this point,  see Appendix  J).

         Realistic  considerations  are  equally missing  from the
EPA discussion of  atmospheric modeling.   To quote a basic text,
"An Introduction to Scientific Research"  [Wilson, 1952]:

         "A  successful  scientist  knows  that all  models  are
         somewhat  defective  and  that  certain aspects  of  his
         visualization  do  not apply to  the  problem  in hand."
One  must  realize   that  atmospheric  models  do   not  predict  a
realistic future.   Models may, however,  be  used to calculate the
consequences of a  set of  assumptions about the future.   Thus, a
modeler  honestly  describing  his  work  on   the CFC  problem must
qualify  his  "predictions"  (a  more   appropriate   word   is
"calculations")   with  a number  of  caveats.   The  results  will
obtain  only,  if 1)  the model  is complete,  2)  input  data  are
accurate, and 3) approximations are justified.  Furthermore, the
"future" as calculated  in atmospheric models  bears little resem-
blance  to the future as we  expect it to be.   Models assume that
all inputs to the  stratosphere remain constant except the varia-
ble(s)   under  consideration.   Simple examples  of expected depart-
ure from the CFC scenarios abound:  CO-  is  increasing; N20 is


thought to be increasing;  other chlorine-containing  compounds are
possibly increasing; natural events may have unpredictable long-
term  effects;  aircraft  and space  shuttle  fleets are  likely to
continue injecting increasing  amounts  of nitrogen oxides, etc. In
short, models  "predict"  only  what would happen  in  a simplified
idealized  atmosphere with  a  number  of   qualifications.    The
limitations of models do  not  imply  that they  are unimportant or
useless, but merely that they  are  imperfect  research  tools.   (The
imperfections are  described  in considerable detail  in Appendix
         The  continued  emphasis  in  the  ANPR  on  "predicted
effects", without acknowledgement of the many serious actual and
potential differences between the model "future" and reality, is
particularly  dangerous  in   that  the  political  decisions  will
ultimately be made not by the  scientists  who take such  restric-
tions  for  granted   but  by  layment  who  may  not  be   properly

         Along with  the  capabilities of  the models themselves,
the  input  information  necessary  for  such  calculations  is
inaccurately discussed in the ANPR.   As  an  example:

         "The  chemical  reaction   rate  coefficients   and  the
         photolysis  rate  coefficients (measures  of  the speed with
         which   reactions   occur),   the   vertical  diffusion
         coefficients .(a  measure of  the  speed of  the   vertical
         transport),   and  other  parameters  needed to  produce  a
         numerical solution  have generally  been measured either
         in  the  field  or  in  the  laboratory.    A   few  are
The  chemical   reaction  and  photolysis  rate  coefficients  have
indeed  in  most  cases  been  measured, but  only  under laboratory
conditions.  A number of  them have  been  measured at more  than one
temperature and  a smaller number at  more than  one pressure, yet
both  temperature and  pressure  often  influence   the  rates  of

reactions.    However,  only  a  very  small number have been measured
over  the  full range of  temperature and  pressure conditions
occurring in the stratosphere.

         In the absence of  appropriate measurements, modelers use
extrapolations where  limited  data  are available.  But in the case
of measurement  at a  single  set  of  conditions, 'temperature  or
pressure dependencies  generally  are  assumed to  be nonexistent.
Such extrapolations and assumptions are  sometimes justified,  but
almost equally often  wrong.   (Specific examples will be discussed
below).  In many cases, the values chosen for models represent a
compromise  between disagreeing  measurements,  again contributing
to overall  uncertainty.

         Diffusion  coefficients  are another  matter  entirely.
Representation of  vertical  transport  by diffusion coefficients is
itself  an  unproven  hypothesis  —  a   simplification  of  the
three-dimensional circulation patterns of the atmosphere  to
"model"  vertical   transport.    Such  coefficients  are  derived,
rather  than  measured,  by  fitting an  assumed  mathematical
expression   to  measured  species  concentrations.    They  are  a
mathematical  representation  of  a  much more  complex phenomenon,
and are chosen to  produce  reasonable  agreement between calculated
and measured  results  for atmospheric species which appear  to be
well  understood.   The  applicability  to  other  chemical  species
again  involves  an  assumption.   (A discussion  of  eddy  diffusion
theory  and  its use  limitations  in modeling   is  included  in
Appendix E).

         The implied  satisfaction  with these input parameters in
the ANPR belies the dynamic nature of atmospheric science.    New
information (much  of which  is discussed  in detail in Appendix E)
continues to arise from ongoing  research, modifying earlier model
inputs and demonstrating that,  in  effect, far  more  than  "a few"
of  the input  parameters   "are  estimates".    As the  parameters

change, so will  the  calculated  depletion.   As our  understanding
of  atmospheric  processes  evolves,  so  will  the models  used to
simulate them.  The ANPR acknowledges  that  "simplifications"  have
been introduced  into these models, but  cites only the  limitation
to  one-dimensional  (1-D)  models.    Other  simplifications  are
numerous  and  potentially  at   least  as  significant.    Despite
apparent  concern over  the  1-D  approximation,   no  reference
whatsoever  is made  to  the two-dimensional modeling  now being
developed, or to the results  of  2-D models  made  available during
the past year since the  NAS report.

         In  the ANPR, EPA has chosen to rely on a 1979 report on
possible ozone depletion,  its conclusions, and  its  discussion of
uncertainties.   The above-mentioned  rapid pace of the science
makes  the construction  of such  a report  a  difficult  task, and
furthermore   quickly  outdates a  summary assessment  made  at any
given  time.    The  year since  the issuance  of the report has  been
marked  with  a number  of  new  developments,  some of which  have
dramatic  impacts  on  the  perceived  severity  of  potential  CFC
effects.  Those  developments have arisen  from  the   many ongoing
research programs  in academia,   industry,  and  government.    Each
such  development   is discussed  thoroughly  in  the  review  which
follows in this section  and in  Appendix  E.

         An   additonal risk  in  reliance on  any  single  review is
the  possibility  of  false  indications  of  scientific  consensus.
Several documents made  available to the EPA before  and after the
issuance of  the  NAS reports, and  before  the publication of the
ANPR,  point  out  the variety of  opinion  which  exists [UK  DOE,
1979;  Du Pont, 1980a; 1980b; CMA, 1980a; EEC, 1980].   That  these
are rejected summarily  and  without explanation  is puzzling.

         One cannot overestimate the importance of  understanding
the uncertainties  involved.  The NAS attempted to quantify  these
uncertainties  [NAS,  1980a] ,   and   their  efforts  have   been

criticized [Du Pont,  1980a;  1980b].   But  throughout the exercise,
the  NAS made clear  that  the uncertainty estimates were, in
general, subjective —  a  "best  professional  judgment".     Such
caveats cannot be  ignored.   To report such confidence limits as
objectively derived  science  without qualification is  to  ignore
something basic to the  scientific  process.   In referring  to the
role of human bias in science,  Wilson [1952] wrote:

         "No  human being  is even  approximately  free  from these
         subjective   influences;   the honest  and  enlightened
         investigator  devises  the   experiment  so that  this  own
         prejudices cannot influence the  results.  Only the naive
         or  dishonest claim  that   their own  objectivity is  a
         sufficient safeguard."
The  NAS  panel,  of  course,  was  careful  to  point  out  the
subjectivity  surrounding  many of   its  estimates.    However, in
spite  of  additional   cautions  on  that  point   [Du  Pont,   1980a] ,
summary  statements  which neglect  to mention  such restrictions
have now been  taken by  EPA  to  provide the basis for  regulation.
The detailed discussions in  the next section and  Appendices E and
F  reiterate  the claim  that those  estimates  of  an   uncertainty
range were  far too narrow,  and that the year-old assessment of
the issue is an overstatement  of its severity.

         Overstatement of severity extends also to the second of
the NAS reports which have provided the  basis for EPA's proposed
actions  [NAS,  1979b] .   The  primary danger of ozone depletion is
cited as risk of greater exposure  to ultraviolet  radiation at the
earth's' surface.     It   is  well   known  both  that   different
wavelengths of  ultraviolet  radiation are  attenuated  in   varying
amounts by ozone and  that any  biological effects are also likely
to be  wavelength  dependent.   In  combining these  variations to
discuss  the  effective change, the  NAS   Committee on  Impacts of
Stratospheric Change  [1979b]  chose  to gauge  effectiveness  at  each
wavelength by the potential  for  DNA damage,  which  is,   perhaps
coincidentally,  the   procedure  which  results  in  the  greatest


increase in  "damaging  ultraviolet"  (DUV)  for any given decrease
in ozone.  While the report makes  clear  the  hazards of assuming a
given  spectrum  (i.e.,  a  particular  gauge  of  effectiveness  for
different wavelengths  of  UV) without  examining  each individual
effect,  it  is  the defined  DUV  change  which is  cited  by  EPA as
posing a danger  to humans,  other animals,  and plants.

         To summarize briefly,  the scientific rationale  advanced
by EPA  as  the  basis for  proposed rulemaking  suffers  from many
shortcomings, each  of  which may  impact  an ultimate regulatory

         •   The chosen scope of the  problem is too narrow.

         •   The  scientific  basis for  results discussed  is  not

         •   New information is  ignored.

         •   Uncertainties   and  weaknesses  in   science  are   not
             clearly stated or  acknowledged.

         •   Scientific consensus  is gauged by a single document
             in  the face   of   several   others  with  disparate

         •   Little attention is paid to  the distinction  between
             scientific exercises  and the  real world.

         •   Conclusions  are overstated.

         It  is  essential  to clarify  the  actual  state  of   the
science  at  the time  of  regultory  decisions.    In   the  face of
uncertainty, such decisions  are extremely difficult; in the face
of  inadequate,  incorrect  or misleading  information,  they will

often be wrong.  In the  section which  follows  and  in  more  detail
in Appendix E, each aspect of the  atmospheric science  involved in
potential ozone depletion is  reviewed  thoroughly,  with  reference
both to  earlier reviews  and  to more  recent information.    This
review also advances what is felt  to be both a  more realistic and
a  more  complete   assessment  of  the  current  state  of science
surrounding the Chlorofluorocarbon/Ozone Theory.


         This section discusses key uncertainties in the  science
of the  ozone depletion theory and  new information which  became
available  after  the NAS  [1979a] and  NASA  [1979]  reports  were
published.   Each  step  of  the theory is assessed and its  current
status is summarized.  In  paticular, the differences with  respect
to the expressed view of EPA are  noted.

     1.  Production and Release of CFCs

         The historical CFC production and  emissions  data  used
for input to models  are well established, and are discussed  more
thoroughly elsewhere in this document  (Appendix  J).  However,  CFC
releases for the future are in  all cases merely  scenarios.  There
is not,  nor can there be, any  general  consensus of what  releases
might be more than a few years  from now,  due  to  the   very  high
connection  between  business   decisions  and  the  regulatory
decisions  which  might  be  made  during  those  years.    Thus,   the
major  uncertainty  here  lies  in  the  interpretation  of model
results  for a  given  scenario  and  in the  likelihood  of  that
scenario ever occurring.

     2.  Lower Atmospheric (Tropospheric)  Processes

         The primary  role  the  troposphere may  play in the ozone
depletion  theory  is in the  possible  destruction of CFCs-11  and
12.   Research  has so far  failed  to demonstrate the significance
of any  possible mechanism,  but  several  efforts  continue.    The
emphasis  of  recent research  results   has  been  in  the  use  of
tropospheric trace  species measurements to provide indication of
sink processes for the CFCs.

      a. CFC-11 and CFC-12 Lifetimes

         The atmospheric lifetimes of  CFC-11  and CFC-12 have been
believed generally  to  be  long,  e.g.,  50-100  years.  The  reasons

         •   Systematic analysis  of  known tropospheric destruc-
             tion processes  indicated  none are likely to remove
             any significant  fraction of  CFCs from  the  tropo-

         •   Measured  values of  CFCs  in the troposphere  are
             consistent with  the conclusion  that CFC-11  and
             CFC-12 have long atmospheric  lifetimes.

         Clearly, unknown  processes which destroy CFCs have not
been evaluated,  if  they exist.    The  first  item  above  says the
processes  that  have been  evaluated  do not  destroy significant
amounts  of  CFCs.     It  does not establish that  CFCs  are not
destroyed in the troposphere.

         The second  item  ignores  errors  in the measurements and
calculations of the total  amount  of CFCs in the atmosphere.  Even
a slow removal  process  of  2 percent per year,  would  be  important
to the theory,  and  would not yet  be detected  by the  measurements.

         Nonetheless,  the  model  calculations  assume  all  CFC-11
and CFC-12  released  to the atmosphere reaches the  stratosphere,
and all  the  chlorine content of  these CFCs  participates  in the
ozone destruction  cycle.    Obviously,  any fraction of chlorine
which does  not  reach  the  stratosphere  reduces calculated ozone
depletion proportionately.

         An experiment  called the Atmospheric Lifetime Experiment
(ALE)  has  been  in progress  since  1978  to  measure  the atmospheric

lifetime of CFC-11 and CFC-12.  The methodology of the experiment
appears in the scientific literature [Cunnold et. al. ,  1978],   The
objective  of  the  experiment  is  to  measure  CFC-11  and  CFC-12
concentrations for 3  years  or  longer,  several  times each  day,  at
4  or  more  remote  sites throughout  the  world.    The  measured
increase in concentration of CFCs  versus time,  i.e.,  the trend  in
CFC  concentrations,  is  compared  to that  calculated  from  known
.releases of  CFCs over  the  same time  period.   The lifetimes  of
'CFC-11 and CFC-12 then  are  calculated  by comparing the  two  trend

         Preliminary results  from  18  months of  measurements
indicate the lifetime of CFC-11 is about one-half  that assumed  in
the  NAS  report  [1979a]   and  elsewhere,  i.e.,  about one-half  the
calculated 50-year lifetime from stratospheric  destruction alone.
At this time  the value  still has  large  uncertainty limits  which
Include the  longer lifetimes,  but  the  limits will become  rapidly
smaller as more  measurements are  recorded.   If this  lifetime  is
confirmed,  the  effects  of CFC-11  on ozone,  if  any, will  be
halved.  Similarly, any  process that removes CFC-11 is  likely  to
remove CFC-12 but at a slower rate.   It, therefore,  is reasonable
to expect  that some  significant fraction  of CFC-12  may  also  be
removed  in  the  troposphere,  with  a  proportional  reduction  in
calculated ozone depletion.

      b. CFC-21

         CFC-21  has  been detected  in the  troposphere  by  several
research groups  [Rasmussen  ^t  al.,  1977;  Penkett et  al.,  1980;
Crescentini  and  Bruner,  1979;  1980;  Singh _et  al.,  1977;   Cronn
and  Harsch,  1979]  at concentrations ranging from 1  to  15  parts
per  trillion  by  volume,  (pptv.).  An early suggestion that  it  is
an artifact  of the analysis  (absorption of  the  CFC-21  standard
onto  "Teflon"  parts  of  the  analytical apparatus and  desorption
during  analysis  of  air samples)  has  not  been supported  [NASA,

1979,  p.  92].   At  these measured levels,  the amount  of  CFC-21
exceeds  that  produced  globally  by about  a factor  of  100-1000.
That being the case,  it  has  been  suggested  that  CFC-21  is  formed
in the atmosphere from CFC-11.

                   CFC13	^ CHFC112                (12)

         If  that  is  the  case,   the  production  of  CFC-21 . from
CFC-11 must,  in fact,  be occurring  at  a  faster  rate  than  the
destruction of CFC-21  by reaction with OH  radical,  a  relatively
fast  process.   In  short,  process  (12)  would  be a significant
tropospheric sink for CFC-11.

         The destruction  of CFC-11 and CFC-12 on sand surfaces
has  been studied  [Ausloss  e_t  al. ,   1977;  Ausloss  and Rebbert,
1980], In  one  experiment,   in  the absence of  air, CFC-21  was
formed from  CFC-11  in  the  presence  of  sand,  but  not  when  air
(oxygen)  was  present.   More  recently,  two research groups  have
obtained  widely  different  results   from   the  analysis  of  air
samples  collected  at  different  times  and  places.     One  group
[Penkett et al. , 1980]  consistently  found  CFC-21  in  the 1-3 pptv
concentration  range,  while  the   other  [Crescentini  and  Bruner,
1979;  1980]   found   low   values   (1-3  pptv)  both in   rural  and
industrialized areas (in one case, no CFC-21 was found  near a CFC
production plant) ,  but  very high amounts  (up  to  100  pptv)  of
CFC-21 in air masses that passed over the  Saraha Desert.

         In summary:

         •   The ALE  research suggests  an unknown  tropospheric
             sink exists for CFC-11,  and  possibly CFC-12.

         •   CFC-21  may  be  a  degradation  product  of  CFC-11,
             presumably formed on sand surfaces.


         •   Background levels of CFC-21 are low but may be high
             in air masses  that  pass over desert areas.

      c. CFC-22

         CFC-22 is  a  commercial product and is  released  to the
atmosphere.    Recent analyses  [Rasmussen  et at.,  1980]  suggest
that the quantity  of CFC-22 in the  atmosphere is much larger than
that from estimated releases.   Several possible explanations are:

         •   The measurements  are in error.

         •   The release estimates  are in error.

         •   A  production  process for CFC-22  exists  in  the

If  the  latter  were  true,  CFC-12  would be  a  likely  source  of

              CF2C12	^  CHC1F2               (13)

by analogy with the discussion for  CFC-ll/CFC-21.  If so, reduced
quantities  of  CFC-12  would  reach  the  stratosphere,  with  a
resultant reduction in  calculated ozone  depletion.

     3.   Transport to the Upper  Atmosphere

         In an  atmospheric model,  transport is  the  movement  of
chemical  species.    In  a   1-D  model,   transport  describes  the
movement of species  in  the vertical direction;   in  a 2-D model,
movement   is   described   in  the  vertical  and   latitudinal
(north-south)  directions.   The  diffusive movement  of species  is
described  mathematically,   and  the altitude-dependent  rate  of
transport is  defined by  an eddy-diffusion  coefficient.   These

coefficients are chosen  to  produce agreement with measurements of
long-lived  species.    Two-dimensional  models  also  contain  an
average air circulation  in  addition to diffusion.

         The NAS  report  [1979a,  p.11]  states,  "It is  felt  that
the  uncertainty  in  the eddy-diffusion  coefficent  at a  given
altitude  is  about a factor  of  2,  although it is  admitted  that
this uncertainty estimate is  somewhat subjective."  Other studies
show calculated ozone depletion  is very  sensitive  to the  choice
of transport.   Derwent  [UK DOE,  1979, p.158] made  several  ozone
depletion calculations,  changing only the transport from one run
to  the  next.   He  used  transport parameters  reported by  five
well-recognized  modeling  groups  throughout  the world.    The
calculated ozone  depletion  in this  study  ranged over  nearly  a
factor of 4 depending on the  transport description used.

         Based  on  this  study,  calculated  ozone  depletion  is
uncertain by  as much as a  factor of 4,  whereas  NAS  limited its
uncertainty estimate to  a factor of 2.   It  is  just this sort of
underestimation  which  can  lead  to overconfidence  in model

     4.  Chemistry in the Lower  and Upper Atmosphere

         The year  since  the  release of the NAS  [1979a]  report has
brought  several major  changes in  the  accepted  set  of reaction
rates  [Chang, 1980],  Also included in the most  recent revisions
are many  minor  changes.   The  net  effect has been a  reduction in
calculated  steady-state  ozone depletion to  roughly 7  to 10
percent rather than the  much higher numbers calculated by  most
modelers in 1979 [NASA,  1979; NAS,  1979a] .

         At least  as important  as the changes in  ozone  depletion
calculations is the increased awareness  of  uncertainty in the
reaction rate data used  to  derive those  results.  Many  of the new

rate  results have come  as  a  surprise to  kineticists.      The
importance  of  accurate  temperature  and pressure dependence
measurements has surfaced as a major issue, particularly  for the
chemistry of the hydroperoxyl  (HO-)  radical.  This radical reacts
with  most  of   the  major  stratospheric   chemical  species,  and
strongly  influences  their concentrations.   Reaction  product
identification,   likewise,  has  been  a  major  issue,  with  the
realization  that assumed products may not  always  be correct and
that  alternative products  (i.e.,  different reaction "channels")
may lead to  very different calculated ozone depletion.

         The uncertainty,  of course,  extends  in both directions.
Resolution of the uncertainties may  lead  to  either  increases or
decreases in calculated  ozone  depletion.  However, they reinforce
the contention  that stratospheric chemistry is simply not well
enough understood to  permit  confidence in current model calcula-

         The major  developments  may  be  summarized  briefly  as

         •   Recent  studies  have  shown several reactions  of the
             hydroxyl  (OH)  radical  may be faster  than  thought
             previously.   The  faster  rates substantially reduce
             calculated  ozone  depletion.

         •   Several  other changes  in kinetic  and photochemical
             data contribute to further  reductions in calculated
             depletion.    They reflect  the major  uncertainties
             still  present   in   the  model  input  data   set,
             particularly   with   respect   to  temperature  and
             pressure dependencies.

         •   For several  important  chemical  reactions,   alter-
             native  products to those assumed  are possible.  The


             alternative  products,   if  formed,  would  reduce
             substantially calculated ozone depeltion.

         •   The rate of formation  of  chlorine  nitrate and  its
             fate   in  the  stratosphere,  are  not  well  defined.
             Since  this  species  has  a  large  influence   on
             calculated  ozone  depletion,  the  calculations  remain
             highly  uncertain,,   and  could  vary  in  either
             di rection.

         a.   Hydroxyl  Radical Reactions

              i.  Hydroxyl Radical and Nitric Acid

         In  a recent  study  [Wine et al., 1980],  the rate of  the
OH + HN03 reaction has  been found  to  be  significantly  faster  at
stratospheric temperatures  than that  measured  previously.    The
effect is to increase  the rate of removal — lower the  calculated
average concentration — of  OH  in  the  lower stratosphere.   This,
in turn,  slows  the conversion  of  "inactive" HC1  to "active"  Cl
                      OH  +  HC1	^  H20 + Cl

which may participate  in the ozone  depletion  cycle  (Reactions  6
and 7)  on  p.  IV-8, which,  in  turn,  lowers the  predicted  ozone
depletion  calculations.   These  results  agree with several
atmospheric measurements  (discussed  in section  6 below)  which
suggest    indirectly   that   calculated   stratospheric   OH
concentrations are too high.  No  direct measurement of  OH  in  the
stratosphere is available.   The  effect  of  the new reaction  rate
depends on the reaction products

              OH + HN03 - »  H20 + N03          (8a)
                       - ^  H0  + N0          (8b)
The Lawrence  Livermore  Laboratory model calculated  steady-state
ozone depletion  of 9.5  percent  if Reaction  8a  occurs and  12.3
percent if Reaction 8b occurs [Wine ^t al. ,  1980] .   Products  (8a)
seem more likely to form since the  reaction path  is  simplier  and
these products are more  stable.   The  reactions are  under  study.
Kurylo  [1980]  has  recent  preliminary  data  confirming the  rate,
although new values [Marinella ert al. , 1980]  are  somewhat  lower.
Marinella ^t al. ,  [1980] also  identify  the  major  product  channel
as (8a) .

             ii.   Hydroxyl  Radical and Peroxynitric Acid

         Recently,  the photolytic lifetime  of  peroxynitric  acid,
H02NC>2,   in  the  stratosphere  was shown  to  be  much longer  than
thought  previously [Molina  and   Molina,  1980a;  1980b] .    As  a
result,  other destruction processes, e.g.,  reaction with  OH,  have
become important.  Two new  measurements [Littlejohn and Johnston,
1980;   Barker  _et  al. ,   1980]  of  the  OH  reaction  indicate  a
relatively fast  rate, which might be  expected,  by  analogy  to  the
OH + HNO-, and OH + H202  reactions.  The effect  of  a  fast  rate is
similar  to  that  for  the  nitric  acid  reaction --  reduced
stratospheric OH  concentration and  reduced calculated ozone
depletion.   Use of  the average of the  new  rates with that  of  Wine
et al. , for OH + HN03 reduces  calculated depletion still  further
to about 6.0 percent.

            iii.   Hydroxyl  Radical and Hydroperoxyl Radical

         Several measured values  [Hack ejt  al_. , 1978;  Burrows
£t_ al. , 1978a; 1978b; Chang and  Kaufman, 1978;  Demore, 1979;  and

Hochanadel e_t  al.,  1972]  of  the  rate of the  OH  + H02  reaction
vary over  a  range  of a factor  of  10.  However,  a slow  rate  for
the  reaction  is used in  computer  models.   If the fast rate  is
correct instead, or  a  pressure dependence exists, the  effect  is
similar to that  of  nitric acid and peroxynitric  acid — reduced
stratospheric  OH  concentration  and  reduced calculated  ozone

         It should be noted that reduced  calculated ozone deple-
tion  is more nearly consistent with the results  of  ozone trend

         b.  Pressure and  Temperature Dependencies

         Several minor  revisions  have contributed to the recent
reductions in  calculated  ozone  depletion,  and reflect   the
continuing uncertainty  involved in  model  input  data.   Much  of
this uncertainty lies in the lack  of  adequate  data  concerning  the
dependencies of rate constants on  pressure and  temperature.  Even
where  data are  available,  as  in this  example   of  H02 +  H02,
individual studies are  often incomplete.   An attempt will be made
in the new NASA recommendations [Chang, 1980]  to gather  this rate
data for  H02  +  H02  into  an  altitude-dependent form.   For most
reactions, pressure dependence has not been measured or has been
measured over a  very limited  range.   Temperature dependence data
are considerably more  satisfactory,  but   are  far  from  complete.
The necessary  assumptions made (usually  that  the reaction rate
does not vary with pressure or temperature) to  permit  modeling  of
a reaction with  incomplete  data confound attempts to adequately
estimate uncertainty.

         Other dependencies noted  for some reactions,  such as  the
variation   of  the H02 + H02  rate  with water  vapor concentration
[e.g.,  Lii et al, 1979]  have not been investigated  for most


reactions, and  add to  the caution  necessary  in  viewing  model

         c.  Alternative Reaction Products

         For  each  of  the following  reactions,  the  assumed
products  (reaction a)  and  alternative  products  (reaction b)  are
              H02 + CIO
              HO + CIO

              HOC1 + h
HOC1 + 0,
HC1 + 0
+ Cl
HC1 + 0.
HO + Cl
HC1 + 0
If  reaction  b  occurred to the  extent  of 10 percent  for  any of
the  above  reactions,  the increased  production  of  HC1  removes
chlorine from the catalytic cycle and calculated ozone depletion
would be reduced significantly  [Howard, 1980],

         Multiple  reaction  possibilities  (channels)  for  the
reactions  are   theoretically  possible  and  experimental  obser-
vations  have been  explained  in  terms  of  alternative  reaction
pathways at  stratospheric temperatures.  Stimpfle et al. ,  [1979]
mentioned channel 9b as a possible  explanation  for  the  unusual
curvature of the  rate-versus-temperature  data  they measured for
the H02 + CIO reaction.

         Until  the  products   of  these  reactions  have  been
determined  quantitatively at  stratospheric  temperatures and
pressures,  the  uncertainty exists that ozone depletion is  vastly
overestimated  because  HC1 channels  are  not  included in  model

         d.  Chlorine Nitrate

         Chlorine  nitrate  is  a  very  important  species  in  the
stratosphere.  It is formed by the  reaction

                      CIO + N02 	> C10N02
The reactants,  CIO  and N02,  are  both part of ozone  destruction
cycles  (Reactions 6  and  7,  Reactions 4 and  5  -  p. IV-8), while
chlorine nitrate  is  inactive.   The rate of formation  of  chlorine
nitrate in the stratosphere and  its subsequent  fate can have
direct effects on calculated ozone depletion.

         To evaluate the effects,  the following must be known:

         •   The rate of formation of C10N02.

         •   The destruction (photolysis)  rate of C10N02.

         •   The subsequent  reactions of the  photolysis products.

         •   All  the  above  for  any  isomers,  e.g.,   OC10NO  or
             C100NO of C1N03.

Since this  information is not  available,  the  effects of  ClON02
and/or  its isomers  are  estimated  only with  a  high  degree  of
uncertainty.   Recently,  Molina e_t  al. ,   [1980]   suggested  that
other isomers are  important.   Should they be formed and be  less
stable than C10N02,  calculated depletion could be increased.

     5.   Atmospheric  Models

         As in the area  of  chemistry,  research in  modeling  has
continued at a rapid pace during 1980.   The  models  represent  an
attempt  to  synthesize  the mass  of experimental and  theoretical
information into interpretable results.   As  such,  use of state-
of-the-art calculations  is imperative.    All information must  be
considered,  and  the prognostic  capabilities  of  models must  be
tested whenever  possible.

         The key research of the past  year  has  produced several

         •   Two-dimensional   (2-D)   models   (including  both
             latitude  and  altitude  variation)  permit  more
             detailed  calculations   of   the  atmosphere  than
             one-dimensional  calculations  (which  consider only
             altitude)  and allow  more  realistic comparisons  of
             calculated values with actual measurements.

         •   A  2-D   model  has   shown  that  calculated ozone
             depletion  occurs  mainly  at polar regions in winter,
             and  the  absolute  ratio of the percentage increase  in
             ultraviolet  radiation  to the percentage  decrease  in
             global  average  ozone  concentration  is  closer to  1
             rather  than the commonly  accepted  value of 2.    In
             other  words, even if  ozone  is being depleted,  the
             projected  effects will  not  be  as deleterious   as
             previously  predicted  by  the  1-D  models.   The most
             recent  chemistry  reduces  the  latitudinal  variation
             somewhat,  but the effect remains.

         •   Increased concentrations of carbon dioxide and nit-
             rous oxide  in the atmosphere reduce calculated ozone
             depletion.   Accordingly, these  chemicals  must  be

             considered in any realistic  assessment of  anthro-
             pogenic effects on ozone.

             It has been suggested  recently  [Johnston, 1980] that
             volcanoes inject  large  quantities  of  chlorine into
             the  stratosphere,  which  should  decrease  ozone
             severly near the point of injection.  These effects
             are not evident in ozone measurements.
         a.  2-D Calculations

         The principal  advantage of  2-D model  calculations  is
that they  more  accurately  represent  the real world.   A complete
2-D  model  would  include  a  full   description  of   chemistry,
latitudinal  transport  with  its  seasonal changes,  seasonal  and
latitudinal variations in solar flux and atmospheric  temperature
profiles.   Profiles  for  chemical species  are calculated as  a
function of latitude,  altitude,  season,  and  day or night.  By way
of comparison,  1-D models include only  average values  of chemical
species  concentrations  as  a  function  of   altitude  and  do  not
include seasonal variations.

         As an example,  the Oxford University 2-D model has been
used to  examine  variations  in ozone  depletion with latitude  and
season  [Pyle and  Derwent,  1980].    The  maximum depletion  is
calculated to occur at polar  regions  in winter.  This  is the time
and  location  of lowest  population,  lowest  biological activity,
and minimum incident ultraviolet solar  flux.  The  Oxford modelers
find the  global average "physical  amplification  factor", i.e.,
the  percent  increase  in  erythemally-weighted   (i.e.,  weighted
based  on  its  effectiveness  in inducing   sunburn)  UV-B  dose
associated with  a  one percent decrease  in  global average ozone
concentrations,   is  closer  to 1  rather  than 2.    This,  in turn,
reduces by  that  same  factor  any estimates of biological  effects

related to a given change  in ozone  (provided they are  related  by
the chosen weighting).

         Another example is that of N2°'  The  biosphere  produces
this gas  naturally,  but the source  strength   (the amount of N^O
produced with time)  varies with latitude by about a  factor of  10
from the equator to 40  degrees  N.   A 2-D model  can deal with  this
real-world situation,  while  a  1-D  model  cannot,  since  latitude
does not exist in a 1-D model.

         It is the assumptions, uncertain input data, and simpli-
fications -- perhaps  over-simplifications  —  of  1-D models  that
bring  their  calculated values into  question  -- that  and  the
serious  discrepancy between measured  and calculated  profiles for
important chemical species.

         b.  Carbon Dioxide/Nitrous Oxide Effects

              i.  Carbon Dioxide

         It  is  well-documented that  the amount  of  atmospheric
carbon dioxide  is increasing.   This  is projected  to warm the
troposphere and  cool the stratosphere — the  greenhouse  effect.
Since the rate of ozone destruction decreases  in the  stratosphere
with decreasing temperature,  the expected doubling of atmospheric
CO- concentration [NAS, 1979c]  will increase ozone levels several
percent.   A group in England recently reported  [Groves and Tuck,
1979] that the calculated  combined effect of C02  and CFCs on the
ozone  layer   is   less   than  the  calculated  CFC  effect alone.
Although  the  two separate effects  are  not additive,  calculated
ozone depletion  from CFCs  is reduced by about 3-5  percent   in  a
model scenario in which the atmospheric  CC>2  concentration is

doubled by about the year  2030  [Penner,  1980b].   As an example,
if  CFCs  alone  produce  calculated  depletion  of  13.9  percent,
including CCU increases  in the model  would  reduce this value to
8.9 to 10.9 percent.

             ii.   Nitrous Oxide

         Agricultural   fertilizer  has  been  suggested  as  an
addditonal  source  of   N-O  to  the  stratosphere.   Using  1979
chemistry,  doubling atmospheric N~0 concentration by  itself has
little calculated effect on ozone  concentrations.  However, the
combined  ^0 and  CFC  effect reduces  calculated  ozone depletion by
about a factor of 2 compared to the  CFC  effect  alone [NAS, 1979a,
p. 181].   The reduced  calculated depletion results primarily from
increased chlorine  nitrate  formation as  calculated by the models.
Updated  chemistry  complicates the  situation  by  introducing  a
significant  effect  from  N-O   alone.    However,  the  calculated
combined  effect of  N-O and  CFCs  is  still less  than the sum of the
individual calculated  effects.

         c.  Volcanoes

         Johnston  [1980]  recently  suggested  that   volcanoes
annually   inject directly into  the  stratosphere amounts  of
chlorine  equivalent to  15  to  35 percent of  the chlorine content
of 1975 global CFC production.  If  the  ozone depletion theory is
correct,  such massive injections  of chlorine over  a short period
of time  would be expected to  produce severe  local depletion of
ozone.  Long-term effects would not induce a trend, although the
model calculated "normal" ozone concentrations might be somewhat
reduced.    Du  Font's 2-D model  calculations  [Steed et  al. ,  1980]
show that  even for low  estimates  of chlorine  from the Mt.  Agung
eruption   in  1963,  ozone  near  the  equator   should  have  been
depleted  by  as much  as 10%,  with the effect gradually spreading
over  the  entire  globe.   However,  no  evidence  is  found in actual

ozone  measurements  for  such a decrease.   One conclusion that
could  be  drawn  from  this  information  is  that  the  models
overestimate the effects  of  chlorine  on  stratospheric ozone.

     6.  Stratospheric Measurements

         One test  of the reliability of  computer models  is  to
compare calculated altitude  profiles  of  key chemical species with
measured  profiles for the   present-day  atmosphere.    Agreement
between the  two would lend  some  support to  the  reliability  of
model calculations.   Conversely, disagreement must indicate error
in  the model   calculations.   An   analysis  of  this  type  is
particularly important in the case of chlorine  species, which are
central to the  ozone  depletion theory.

         a.   Chlorine Species

              i.  Hydrogen Chloride

         The amount of hydrogen chloride (HC1)  calculated  by the
models  to  be  present in the  stratosphere  is  less than that
measured in  the upper stratosphere and greater  than that measured
in  the lower  stratosphere.    The  difference  suggests  that  the
model   improperly  distributes   chlorine  among  the  various
atmospheric  chlorine  species.  The NAS  report  expressed a  belief
that the  problem  was an  artifact  of latitudinal  transport  not
accounted  for   in  1-D models,  and  that two-dimensional  (2-D)
calculations would remove the  discrepancy  [NAS,  1979a,  p. 161].
However,  the  2-D  model  calculated  profile  at the  latitude  (30
degrees N) where  these measurements  were made  is  similar  to the
1-D calculated  profile and  its  slope continues to disagree with
the measurements  [Miller  e_t al. ,  1980a] .   Recent  revisions  in
chemistry  exacerbate  the  problem.

             i i.   Chlorine Monoxide  (CIO) Radical

         Although calculated and  measured  CIO  values using NASA
[1979]   chemistry agree  reasonably  well  at  about  38  km,  the
average measured values below 30 km — in the lower stratosphere
— are about  one-fourth calculated  values  [NASA,  1979,  p.  177],
Some measurements are one-tenth the calculated value.  Since the
amount  of  CIO  in  the  stratosphere   governs  calculated  ozone
depletion,  the  latter  has  been  clearly  overestimated.    The
measurements also  suggest indirectly that  the  stratospheric
concentration of  the  OH radical calculated by the model  is too
high.  As in  the  case  of  HC1,  the NAS report suggested that 2-D
model calculations might remove  this discrepancy. Two-dimensional
calculations show,  the discrepancy  persists  [Miller et  a_l.  ,
1980a].   Recent  revisions  in  chemistry improve the agreement in
the amount of CIO, but a significant discrepancy  in slope remains
which  still   leads  to  overestimates  of  CIO  in  the  lower
stratosphere, and points to problems in partitioning of chlorine.

         On  July 14,  1977,  J.  G.  Anderson  [Anderson et  al.  ,
1980a]  measured exceptionally  high  values  of  CIO  in  the
stratosphere, and simultaneously measured normal values of ozone.
The results are  inconsistent with  the ozone depletion  theory.
Even  though high  CIO  values  were  not  recorded  in subsequent
measurements,  there  can be  little  doubt  the  1977 measurements
were correct,  i.e.,  the measured amounts  of CIO and ozone were
present in  the  stratosphere.    The  results can  be explained in
several  ways,  including   the   possible  existence  of  an  ozone
generating  cycle  catalyzed by  chlorine,  which would  imply the
ozone depletion theory is  wrong.

         Other measurements of  CIO  also differ  from calculated
values [Parrish e_t £l. ,  1980; Menzies,  1979].  One  feature of CIO
measurements  is  great  atmospheric  variability.     For  example,
Anderson has  recorded CIO  concentrations  that differ by a factor

of 2 over  an  altitude  difference  of  only 400 meters.   Computer
models  are incapable  of dealing with this experimental reality.

         b. Nitrogen Oxides

         Relative  to actual  measurements,  models calculate too
much odd  nitrogen   in  the  stratosphere  including  very  high
concentrations  of   NO  and  HNO,  in   the   upper   and  lower
stratosphere,   respectively  [NASA,   1979,  p.  171].    The
discrepancies  have not  been explained.    The  calculated  HN03/N02
ratio  is  also  higher  than  the  measured  ratio  [Miller  £t al. ,
1980c].  Using the  faster rates  for  several OH reactions  narrows
this discrepancy  somewhat.


         This  section  describes a number  of  scientific  studies
either in progress or planned for the near future .  The  results
of  these  studies will  increase our  knowledge  of  stratospheric
science and  should  reduce  the  degree of uncertainty associated
with the effects of chlorine, if any, on the stratospheric ozone

     1.  Atmospheric Measurements

         An  important  series  of  atmospheric  measurements  is
planned  for   1981  which  may constitute  a direct  test  of   the
validity of  the  Ozone  Depletion Theory.   Whether CFCs produce  a
net  decrease  in  stratospheric ozone can  be  determined  by
measuring the  concentrations  of the  postulated  ozone-destroying
species and ozone at the same time and place in  the  stratosphere.
This simultaneous measurement of the  key species —0-j, 0,  C10,H02
and N02 — takes  into  account the interactions  of these  radicals
with one another.

         It can be demonstrated  in the laboratory that CIO reacts
with 0 and Cl  reacts  with 0-,.   The  rate constants  for  the reac-
tions have been measured.  However,   in  the earth's  stratosphere,
there  are  other  radicals,  e.g., certain  NOV  and  HO   species,
                                             A        A
which  also  react with  ozone and atomic oxygen.   The  critical
question is  this:   "When chlorine is added  to  the real  strato-
sphere, does it increase, decrease,  or not  affect the  net concen-
tration of 0-,?  Due to the coupling of the  chlorine, nitrogen and
 Many of  these  studies are  being funded  by  the CFC  producer's
• research program under management of  the  Chemical  Manufacturers
 Association  (CMA)  Fluorocarbon  Project  Panel (FPP).   A  summary
 of this program appears as Appendix  K.

hydrogen cycles, the presence of  chlorine  can  actually increase
the  concentration  of  ozone  in  the  stratosphere  if   it  reacts
preferentially with NOV or HOV  to  reduce  their  effectiveness  in
                      A      X
destroying ozone.
         An  analogous  situation  demonstrated  the  effect  of
interacting  active  species.   Prior  to 1977,  models  calculated
that  the  injection  of  NO  exhaust  from   the  jet  engines  of
supersonic  aircraft  would  result  in net ozone  depletion.
However, when the  rate  constant  for the reaction of NO  and  H02
was remeasured and used as input data, the  model calculated that
in  the   lower  stratosphere,   where  the  ozone  concentration  is
greatest, the added oxides  of  nitrogen  resulted in a net increase
in ozone.

         Two experiments which are designed to measure the effect
of  chlorine  on  stratospheric ozone  are in  progress  and  should
produce  data in  1981.

         •   J.G.  Anderson  (Harvard)  will  simultaneously  measure
             CIO and other species  which react  with  ozone  (H02f
             N02,  OH and 0)  and,  also, 03  itself.   It  will  be
             done  in  the so-called  "reel-down" experiment.   This
             equipment  is  a  variation of Anderson's  proven  CIO
             measurement technique.   The probability  of success-
             ful operation  is high.   These "in  situ"  measure-
             ments,  taken  in a  single balloon  flight,   will
             produce  several concentration profiles  for  key
             species  over  10  km  altitude  intervals  in  the
             stratosphere.   Between  28  and 38 km, where transport
             is  slow compared  with the  chemical interactions, the
             measurements can  be  interpreted  unequivocally.

             Below  28  km,  the  measurements  may  require  a
             correction  for  transport.    A  valid  method  of
             accomplishing  this  is  being established.

         •   P.  Solomon  (State University  of  New  York)  has
             developed and tested  a  ground-based  ultrasensitive
             millimeter-wave  detector  for  measurement  of  CIO and
             03  [Parrish  e_t  al.,  1980].    The  total  vertical
             column amounts of CIO and  0,  are measured  with it.
             A  concentration  profile  of  these   species  with
             altitude  can  be  calculated from  the  shape  of  the
             measured  absorption lines.   This unit has  already
             been used to  make over 30 CIO measurements which are
             consistent with  the   rapid  falloff  of CIO   in  the
             lower stratosphere,  observed  repeatedly by  Anderson
             using  a  different  measurement technique.    This
             equipment,  which  can  simultaneously measure  CIO and
             0-j, will  be moved to  a location in New Mexico where
             clear skies will  allow almost daily measurements.  A
             significant body  of data will be generated in 1981.

         The Atmospheric Lifetime Experiment  (ALE)  to measure the
lifetime  of  CFC-11 and  CFC-12  in the atmosphere  is still  in
progress.    A preliminary estimate  is  that  the atmospheric
lifetime of CFC-11 is  about half that assumed to be the case from
solely  stratospheric  destruction   processes.   The  estimate  was
made with only 18 months of data and, accordingly,  the error bars
are very wide, i.e., 7 years  to  infinity.  In 1981, 24  months and
30  months of  data will  become available  which   should  better
define  the  CFC-11 lifetime  and  reduce  the error  bar  range
substantially.  The CFC-11  lifetime should be defined in 1982 and
a  preliminary estimate of  the  CFC-12  lifetime  should   also  be
available.  If the preliminary lifetime  for CFC-11 is confirmed,

and CFC-12  behaves  similarly,  i.e.,  its  lifetime  is  about half
that assumed to be the case  from  solely stratospheric destruction
processes, calculated ozone  depletion would be halved.

         In  relation  to  the  ALE  program and  the question  of
tropospheric  sinks   for  CFC-11  and  CFC-12,  a  program  is  in
progress   to  measure  the  concentrations  of  CFC-21  in  the
atmosphere at  several sites and  to  correlate  them with  CFC-11
concentrations.   These studies may establish a  mechanism for the
conversion of CFC-11 to CFC-21  in the troposphere.

         The fluorocarbon  industry  program is  actively seeking
[Upper Atm. Programs Bull.,  1980] to  fund experiments  to measure
total  chlorine  in  the stratosphere.   Such measurements  would
undoubtedly provide  increased understanding  of stratospheric
chlorine chemistry since the chlorine content of the stratosphere
is an assumed value.   Two methods are  under  development.   The
first  involves  collecting samples  on  activated  charcoal filters
followed by neutron  activation  analysis [Berg, 1980] .  The second
technique,  which  is  funded by  the  industry  research  program,
involves  decomposition  of  the  sample  by  plasma  or  microwave
discharge,  followed by  measurement  of  the  chlorine  atomic
emission lines [Howard,  1977].  Initial results from at least one
method should be forthcoming in 1981 or early 1982.

     2.  Modeling

         Ozone trend analysis  studies  continue,  and will include
recent  ozone  measurements   from  the   Dobson  stations  and
satellites,  Umkehr   measurements,  attempts  to  correlate  ozone
trends  with  other  meterological  variables,  and  methods  to
establish   that  the  Dobson  stations  do  measure average  global
ozone, as  suggested  by preliminary  studies.  An important part of
the program will be  to calculate  the trend  in ozone with the most
recent ozone measurements  from  the  Dobson  station network.

         Another important aspect  of  modeling is  to  refine and
use 2-D modeling capability along  with  atmospheric measurements
to validate model simulations of  the  present atmosphere.   Other
2-D model studies will be directed to better  understanding of the
latitudinal  distribution of  effects  induced  by atmospheric
perturbations,   e.g.,  volcanoes,   anthropogenic  pollutants,  etc.
The 2-D studies will complement 1-D calculations and will help to
quantify  some   of  the  averaging   assumptions  necessary  in  1-D

         The effects  of  increasing  concentrations  of  C02,  and
possibly N20,  in the atmosphere are of  concern, and these effects
must be better  defined.   A number  of modeling  groups are studying
this important  question  as it relates  to  the greenhouse effect
and its effect  on calculated  ozone depletion.

     3.  Chemistry

         Major  uncertainties  to be addressed  in chemistry  include
the products of important chemical reactions,  and  the pressure
and temperature dependence of reaction rates.  These three items
are obviously  related  since  it  is necessary to measure reaction
products  and rates  over  the  range of  temperature  and pressure
encountered in  the stratosphere.   This  significant undertaking is
in progress for several important  reactions,  e.g., OH + CIO, OH +
HN03,  and  results  should   be   forthcoming  over  the  period
1981-1983.   .Most   of  the  reaction  product  studies  have  the
potential to reduce  calculated ozone  depletion,  or to leave the
value  unchanged,   rather than   to increase ozone   depletion


         In  the  preceding  discussions,  a  number  of  major
scientific  aspects  of  the CFC/Ozone  Issue  have  been addressed,
and  conclusions  drawn  should  impact  directly on  the  need  for
possible regulation.   Each  of  these issues  has been  inadequately
dealt with by the EPA in  the ANPR.  Briefly,  we have  shown:

         •   Statistical  analyses  of  real-world  ozone  measure-
             ments  (ozone   trend  analysis)   from  the  worldwide
             Dobson  measuring  network  show a slight increase in
             ozone has  occurred during 1970-1979.    The  analyses
             are sufficiently  sensitive  to  detect  an increasing
             or decreasing  trend in ozone concentration  of +_ 1.0
             to + 1.5 percent over  this  period.   In contrast, NAS
             [1979a]  stated  2.1 percent depletion  should  have
             occurred  according  to  model   calculations.   The
             results suggest some  combination of  the- following

             1.   Computer   model   calculations   significantly
                 overestimate ozone depletion by CFCs, or

             2.   An  opposite trend — natural  or man-made -- is
                 offsetting  any ozone  depletion caused by CFCs.

             Recent results  in  chemistry and  modeling support the
             former option.

         •   The  Lawrence  Livermore  Laboratory   (LLL)  recently
             reported that  their   central  value   for calculated
             future  potential  ozone  depletion has  been  reduced
             from 18.6  percent  to 13.9  percent through revisions
             in model  input data.    This change has been  made
             since publication  of  the  NAS report, which reported

the 18.6 percent value.   The 18.6  percent  calculated
value was  "adjusted"  in  the report to  16.5  percent
— the  value  cited  by the ANPR.   As  the NAS  panel
relied  on  the  LLL model  for its  analyses,  the  13.9
percent value  should  now be taken  as the NAS  base
case, not 18.6 percent.   To  provide a  clear  relation
between new  results  and  the NAS  report,  we  employ
13.9  percent as the  base  case in the discussion  that

One-dimensional  computer  model  calculated   concen-
trations of CIO  (the  critical  chemical  intermediate
in the  ozone depletion theory)   in  the  lower  strato-
sphere  (made  using  NASA  [1979] recommended  chemis-
try)  exceed the "normal"  range  of  measured values  by
about a  factor  of 4.  This discrepancy  remains  in
two-dimensional model calculations,  suggesting  basic
errors  in  understanding of  stratospheric  processes.
If calculated values of CIO  concentrations are  arti-
fically  reduced   in  the   model to  agree with the
measured   values,   calculated ozone depletion  is
reduced from 13.9 percent  by  more than a factor  of
2^.  New chemical  data have  led to  some  improvement
of CIO  agreement,  and  a concomitant reduction  in
calculated ozone depletion.

The  rates  of chemical   reactions  used in model
calculations are of major importance.    For  example,
several reactions  of OH  radical,  e.g., with  HNOj,
have  been  recently  reported  to have  rate constants
larger  than those recommended  by  NASA  [1979] .  The
effect on model results  is a reduction in  calculated
OH radical and CIO  in the lower  stratosphere.  The
larger  rate constants reduce calculated  ozone deple-
tion  to about 6 percent -  9  percent.  These  figures

represent the model result for  tentative  1980  NASA
recommended  chemistry along  with  the  recent  first
measurement  of  a  rate  for OH + HCUNCU.

Preliminary   results  from  the Atmospheric  Lifetime
Experiment  indicate  (although with large uncer-
tainty)  that only about half of the CFC-11 released
at ground level is transported to  the stratosphere.
Presumably,  CFC-12 would  behave similarly.   Since
calculated ozone  depletion  is proportional to  the
amount of chlorine injected  into  the stratosphere,
these  results  would   further  reduce all calculated
depletion values  by up to a factor of 2.

Unexpectedly high  measured  values   of  CFC-21  and
CFC-22  in  the troposphere  suggest  they may  be
degradation  products   of  CFC-11   and  CFC-12,
respectively.    High  levels  of  CFC-21  seem  to
correlate with  the movement of  air  masses  over  the
Sahara Desert.    This could  indicate  a destruction
process for  CFC-11 and CFC-12  before  they  reach  the
stratosphere,  and thus lead to  a  like  reduction  in
the  amount  of   calculated  stratospheric   ozone

Significant  discrepancies exist between measured and
calculated   values  of  several  species   in  the
atmosphere,  in  addition  to  CIO,  among which are  the
HCl/HF  ratio,  and  the  HN03/N02  ratio.    These
discrepancies  remain  in  recent model  calculations
and  lend  further  support  to  the suggestion  that
basic errors exist in  our understanding of strato-
spheric processes.

•   One-dimensional  models,   such  as  used  by   NAS,
    average,  and  hence  ignore,  the known  latitudinal
    (north  to  south)   and  seasonal  variations  in
    stratospheric  ozone  concentrations.   For  this  and
    other  reasons,  one-dimensional  models  are  useful
    only diagnostically.    Alone,  they are not adequate
    for prognosis.    Since  models  provide only  global
    averages,  actual  measurements,  taken at  specific
    locations,   cannot  be   compared   with  model
    calculations.   Two-dimensional models  are being
    actively  developed  to  reduce such uncertainties.

•   A two-dimensional model at Oxford  University  shows
    that calculated  ozone depletion is  greatest at  high
    latitudes  (the  polar  regions)  and  in   the  winter
    season.    Since  ozone  is  at  its   maximum,   and
    ultraviolet  flux at  its minimum, at  that  time and
    location,    any possible biological effects of ozone
    depletion are  minimized.

•   In  at  least  three  important   chemical  reactions,
    alternative  products to  those now assumed have  been
    suggested.   In  every case,  HC1 is  an  alternative
    product.    This  is  very important because   the
    formation of HC1  removes  active chlorine  from  the
    theoretical  catalytic  ozone depletion cycle. (Even a
    10 percent channel  to HCl  in the reaction of  OH  +
    CIO would reduce  calculated ozone depletion signifi-
    cantly) .   Studies are in  progress to  identify
    quantitatively any  HCl production channels  from the

•   Other isomers  of ClNO^  may be  produced  along  with
    ClONOj.   Less  stable  isomers could  reduce  the
    effectiveness  of  this holding  tank  (a reservoir  of

             inactive chemical  species  which  may be converted to
             an  active  ozone   depleting  form),  and  increase
             calculated depletion.  Likewise, more stable isomers
             could  reduce calculated depletion, but the situation
             is very uncertain.

         •   General uncertainty in reaction  rates,  solar  flux,
             transport, etc.,  could easily vary the calculations
             over a wide range  of values.

         •   When the effects  of increased concentrations of CC^
             and/or  ^0   in   the  atmosphere  are   considered
             simultaneously with those  of CFCs, calculated ozone
             depletion by CFCs  is reduced.

         •   Volcanoes  may annually  inject   chlorine  into  the
             stratosphere equivalent  to 35 percent of  that  in a
             year's global production  of CFC-11 and CFC-12.   The
             local  effects of these injections would be extremely
             large  according   to   theory,  but  have  not  been

         The major  conclusions one may  draw from these points

         •   Ozone  depletion has not been detected.

         •   Calculated ozone  depletion is now about one-half or
             less that stated in the NAS  report.

         •   Preliminary scientific developments,  if  confirmed,
             will substantially further  reduce  calculated  ozone

         It is useful  to  summarize  the changes in  the  theory as
demonstrated by model calculations of steady-state depletion.  We
present below  several  of  the developments and  the corresponding
theoretical depletion taking each effect into account:
             1979, NAS calculated steady-
             state depletion (from LLL
             Model).   (This number was ad-
             justed downward by NAS to 16.5%
             to account for possible tropo-
             spheric sinks and feedbacks.  That
             adjustment will not be made below).

         •   Summer 1980, LLL model results were
             revised to include several minor
             changes in rate constants.
             Summer 1980, results revised to
             include Wine et al., [1980] rate
             for OH + HN03 -* H20 + N03.

             Fall 1980, results revised to
             include all tentative NASA
             Fall 1980, results revised to
             include new measurement of OH +
             H02N02 [Littlejohn and Johnston, 1980].

Other preliminary results may be considered
with respect to their individual effects on
this last result:
    If C1N03 isomers are very unstable

    If atmospheric lifetimes of CFC-11
    and CFC-12 are reduced by a factor
    of 2.
                                      6%-> 7-8!

                                      6% -» 3%
           effects are considered
6%-» 1-3%
and finally,
    If all three of the above effects
    are considered together (in the
    above order)                       6%

         Stated simply and  directly, the potential  for ozone
depletion  is  currently perceived to be far  less than it was only
one year ago.   While major remaining uncertainties  could easily
affect that conclusion  in either  direction, most of the movement
is expected to be  in the direction of reduced calculated ozone
depletion.     But regardless of  how the calculated  depletion
numbers are affected by resolution of some of  the uncertainties^
the bottom line  or "fail-safe"  is the ability of ozone trend
analysis to detect even small trends in actual ozone  concen-
tration.   This ability,  coupled  with the slower calculated  rate
of depletion implied by current models,  provides a sophisticated,
capable  early  warning  system,  with greatly  reduced  numerical
overshoot  values  if   and  when  depletion  is detected.    The
insistence of  EPA  on ignoring all these developments and rushing
into regulation justified with an out-of-date  science assessment
is unwarranted.



     A.  INTRODUCTION                                            2
         EFFECTS OF OZONE  DEPLETION ON RISK                    14

     E.  RISK IN WAITING  -  RISK VERSUS TIME                    32

     F.  IS THE RISK DEVELOPING AS  PREDICTED.->                  39
         WARNING SYSTEM                                         43
         OF THE  ISSUE  TO RISK                                  46
         RISK - RISK COMPARISON                                48
         OF RISK ON THE  CFC/OZONE ISSUE                        53
     K.  SUMMARY AND CONCLUSIONS                                60



          The key underlying  issue  in the CFC/Ozone  controversy
is risk —  how  to assess it;  how to  manage  it.   This  is  a  com-
plex  issue   because   it   is  made  up  of  so  many  interlocking
questions, for example:

          •   What is the current or  future  risk  to human health
              and  the environment  from  continuing  release  of
          •   How certain is the risk?
          •   Does   the   projected   risk   necessitate   acting
          •   If not, what is  the risk in waiting?
          •   Will  the   benefits  from   waiting,   e.g.,   better
              information, be  worth the risk in waiting?
          •   What   is   the    risk   associated   with   acting
          •   What is  the  balance  between  the   risk  associated
              with   waiting   and   the   risk   associated   with
              immediate action?

          Although the  risk question  is  complex,  the  objective
of  risk  assessment  and   management  may  be  stated simply:   to
determine the course  of  action  which  will be  recognized  as  wise
at a future time.

          EPA has stated  that:

              "If  [EPA  waits]   until  better  data  are  in  on
              whether  chlorof luorocarbons  deplete  the  earth's
              ozone layer,  either  the theory  will  be  wrong  and
              there will  be no  harm  done or the theory  will  be
              right and  it will  be too late  to do anything about
              it".   [Jellinek, 1980b]

          We believe  that  this  approach to  the  complex  issue of
ozone depletion  risk  is  not supportable by  the  available facts.
On the  one  hand, based  on currently  available  information,  EPA
greatly overstates the risk from  not  acting  immediately; and, on
the other hand,  EPA  ignores the  substantial  potential risk which
could be incurred from premature or unnecessary regulation.

          In order  for  a  risk  assessment  to  be  of  use  to  the
policy maker,  and credible to all participants  in a rule-making
process  designed to  manage  the  risk, it  must  be  accurate  and
thorough.   All  important  elements of  the  issue  which  bear on
risk must  be  addressed  and  integrated into the  whole.   A  risk
assessment  which ignores  critical  components,  for  example,  the
question of  uncertainty  or the  relationship of  projected deve-
loping  risk  versus  time,  will  not provide  an accurate  view of
the true  situation.   Regulation  based on  incomplete  or  inaccu-
rate risk assessment  may be bad regulation  and  subject  to legal

          In  this  section of   our   ANPR  response,  we   discuss
important risk components which  must be  included  in a properly
balanced  analysis  of  the CFC/Ozone   Issue—components  which to
date have not  been adequately addressed.  These include:

          •    The impact of uncertainties  both  in the underlying
               science  and  in  estimates of  the  potential  effects
               of ozone depletion.
          •    The importance,  probability  and  timing  of reduc-
               tions in these uncertainties.
          •    The relationship of  these uncertainties to  the  U.S.
               versus   world   regulatory   status   and   potential
          •    The question of risk versus  time, which encompasses
               questions  such as,  "Is  the  risk  developing  as  pro-
               jected?",  "What  is the  risk  in  waiting?",  and  "Is
               there any  way to provide an  early warning  system?"


          •   The  need  to  develop  an  assessment  of  the  risks
              created by  regulating  CFCs and  to  balance  these
              risks with the risks from not regulating.

          The  last part  of  this  section is  a discussion  of a
number  of  approaches  to  the  question  of  risk  which  we  have
identified in  the  ANPR  and  in  previous  Agency  statements   and
documents — approaches to the question  of  risk which we believe
are not  conducive to the obtaining  of  the thorough  and proper
risk determination needed for the CFC/Ozone Issue.



      1.  Introduction

          In  an  ideal  rule-making  situation,   the  risk  from  a
chemical  under  assessment  is  known   from  experimentation  and
testing, its benefits are  also known,  and a determination can be
made as  to  what  extent  it is  reasonable  to  give up the benefits
in  order  to lower  the  risk  from its  continued  use.   When the
degree of  risk is not  well-known  or when the  accuracy or vali-
dity of  the stated  risk is  highly uncertain,  this determination
becomes  significantly more complex  and subject  to  major error.
Such is  the situation  with CFCs and the  theory of stratospheric
ozone depletion.

          In this  instance,  there are  predictions and  estimates
of  risk  from  continued use  of  CFCs,  but  there  is  substantial
debate over how accurate or  "certain" these  estimates  really are.

          The  underlying  importance of  these  risk uncertainties
is  their impact on the  regulatory  decision process—Are estimates
of  risk  likely to prove to be sufficiently accurate or  "certain"
that supportable  decisions based on them may  be made?  The more
uncertain  the  data  base on which  risk  assessments are made, the
less certain the  accuracy  of the risk  assessments and,  thus, the
less certain   it  is  that   regulatory decisions  will  prove to be

          Consequently,  we believe  the question  of  uncertainty
as  it  applies  to  the  underlying  science  and data  base  of  the
Chlorofluorocarbon/Ozone   Issue   is   critical.    Therefore,   we
review  below in section  2 the major  existing uncertainties  and
their significance to risk  assessment.

          In  section 3  we  discuss  errors  made  by  EPA  in  its
treatment of uncertainties  in  the ANPR.   These  deficiencies  in
EPA's treatment  of  uncertainties  are  critical.   Their  existence
throws  into  question the  validity of  the  risk  assessment  being
used by the Agency to support  its  regulatory  decision.

          The  uncertainties in atmospheric science  are  discussed
in detail in  Section  IV and Appendix E; uncertainties in  effects
of ozone depletion are discussed in Appendix  F.

      2.  Major  Current Uncertainty  Sources  in  the  Atmospheric

          To  review  from  Section  IV,  the  major  existing  uncer-
tainties in atmospheric science are:
              Quantification   of   CFC  emissions  actual
              spheric removal  rates.
•"•Scientif ic  uncertainties  are  introduced  both  in  estimates  of
ozone depletion  and  in estimates of  the  effects  of ozone  deple-
tion.   The importance  of  the  former  to risk  determination  is
discussed  in  this  section;  the importance of  the  latter in  sec-
tion V-C.   The effects   of these  uncertainties  are  cumulative.
At each successive step,  it is difficult  to  intelligently discuss
a given step  and  its  uncertainties without tacitly or  explicitly
assuming "best guess"  conclusions  of  each preceding step.  As  an
example, the  preface  of  the NAS/CISC  report, on effects of ozone
depletion    [NAS,1979b],    acknowledges    dependence    on    the
preceding   NAS/PSCT    report   on    the   underlying   science
 [NAS,1979a].    The   cumulative   nature   of   the   uncertainties
must be kept  prominently  in mind.

          •   Quantification of actual  transport  rates  of impor-
              tant species  in  the troposphere  and  stratosphere,
              vertically and laterally.
          •   Lack  of   determination   that  relevant  atmospheric
              chemistry  is   either   accurately  or   completely
          •   Lack of demonstration that the computer simulations
              ("models") used  can  provide  accurate  predictions
              of future atmospheric conditions.
          •   Interpretation of model results  and their  relation-
              ship to the present and future atmosphere.
          •   Quantification  of  ozone  changes  into  changes  in
              UV-B and  then  into  changes  in  damaging  UV  (DUV)
              using appropriate action  spectra.   (An  uncertainty
              that  bridges  the   atmospheric   science   and  the
              effects of ozone change.)
          •   Discrepancy between  calculated ozone  depletion and
              observed trends in ozone.

          It is  commonly argued  about  the  nature of  uncertainty
that the high range  is  as  likely as the low range  and  since the
high range,  if  correct, implies  greater  risk, it  should figure
disproportionately  in   risk  assessments.    However,  this  should
not be  true if  the  predicted risk  occurs  gradually over  time,
and methods exist  for  detecting  the effect.   Under  these condi-
tions,  the  larger  predicted environmental  effects  in  the uncer-
tainty range  clearly should be  detected  fairly  early.   If they
are not  detected,  one  may  conclude  that the  high  range  can  be
adjusted downward.  The CFC/Ozone Issue is just such a case.

          In the CFC/Ozone Depletion Issue, ozone trend analysis
already provides an early warning technique for changes  in ozone.
The absence  to date of any detectable downward trend  in ozone
concentrations  indicates that  the greater  risks  associated with
the high range  of  ozone depletion estimates may be discounted.

In addition, a monitoring  system  for  gathering  and reporting CFC
production and emissions has  been  in  place  for  several years, so
a  high  range  of  ozone   depletion   as   a  result  of  unknown
emissions  is not a concern.
          The uncertainties which exist surrounding the detection
of ozone  depletion  (about  +1 to  +  1.5 percent  depletion)  and
quantification of  CFC  emissions  (about + 5  percent)  are subject
to further  reduction but  are  already small  in  proportion to the
uncertainties surrounding  our understanding  of atmospheric pro-
cesses and our ability to model those processes.

          Ideally, the  uncertainties  are reducible  to the point
where measurements  and  modeling  are consistent with  each other.
As discussed  in Section IV,  the  opportunity for  major progress
in this  direction  exists   in  the   coming  years.   (Meanwhile  it
would be  folly  to reject  that which is  measured with relatively
great certainty  in favor  of that  which  is  calculated with rela-
tively little certainty).  In fact,  already  there  is evidence
that  the  uncertainty ranges  assigned  for  the  modeling  of  some
atmospheric processes have  been underestimated  (See Appendix E);
more recent values of certain factors lie outside the correspond-
ing "confidence limits" adopted by NAS [NAS, 1979a].

          Introduction  of  recent   revisions into  modeling  has
reduced the calculations or estimates  of future ozone depletion.
Other current research  and better  model  simulation are expected
to  reduce  depletion  estimates  further.   Therefore,  the  most
    This  is  separate  from growth.   Growth  in  emissions,  should
    current  trends  be  reversed,  would  be  known  and not  an addi-
    tional uncertainty.   Uncertainty develops  if  emission levels
    are not known.


likely  scenario  is  a progressive  reduction of  ozone depletion
estimates  towards  the  shrinking  uncertainty   range,  which  is
being  established through  continuing  improvements  in  the  ozone
data base  and  in  the  technique of ozone trend analysis.  And  the
combination  of  no measurable  ozone  depletion and model calcula-
tions  of  declining theoretical ozone  depletion  reduces the  risk
associated  with  a regulatory postponement  while  the research

           The  following  section  discusses  EPA's  treatment  of
uncertainties  in  the  ANPR.   Because of  the cited  deficiencies,
EPA's  risk assessment substantially overstates  the  risk relative
to  a  risk  assessment based on  an  up-to-date treatment of  uncer-
tainties  (as highlighted  above).

       3.   Errors  Made by  EPA  in Treatment of Uncertainties

           a)  EPA Over Relies  on  the  "Key  Findings"  Section  of
              the NAS Report  [NAS,  1979a]

           The first major error in EPA's treatment  of  uncertain-
ties is that the  Agency  overestimates  and misrepresents the  cer-
tainty of  future  ozone depletion  calculations,  apparently  due  to
overreliance  on  the  "Key  Findings"  Section of  the  NAS   Report
 [NAS,  1979a],  while  ignoring  qualifying  statements   in   the
.body  of  the report.   It  is clear  from  a  careful reading  of  the
full NAS Report that  the  panel was hazarding a  rough  estimate  of
the  probability  of stratospheric  ozone depletion by  CFCs  based
on  information  available  to them  at the time of  writing  (summer
1979) .

As  examples,  the  NAS  Report acknowledges (p. 17):

       "There  are  two  possible sources  of error  that,  inherently,
       cannot  be quantified."   and,


      "It is  obviously  impossible to  estimate the  unknown with
      any precision."

Such qualifications  do not  appear  in  EPA's  ANPR  discussion  of
uncertainties in ozone depletion estimates.

          b)   EPA Places  Sole  Reliance on  the NAS  Report  [NAS,

          A more basic error on  the part  of EPA is its exclusive
reliance on  a report which,  even at  the  time of  issuance, did
not treat  adequately the question  of  uncertainty  and  which was
in conflict with other assessments available at that time.

          The  adequacy  of  the  NAS treatment of  uncertainties
itself  is  discussed   in  greater  detail  in  Du  Font's  submission
[Du Pont,  1980a] ,  where  it   is  noted   that  the  NAS  Report's

          *   Conflict  strongly   with   considered  viewpoints  of
              much  of  the   world's  scientific  community,  for
              example,  the  October  1979  report  by the  United
              Kingdom's Department  of  the  Environment  [UK DOE,
              1979] .
          *   Are not substantiated by the data used  in  the NAS
          •   Are based,  in part,  upon  serious  inconsistencies
              and omissions  in the body of  the NAS Report.
          •   Attempt to quantify fully  the uncertainties in the
              calculated predictions by  including  subjective and
              unsupported  assignments   of   precise  uncertainty
              ranges  due  to factors  which the  body of  the NAS
              Report itself  describes as "unquantifiable."

          A  comparison  of  the  treatment  of  uncertainty  by the

NAS  and  the  UK  reports  is  attached  as  Appendix  L,  but two
quotations from each will serve to illustrate the differences:
   NAS, 1979a
   UK DOE, 1979
•  "The uncertainties in the
   chemical rate coefficients,
   in atmospheric transport,
   and in the use of one-di-
   mensional models have been
   combined to give an overall
   uncertainty range of a fac-
   tor of 6 within a 95 per-
   cent confidence level."
   "There have been consider-
   able improvements in the
   computer model and in the
   laboratory and atmospheric
   measurements which have
   reduced the uncertainty
•  "It is not therefore
   realistic to assign over-
   all uncertainty limits to
   our calculated ozone per-
   turbations;  deficiencies
   in our basic knowledge of
   the processes establishing
   the composition of the
   stratosphere and in the
   modeling  technology   cast
   doubts on their validity."

•  "The STRAC [The UK Strat-
   ospheric Research Advisory
   Committee] report deals
   extensively  with the uncer-
   tainties in  the model re-
   sults.  Not  all of them
   could be assessed quanti-
   tatively  and   it   is  not
   possible  to  assign  error
   ranges  to these  estimates
   that allow for all the un-
   certainties.   These  have,
   however,  widened   rather
   than  narrowed  since Pollu-
   tion Paper  5  was published
          c)  EPA does  not  Acknowledge Conflict Between  the NAS

              Report and More Recent Reports

          A  related  error  in  EPA's presentation  of  uncertainty

in  the  ANPR is  in  not  weighing  the  NAS  Report's  treatment of

uncertainties against  reports  which have  become  available since

issuance of  the NAS Report,  for  example,  the  European Economic

Community, June, 1980 analysis of the science [EEC, 1980].


The  key findings  of  the EEC  report,  detailed  below,  provide
sharp contrast with the NAS assessment:

          •   There is now much more  information  available about
              the  photochemical  theory of  ozone  in  the  strato-
              sphere than there was ten years ago.
          •   There are still more uncertainties,  however;
          •   The models  have helped  to  improve  knowledge of the
          •   As   they   [models]   are  simplified,   they  cannot
              fully describe  the  behavior of  the  atmosphere and
              its minority constituent parts;
          •   In  the  next  few years  more  sophisticated models
              must  be  developed   which   can   take  into  account
              simultaneously  the   chemical,  thermal  and  dynamic
              aspects of  atmospheric processes;
          •   This  is a  task which  cannot be completed within
              five years  but  steady efforts  must  be made in this
          •   Permanent  observation  and monitoring of  ozone are
              therefore particularly important;
          •   At  present  there  is nothing  to  indicate  that CFCs
              have  had  a  genuine effect   on the  ozone  layer
              (emphasis added);
          •   Observation  facilities   should  therefore  be  deve-
              loped  i.e.,  both   satellite  measurements,  which
              supply  a  large  number of  observations,  and ground
              measurements, which  are easier to calibrate;
          •   The  examination  of  the   balance  sheets  of  the
              minority  constituent parts should  be continued  in
              order  to  detect natural and  artificial  sources  or
              sinks of these  compounds in the  atmosphere;
          •   It   is  vital   to   study  simultaneously   all  the
              effects of  human activities on atmospheric  ozone.

          •   The  problem  of   ozone  and  its  vulnerability  to
              compounds  of  human  origin  has  now  become  a  per-
              manent  problem.    The  figures   now  advanced  will
              have to be  revised  frequently  to take  into account
              the  development   of  knowledge,  the   degree  of
              sophistication of  the models and  the  observations
              of the minority constituent parts.

          d)  EPA Relies  on an  Out-of-Date  Report  While Ignoring
              Recent Critical Developments in the Science

          A last failing  by  EPA is in not  weighing  the accuracy
of  the  NAS  [1979a]  treatment  of  uncertainty  against  recent
developments  in the  science.    As an  example,  the  NAS  rather
confidently assessed  that it was  quite  unlikely there  would  be
any major changes  forthcoming  in the area  of  reaction kinetics.
Yet, work within the last year  has produced  results  which  sig-
nificantly change  a  number  of  reaction rate  constants,  with the
consequence that the depletion  prediction  made by  the  NAS  of
16.5 percent now is reduced by approximately half.

          Refinements  in  chemistry  and   atmospheric  modeling
could lead  one  to  conclude the  uncertainties  are  being narrowed
and therefore  the  ability to  make a proper  regulatory decision
has  been enhanced.   However,  to  the  contrary, the  refinements
have led to an  increased awareness of the  large existing uncer-
tainty.  Moreover,  the  results  of  ozone trend  analysis further
throw into  question  the  utility of the NAS1  assessment.   These
critical actual  measurements  (which  have  been  available  to the
policy  maker)   are  the   only  measurements  which  reflect  what
actually is happening to  stratospheric ozone.  They indicate that
no problem is developing.  As more measurements become available,
the certainty  of what actually  is occurring  increases,  and the
measurement series can  better  test the  validity of  calculations
of ozone depletion based  on the  theory.



      1.  Introduction

          The  underlying  risk  issue actually  is  not  whether, or
to  what  extent,  CFCs  may  deplete  stratospheric  ozone,  but
rather, what would  be the  consequences  to human  health  and the
environment  should  such  depletion  occur.   More  attention needs
to  be  given  to  these  possibilities  and  to  the  likelihood  of
their occurring.  Too often, discussion has  focused on a  numbers
game  between  various  computer   calculations  of  a hypothetical,
far in the  future,  depletion of ozone  (which  assumes continuing
emissions  at  current  levels ad infinitum).   A  more  realistic
assessment  would  be:   "If  ozone depletion were  to  occur  at x%
per year, what would  be the unavoidable future consequences for
each ongoing year of  emissions  at  current  levels,  and  to what
extent would these consequences  justify curtailing CFCs now from
their  current  uses?"   Critical  factors in  this  evaluation  are
the confidence with  which  these projections  for  the future are
made and  the time it  will take  to  improve the confidence level.
In  other  words,  what  is  the  incremental   risk  of delay?   A
related  question  has  to  be:   "How much  depletion  could occur
before the  attendant  increase in UV caused a  problem, i.e., what
is the danger  threshold of ozone change?"

          Our  observations  here  are almost in  parallel  to those
presented  in  the previous  section:   a)  the more  uncertainty
surrounding  these estimates, the less  likely  a  correct   regula-
tory  decision  can  be made,  and  b)  EPA's  assessment of these
uncertainties  is  grossly out  of phase  with   the  best currently
available  information.    In  fact,  the uncertainties associated
with.the  predicted effects  of ozone depletion  out-weigh even the
very  significant  uncertainties   associated  with  the  issue  of
whether  ozone   depletion  is  occurring  as  predicted.    This  is

because  the  data  are  more  sparse  and  the  relationships  more

tenuous.   Yet  a  regulatory  decision  should  be  based  more   on

whether any harm is  developing,  or  is  likely to develop, than  on

whether certain chemical  or  physical changes  may occur  in  the

stratosphere.   Thus,  the question of  uncertainties  in  the  area

of  potential   effects   of   ozone   depletion  are  of  paramount


          Because  EPA  again  bases   its   assessment   almost   ex-

clusively  on   the  NAS  Report,  we  begin   our  discussion  with  a

critique  of  the  NAS  Report  by  the  Committee  on   impacts   of
Stratospheric   Change   (CISC)    [NAS,   1979b] .    In  Du Font's

earlier  critique   [Du  Pont,   1980b]  of   the  CISC   report   we
              "The  CISC  Report shows  that there  has  been a  di-
          verse,  but  neitner extensive  nor  definitive,  research
          effort  into  the  possible  impacts of increased  damaging
          ultraviolet  light  (DUV) on the world's plant  and animal
           (including human)  eco-systems.   That effort  has demon-
          strated a number  of potential interactions between  in-
          creased DUV  flux  to the earth's  surface and  those  eco-
          systems.  However,  the significance to  the  real  world
          of  those  potential  interactions  (with  the possible  ex-
          ception  of  nonmelanoma  skin   cancer)  has   not   been
          adequately demonstrated.   Virtually all of  the  exper-
          iments  have  been  exploratory  or  preliminary  in  nature.

              The  body  of  the  CISC  Report  and  its  associated
          appendices generally  provide a  rational discussion  of
          all  relevant experimental work  to  date, taking  parti-
          cular  care  to  point   out  a  variety   of   experimental
          uncertainties  and  failings  that  may affect any conclu-
          sions  to  be  drawn.   Most  conclusions found in  the  body
          of  the  report  also  include  relevant  qualifications.
          However,  at  least  three of the "Key Findings" (concern-
          ing  melanoma,  damage  to  crops,  and damage  to aquatic
          organisms)  go  beyond   the  evidence  presented  in  the
          report.   Each  describes  as  fact  something  which  is
          explicitly   stated  in  the   report as  an   unverified
          possibility.   Since this  report  describes a  portion  of
          the  evidence  on  which  EPA   will  make  its  regulatory
          decisions,  it  is  imperative  that  the  Agency  consider
          the  whole  report,  avoiding  reliance  'on  the  overly
           conclusive "Key  Findings."

          And we  indicated  in the  letter  of transmittal  to EPA

[Halter, 1980]  that we considered:
              "...the   subject   matter   of   the   CISC   Report
          necessitates  the  assistance  of outside  consultants in
          order to prepare more complete  comments.   Should we be
          successful in obtaining more  in-depth critiques, these
          will be forwarded to you."
          The critiques have been obtained and are listed below:
Predicted Effect/Concern
from Ozone Depletion

    Human Skin Cancer
    (Appendix F-l)
    Measurement and
    (Appendix F-2)
    Agricultural Crops
    (Appendix F-3)
    Aquatic Ecosystems
    (Appendix F-4)

Professor Frederick Urbach, M.D,
Center for Photobiology
Temple University School of
Philadelphia, PA

Dr. Wilj.iam H. Klein, Director
Smithsonian Radiation Biology
Rockville, MD

Professor R. Hilton Biggs
Institute of Food and Agricul-
  tural Science
University of Florida
Gainesville, FL

Dr. David M. Damkaer
University of Washington
Seattle, WA
          There  is  striking unanimity  in the  appended  reviews.

Each reviewer  acknowledges  that the body  of  the NAS  report and

its  appendices  provide a  reasonably good  status  report,  as of

1979,  of   the  several  areas  of  knowledge,   and  point  to  the

numerous  caveats and  acknowledgements  of inadequate  data  bases

for  conclusions  contained  therein.  The  reviewers  differentiate

this status  report,  which  is  what it  was  intended to  be,  from

any form of  final  report, which it was  not  intended to be.  The
reviewers  express  substantial concern  over  the  summary  and Key
Findings sections where  the  state  of  knowledge is oversimplified
and where  the  multitude  of  necessary  qualifications are  largely
omitted.   We  note  that  it  is  these very sections  of  the  report
which seem to predominate EPA's statements.

          There  is  further   unanimity  that  in  all  effects  areas
there is  no  data base  to predict  quantitatively  the  effects  of
ultimate  depletion  and  no  basis  to  predict  an  imminent  catas-
trophe .  The  need  for  research is  emphasized  strongly, and  fre-
quently  specifically.    The  consultants  conclude that  the  data
base identifies  possibilities  which should  be  the basis for  such
further research.  And  it is acknowledged that there is time for
research and that  the  hazard in waiting for research results for
a  limited  period   is   negligible.   Specifically,  Dr.   Urbach

              "Finally,    calculations,    using    worst     case
           assumptions based  on NAS data, strongly suggest  that  a
           5 year delay  in regulation  of CFC will not have  a  dis-
           cernable  effect on  increases  in  incidence  of  [nonme-
          lanoma skin cancer]  or [malignant melanoma]."

And Dr. Biggs concludes:

              "...the  degree  of  uncertainty  that  is   associated
           with the possibilities would  seem  to indicate that the
           best  course  of  action  would  be  to  proceed   for   a
           limited period  of  time  to mount a good research  effort
           to   reduce   (a)   the   uncertainties  associated   with
           knowing  the  degree  of  stratospheric  changes expected
           in relation  to time, say five years when some  verifi-
           cation of whether  stratospheric ozone  changes predicted
           by  atmospheric scientists  is  actually occurring,  and
           (b)  those   uncertainties  associated   with   biological
           effects of UV-B radiation on  plants."


          Highspot summaries of  the  consultants'  findings follow
in sections 2-6.  The full reports appear in Appendix F.

      2.   Human Skin Cancer Effects

          In  the ANPR,  EPA  quotes  NAS'   [1979b]  estimates  of
increased skin cancer incidence without mention of the cautionary
statements in the NAS reports or the many conflicting conclusions
on the causes  of skin cancer,  melanoma in particular.   In this
section,  we  will very briefly present  some  qualifications which
should be made  on  EPA's  and the NAS/CISC  Report's  statements on
skin cancer.  These  statements  are based on  the  review recently
performed by Dr. Frederick Urbach for the Du Pont Company.

          The most  important  conclusion by Dr. Urbach,  from the
point of view of the regulatory decision-maker,  is  that no dis-
cernable effect  on the  incidence  of malignant melanoma or non-
melanoma skin cancer  is  to  be  expected  due to a 5-year  postpone-
ment of  regulatory action  by  the United  States.  (Dr. Urbach's
full review appears in Appendix F-l).

          a.  Melanoma Skin Cancer

          For  most forms  of  malignant melanoma  (the  rare  but
often fatal  type of skin cancer),  medical data  show  that inci-
dence is not related  to  chronic  repeated damage from accumulated
doses of UV-B.   There is,  thus,  no possibility  of  assuming any
reasonable  dose-response  relationship  between  UV-B   dose  and
changes in malignant melanoma incidence.

          The use  by CISC  of  essentially the  same  "model" used
to calculate  changes in  nonmelanoma skin cancer  incidence from
projected ozone  depletion is unsupportable.

          What can  be said  about  malignant melanoma  is  that  a
real worldwide increase in incidence  has  occurred  in  the absence
of  any  ozone depletion  and  that  it  is  middle  class males  and
females  who  show   this   increase,  not   those   habitually   or
occupationally exposed to UV-B.

          No  discernable  effect  on malignant  melanoma incidence
is  to  be  expected from a  5-year postponement of  any regulatory
action on CFCs.

          The above  conclusions  should be  contrasted  with EPA's
ANPR statements:
              "Assuming continuation of  present  patterns of sun-
          light exposure, NAS predicts a  16  percent ozone deple-
          tion  would  result  in several  hundred  thousand  addi-
          tional cases of nonmelanoma  skin  cancer  annually, and,
          with somewhat less certainty, in several thousand addi-
          tional  cases  of  melanoma  skin  cancer   (often  fatal)
          annually in the United States alone."
              "For   melanoma,   this   statistical   relationship
          [between  increased   incidence  and   increased  ozone
          depletion]  is  less  certain  but  appears  to  be  about
          two to one."
          The  semiquantitative estimates  of malignant  melanoma
referred to in the ANPR are speculative.

          b.  Nonmelanoma Skin Cancer

          Nonmelanoma skin cancer  is  the  common but rarely fatal
skin cancer.   It  has  the  best prognosis of  any cancer.   While a
correlation between  most, but  not all, nonmelanoma  skin cancer
incidence  and  solar  UV-B exposure  can be  reasonably inferred,
existing "models"  for  quantifying  the dose-response relationship
need considerable refinement.

          Present methods  for  estimating changes  in  nonmelanoma
skin  cancer   incidence  following  a  calculated change  in  UV-B
clearly  overestimate  effects.   Present methods,  for  instance,
uncritically  use  the  worst   relationship  between   calculated
changes in UV-B  and the  presumed damage that  such  changes could
produce, and  they  make  no allowance  for attenuation of  UV-B in
the outer skin cells.  These outer  skin  cells  are  not capable of
being transformed into cancer cells  since they typically are not
capable of division.

          Dr.  Urbach's   review  concludes   that   the   NAS/CISC
[NAS,  1979b]  projections  of  increased  skin   cancer  are  based
on all nonmelanoma skin cancer,  while  in fact  about  one-third of
basal cell carcinoma  occurs  on  sites  and under  conditions which
suggest this subset has no relationship to UV exposure.

          Further  conclusions   are  that:   Existing  models,  in-
cluding the calculations made by  CISC, need considerable refine-
ment  before  realistic estimates  of  changes in  nonmelanoma  skin
cancer incidence can  be  made for projected  depletions  of ozone.
Present models,  including  the  techniques  used by  CISC,  clearly
overestimate the risk.

          No  discernable  effect  on   nonmelanoma  skin  cancer
incidence is  to  be expected from  a  5-year postponement  of any
regulatory action of CFCs.

          These  conclusions  should   be  contrasted  with  EPA's
emphatic statements in the ANPR that:

              "A relationship  has  been  epidemiologically estab-
          lished between increased  DUV exposure and incidence of
          nonmelanoma skin cancer.   For  nonmelanoma  skin cancer
          approximately a  four  percent increase in incidence can
          be  expected for  every one  percent   increase  in ozone
          depletion on average."

3.    Natural Variations in Normal  Background  Solar Radia-
      its Simulation and its Measurement

          Comparison  of  data  between Rockville,  MD  (39  N)  and
Panama   (9°N)   shows   approximately  a   340   percent   natural
increase  in  ultraviolet  radiation  across  this  30°  latitude
band, or  approximately 0.16 percent   average  increase  per  mile
(see Appendix F-2).  The variation  is almost 8 times larger  than
the  44   percent   ultraviolet  increase  which   NAS/CISC    [NAS,
1_9 7_9_b_j	ca 1 cu 1 ated J:o_ result  from  an  ultimate   ozone  depletion
of 16.5 percent.

          This  observation  provides some  needed  perspective.  It
is  illuminating  to  compare  these   numbers  to  the  0.2  percent
potential maximum incremental  ozone depletion  difference,  corre-
sponding  to  a  0.6  percent   increase  in   damaging  ultraviolet
radiation,  between a  U.S.  ban  in  1980  versus  a  ban in  1985
[Du Pont,   1980b]   (Details   of   this  calculation   appear  in
Appendix  E) .   The 0.6  percent difference  may  be  compared  to
existing ultraviolet increments over  a  north-south  movement  of 4
miles.    However,   more  importantly,  it  indicates   the  existing
environment provides ultraviolet differentials much in excess of
our current concerns.   It  also suggests  that  the natural  envir-
onment readily  could  be used  for  experiments  on the effects of
varied amounts  of  ultraviolet  radiation  on   representative  crops.
Such experiments  would  avoid  the need for  growth chamber  exper-
iments.  This  is  important because there are  critical physical
deficiencies  in our  ability to  simulate  changes  in ultraviolet
radiation using experimental  growth chambers.   Yet,  it is  these
growth chambers on which most data  are  presently  based  and on
which EPA  reaches its  conclusions.  This  is  discussed in  more
    340  percent  *  30°  *  69  miles/0  latitude  =  0.16  per-

detail  in  the following  section.   (The  above  points  are  deve-

loped more  fully  in the  review by Dr.  William H.  Klein,  which

appears in its entirety in Appendix F-2).

      4.  Crop Effects

          With regard  to  the effect on  crops  from  a  16 percent

depletion of the ozone, EPA states in the ANPR:

              "Other  significant  effects  of  increased DUV  may
          include   reduced   crop  yields  from   many  important
          agricultural species,  including tomatoes,  sugar  beets
          and corn..."
This statement exaggerates the NAS conclusion, which was:
              "Key Finding  12 - Crop  yields from  several kinds
          of agricultural  plants are  likely  to be  reduced  as a
          result of a  16  percent to 30 percent ozone depletion.
          Present data does not  permit a  quantitative estimation
          of  the   expected  production   losses  but   do  show
          differences   in   the   ultraviolet   sensitivities   of
          different  plants  cultivated  in  the  United  States.
          Since  non-agricultural plants show  ultraviolet sensi-
          tivities in  the  same   range  as do  agricultural plants,
          effects  of  ozone  depletion on  wild  and  cultivated
          plants should be similar."
      The Key point  here  is that the NAS  limited  itself  to con-

cluding effects  may  occur from  depletion  in the  range  of 16-30

percent, a depletion  range  in excess of  the calculated ultimate

potential  depletion   of   16  percent  associated  with 1977  pro-


          Additionally,  the  body  of   the  NAS  report  strongly

emphasizes  the   paucity  of  good data  and  the  numerous  uncer-

tainties.  These factors  have  been  ignored by EPA in its summary

position in the  ANPR.

          Specific  to  the   findings   of   the  NAS/CISC  report
[NAS,  1979b] ,  Dr.  R.  Hilton Biggs  (See  Appendix  F-3  for  his
full review) reports that  "No studies of plant  responses per se^
[in  controlled environmental growth  chambers]   have   ever  been
used  successfully  to  quantitatively  predict crop  yield  under
field   conditions."   and    "[controlled]    environment   growth
chamber  studies  cannot be  used to  extrapolate  to  field condi-
tions."    Yet,  almost all  the  evidence cited  in  the  ANPR  for
predicting adverse  effects of increased ultraviolet  radiation on
crops is based on growth chamber studies.

          The  discrepancy  between   growth   chamber  and  field
experimental   results  may   be  illustrated   by   comparing   two
findings which appear in the  NAS Report:

          *   From  growth chamber studies:

                  "...soybeans  tend  to  be  generally  sensitive to
                  UV-B radiation..."  [NAS, 1979b, p.  284]
              But from  field  studies,  a contradictory conclusion
              is offered:
                  "Several  crop  species  such  as....soybeans...
                  exhibited   no   detectable  response   to  UV-B
                  radiation supplements  as  large  as two to three
                  times   the   present   solar  DUV  for  summer
                  conditions  at  30°N  under  field  conditions."
                  [NAS, 1979b, p. 285]
    Dr.  Biggs'  review  discusses  in  some  detail  the pertinent
    physical  and  biological  reasons  why  growth  chambers  are
    unsuccessful  models  for  quantitative  predictions  of  crop
    yield under field conditions.

          The misleading  high sensitivity  of  soybeans  grown  in

growth chambers  has been  prominently and  prolifically  featured

in  EPA  statements   [EPA,  1980a;  1980c;   1980d;  1980e;  1980f;
1980g;  Jellinek,   1980a;   1980c;   Wellford,  1980]   while  the

results  from  field experiments  have  been  ignored.   One  can
conclude that  EPA  does not appreciate  the  relative significance

of the differing results.

      5.  Marine Effects

          EPA's key statements in the ANPR  on  the effect of a 16

percent ozone depletion on marine life are:

              "Other  significant effects   of  increased  DUV may
          include...;  significant  larval  and juvenile  killings
          of   certain   seafood   species   including   anchovies,
          mackeral, shrimp  and  crab; and adverse  effects  on the
          microorganisms  constituting  the  base  of   the  marine
          food chain."

This should be contrasted to the full NAS Conclusion which was:
              "Key   Finding   13  -   Larval  forms   of  several
          important  seafood  species,  as  well  as  microorganisms
          at  the  base  of  the  marine food  chain,  would  suffer
          appreciable killing as  a  result of a  16  to 30 percent
          ozone  depletion.   Present  ignorance  of  ultraviolet
          penetration into  the  waters that  they  inhabit  and of
          the depth  distribution of  the  organisms  precludes an
          estimate of actual losses."  [NAS, 1979b, p.  7]
          Again  it  is pertinent  that  the NAS  limited  itself to

concluding  effects  may  occur  from depletion  in  the  range of
16-30  percent,  a depletion  range  iji   excess  of  the  calculated

ultimate potential depletion of 16 percent cited by EPA.

          Additionally, the body  of  the NAS/CISC Report strongly

emphasizes the paucity of  good data and  the numerous uncertain-

ties.   These  factors  have  been  ignored  by  EPA in  its summary
position in the ANPR.

          In many  of the experiments  cited by  the  NAS Reports,
and subsequently by EPA in the ANPR, the experimental conditions,
such as  ultraviolet radiation dose-rates,  temperature  and water
depth were  not  realistic simulations of  natural conditions. For
some studies  cited, the radiation  dosimetry  and calculations of
the radiation level are open to substantial question.   (These and
other points  are  discussed  in detail  in Dr.  David  M.  Damkaer's
review which appears in its entirety in Appendix F-4).

          The bottom line to  the  uncertainties  surrounding the
results  from these experiments  is  somewhat  analagous  to  the
situation  with  regard  to  crops  (discussed   in  the  previous
section)—the data  represent  the  necessary  first  step  of  ex-
ploratory  research, but  are  not   suitable  as  a  final base  on
which future quantitative predictions can be made.

      6.  Climatological Effects

          EPA states in the ANPR:
              "In  addition,  continued  accumulation  of  CFCs  in
          the lower atmosphere  (troposphere)  may induce a slight
          warming  of  the  mean global  surface  temperature,  but
          this is  less  than  the warming  predicted  for a doubling
          of  atmospheric  carbon  dioxide caused  by  fossil  fuel
              The  text   infers   these  are  part   of  the  NAS

              What the NAS  does  say  about  potential  temperature
      change is that:

              i.   "...the  warming  due  to...CFMs  is  expected to
                  be  an  order  of  magnitude  smaller  than   that
                  expected  from   the  increased   CO?."     [NAS,
                  1979b,  p. 118]

             ii.   The  [uncertainty]   is   so   large,   in   fact,
                  that  the  net  warming  due   to...   [CFMs]  has
                  an  uncertainty  equal to  the  expected  mean."
                  [NAS, 1979b, p.  118]

            iii.   ...a change between  successive  nonoverlapping
                  20-year  averages  of  surface  temperature  at
                  60°N  must  exceed  0.4°  to  be  statistically
                  significant..."   [NAS, 1979b, p.  106]
          One  could  equally  well   state   that  the  potential

temperature change  from  CFC  release  is so  uncertain  that it may

not occur  at all.   But  even  if  a  temperature change  from CFC

release  were to  occur  it  would  be  an insignificant   increase

relative to that possible from C02-



      1.  Introduction

          As discussed  in  section  B, Section  IV  and  Appendix E,
the science underlying the CFC/Ozone Issue is developing rapidly.
 In the year since  the  NAS reports,  there has been a substantial
increase in  knowledge  in a  number  or  critical areas,  which,  in
turn,  has  served  to narrow  several  of  the  key  remaining  uncer-
tainties.   The  narrowing of uncertainties  is a  continuous pro-
cess.    If   research  continues  as   expected,  the  reduction  of
uncertainties likely  will  extend into  the  foreseeable  future as
the data  base  increases and  understanding  of  atmospheric pro-
cesses   improves.    However,  one   cannot   confidently  predict
exactly to what extent, over time, this will happen.

          Yet the very  question  often  asked  is:   "When will the
uncertainties  be  reduced  sufficiently  to  confidently  make  a
determination as  to the validity of the  theory?"  Consequently,
attempts have been  made to assign to the key uncertainties time
estimates  for  their  resolution.   We review  two of  them   [Ward,
1979;   SRI,  1980]   in  the  following  sections.   We  end  with  a
discussion  on  why  it does  not matter  how  long   it will  take to
resolve the  uncertainties  so long  as an early warning system for
any developing problem  is available.

      2.  Du Pont/Fluorocarbon Project  Panel Estimates

          At  the  request of EPA,  Du Pont  prepared,  in coopera-
tion  with  the  Chemical  Manufacturers   Association  (CMA)  Fluoro-
carbon  Project  Panel (FPP)  a  submission  reviewing uncertainties
in  the  ozone  depletion  theory   [Ward,  1979]   The  submission's
summary  included  the  comment:

              "This   submission  identifies   several   important
          uncertainties  in  the ozone  depletion  theory,  explains
          the  significance  of  the   uncertainties/   reviews   the
          industry-supported research  targeted  to the  uncertain-
          ties,  and  gives  the  results expected  and  anticipated
              The program  is  consistent with the recommendations
          of  the National  Academy  of  Sciences  and  cooperative
          with government agency and academic research.
              The industry  believes that  there  is time  to  verify
          or  disprove  the  theory  experimentally  without undue
          risk.  The  issue  should be  decided  on such  scientific
          measurements  and  evaluations,  not just upon  unverified
          The estimates of timing were arrived at  in  consultation
with  the  investigators funded  by FPP  and with  the  FPP project
coordinators.   A  copy   of   the   tabulated  contents   from   the
submission appears on  the following page.

          In  reviewing this  estimated, timetable  however,  it  is
important to  recognize that,  although in  each  case  the  expected
results are anticipated in  5  years  or less, the anticipated  time
required to obtain results can change as research  progresses.

      3.  SRI Workshop Conclusions

          Subsequently and  independently,  EPA sponsored  a  "work-
shop" at SRI  International  in March, 1980.   None  of  the FPP/CMA
coordinators,  and  no  CFC-producing  industries  were  invited  to
attend  the  workshop.   The  conclusions  of  the  workshop  partici-
pants,  as   reported   in   the   report  on   the  proceedings   [SRI,
1980] seem to have been that:

          i)  There  are   many  key  uncertainties   remaining  which
              are  critical   to  making   a  correct   regulatory

Estimated Time Required
Are  there trope-spheric
 Is all pertinent
   chemistry known
   and quantitatively
Are  1-D models adequate?
Ozone Trend Analysis
•10 year sink, not currently
 excludable, would reduce
 ozone depletion 10-fold.

•Uncertainties associated
 with reaction rates,
 photolysis, and reaction
 products could together
 reduce ozone depletion 13-
•Missing chemistry could
 reverse sign of ozone
 depletion  (ozone augmen-
 tation) .
•Transport uncertainties
 could reduce ozone depletion
 by a factor of 0.7.
•Latitude and seasonal dis-
 tribution for comparison of
 measurements and calculations.
•Latitude distribution of
 calculated depletion reduces
•Atmospheric Lifetime Experiment
•Research on silica-catalysed
 decomposition and PC-21.

•Studies on reaction rates and
 temperature dependence.
•Absorption cross-section measure-
•Studies on reaction pathways.
•Studies on hypothetical missing
 chemistry suggested by discre-
 pancies between measurements
 and calculations.
•Anderson's "reel-down" experiment
•Methods for, and measurements of,
 total stratospheric chlorine.

•Not included
                                                           •2-D modeling studies.
                                                           •2-D model development and
•Basic test of whether CPCs     •Statistical Trend Analysis
 deplete ozone.  (Mote that     •Establishment of Detection
 this is not the same as         Threshold
 whether ozone is being depleted
 from any source—a detection
 ability already in hand.)
  3-5 years
  1 year for measurements
  3 years

  3 years

  3 years
  5 years
                                                                                                   2 years
                                                                                                   2 years
• Not applicable

• 2-3 years

• 2-3 years
                                        2 years or more depending
                                        on actual detection


         ii)  These  uncertainties  generally  are "researchable",

        iii)  Most  are  researchable within  1-5  years, depending
              on the uncertainty.

          The  summary  tables on  uncertainties  from  this report
appear as  Appendix L.  The  full report  is  attached  as  part of
our submission.

          It  is  noteworthy that of a  broad  range of 37 issues
classified as  "high"  or "moderate"  in  importance and  identified
as  "researchable",  28  were listed  as  requiring   5  years  or  less
and an additional  4 were expected  to require 5-10 years.  Of the
remaining  5  researchable  issues  requiring 10 years,   and  the   6
"unresearchable"  issues,   none  involved  CFC  releases  and   none
involved transport or atmospheric chemistry and modeling.

      4.   Conclusion

          The research  needs  described in the two  reports above
are completely  compatible  with  research  recommendations  made by
the   NAS   [NAS,    1979a;   1979b]   and   NASA   [NASA,   1979],
although these later reviews  did not make specific estimates of
the time required.  However, the NASA report did  conclude:

              "The  uncertainties  associated  with estimating  the
          long-term  impact of  several  perturbing  influences to
          the  stratospheric  ozone  layer  continue  to  be large.
          However,  prospects   appear   good   for  improving  the
          situation  in  the  near   future."    (Emphasis  added.)
          [NASA, 1979,  p.   362]

          The conclusion  is clear  and  inescapable.   The uncer-
tainties concerning  the effects of  CFC on  stratospheric ozone,
and the effects of  ozone changes should they  occur, are so large


that a  reasoned and logical  decision-making  process for  further
CFC regulation  cannot presently be mounted.

          There  has been  a  tendency  on  the  part  of  EPA  and
others  to  acknowledge  the   uncertainties,  but,   understandably
lacking confidence  in  their  very  near-term  resolution,  to  con-
clude  that  an  indefinite  wait  for  the needed  resolution  will
incur unreasonable  risk.   Therefore,  it  is  argued  that  regulation
must occur  now.  What  this   analysis  neglects, however,  is  the
existence of   an  early  warning  system—ozone  time-trend  analy-
sis.  From  a  regulatory  standpoint,  it should  not  matter  whether
the underlying  scientific  uncertainties  will be resolved  in  1,  5
or even 20  years,  so long  as it is apparent  that  an  unreasonable
risk to human  health or  the  environment  is not developing  during
the period.  Trend  analysis  provides  such an ability.  Under  the
umbrella of an  early warning system based on actual  ozone  obser-
vations,  the  time   it  will   take   to  resolve  the  uncertainties
becomes of  academic  interest.  Research  to  ultimately  resolve
all the discrepancies  and unanswered  questions can  proceed  with
confidence, no  matter  how  long it  might  take,  so  long  as  no  risk
is developing.  The trigger  for  regulation should  be "developing
risk",   not  concern  that  it   may  take x  years to  get  the  final
answers,  and  that  if these  answers  are  negative  it  will be  too
late to act.   These points  are  discussed  in  more detail in  the
ensuing sections E-G.


      1.  Introduction

          In  the  United  States  many   of   the  studies  [NAS,
1979a;  1979b]  have  concentrated on  calculations of  ultimate  or
long-term depletion  and on  attempts to  predict the  effects  of
such  long-term  depletion  should it  in  fact occur.   The reports
note that such  effects  occur gradually  over a period  of about a
hundred  years.   However,   exclusive  consideration  of  the  long-
term  calculations  and  estimates  is largely  inappropriate  for
decisions as  to what  action  should be  taken  now.   Such  long-
range estimates are mainly  relevant  to  a decision  as  to whether
action  on the  issue  should  be  postponed  for a  long  period,  say
50  years.   The relevant  decision  that  is  facing   us now  is
whether  regulation of  the remaining nonaerosol  uses  of CFCs  in
the  United   States  has  to  be  decided  upon  and   initiated  now
(1981).  The alternative to  immediate  regulation is postponement
for  limited  sequential periods.   We are not recommending that
postponement  or  deferral  be  for  a  single  pre-set  specific


period.    Rather,  we  believe deferral  should be  on  a  sliding

scale, say a year  at  a time,  in  conjunction with  periodic formal

assessments of whether the theorized risk is developing ("Assess-

ment  and  Surveillance").   As discussed  elsewhere,  ozone  trend

analysis permits  this to  be  done.  The  deferral  should  not be

just to postpone regulation but rather, in order to:

          a)   continue  to  work  to  reduce  uncertainties  in  the

              ability  to make stratospheric predictions,

          b)   reduce  uncertainties  in  our  ability  to estimate
              the effects of ozone depletion,

          c)   insure  the list  of  available  regulatory options is

              complete, and
    A  pre-set  period  of   5   years   has  been  often  mentioned.
    Several  analyses   [Ward,   1979;   SRI,   1980]   of  the  work
    required  to reduce  the  critical uncertainties  suggest that
    most  can   be   materially   reduced  during  periods  varying
    between  one and  10  years, with  a period  of  about  5  years
    being  most  often  stated.   Reduction  of uncertainties  is a
    continuous  process  but  the period of 5  years  is selected as
    one  within  which  major  improvements  in  knowledge  and   re-
    ductions   in   uncertainties   are  expected   (see   previous

    More  recently,  the  EEC reviewed  the state  of  the  science
    [EEC,  1980]  and  the   need  for   further   CFC   controls   and

      "...a  delay  of  5 years  before any decision is  taken  on
      CFCs can  be reasonably accepted."

    The key  point underlying  all  these assessments is not that a
    5 years  deferral  in  regulation has some  special significance
    but rather, given  the  current state  of  knowledge, studies in
    reducing  the  uncertainties probably can be made within this
    period of time, and  the risk  in waiting  is  acceptable.

    With  the recent  improvement in ozone  trend analysis,  we have
    the ability to  assess  developing risk on  a yearly  basis  and
    to  rethink  the  wisdom of  continuing  the deferral according-
    ly.   No committment  is required  that  deferral be  for   any
    pre-set period.


          d)  complete and quantify  the  economic  impacts of such
              regulatory actions.

          We  stress  that the  relevant  choice should  be between
regulating  now  or  waiting for  limited sequential  periods  while
monitoring  on  an ongoing basis  whether any  risk  is developing.
It  should  be kept  in mind  that as  our  knowledge  improves  and
more  trend  analysis  of  actual  ozone  concentrations  becomes
available,  the  decision to  continue to wait may  be  altered at
any  time.   The  decision is  not,  as  EPA  tries  to paint  it,  a
simple choice  of regulating  now or  having  to  wait until  it is
too late to head off  major deleterious efforts  should  the theory
prove to be correct.

          The risk basis for  such  a  decision is  not long-term or
ultimate ozone  depletion estimates but estimates  made  for incre-
mental depletion  and  corresponding estimates of  effects for the
postponement  period  under  consideration.   Such   analyses  are
conspicuously  absent in  the  NAS  Reports  [NAS,   1979a; 1979b],
although  not from  all   the  reports  EPA has received  or  spon-
sored.   Fortunately,   it  is   relatively   simple  to   make  the
calculations, and the anticipated effects can be prorated.

          Below we  review  conclusions reached in  a Du Pont  sub-
mission   [Du  Pont,   1980b],  a  study  from  the   University  of
Maryland  [Bailey,  1980]  and  a  study  by  Systems  Control,   Inc.
[SCI,  1979] which  are  pertinent  to  the  question  of  risk  from
limited  periods of  delay—delay  taken  in  order   to  reduce the

      2.  Conclusions from 1980  Du Pont  Submission

          The   Du  Pont  submission   [Du  Pont,  1980b]   examined
the  calculated  environmental   difference  between two extreme
hypothetical regulatory  scenarios:


          •   A ban on all CFC production in the U.S. in 1980.

          •   A ban on  all  CFC production  in  the  U.S.  postponed
              until 1985.

          The  difference in  potential  ozone  depletion  between
these two scenarios would reach  a maximum of  0.2  percent  in the
year  2010  and subsequently  decline.   The scenarios  assume con-
tinued  use  at  1978  rates  by  the  rest  of  the  world.  The 0.2
percent  maximum  incremental  depletion  corresponds  to  a  0.6
percent maximum  incremental increase  in  ultraviolet  reduction,
also occurring in 2010 and subsequently declining.

          Such  incremental   changes  in  ozone  and  ultraviolet
radiation   would   be   insignificant   and   undetectable   (See
Appendix F).   Similar  calculations  could  be  repeated  for  a
five-year   postponement  in   any   regulatory  scenario.    Any
regulatory  scenario  less   severe  than  a  production  ban  would
necessarily   result   in  even  smaller   calculated  incremental
effects.   Although  it  is   recognized  that  a  total  ban   is  not
being  considered  as  a  practical  regulatory action  in 1980  or
1985,  the  extreme  regulatory  scenario was  chosen  to  emphasize
that  the  incremental  effects  from a 5-year  U.S.  postponement of
even  extreme  action  were   insignificant.   Details  appear  in
Appendix E and [Du Pont, 1980b] (attached).

      3 •  Conclusions ^f_rgm^University of Maryland Study

          The University of Maryland Study  for EPA by  Professor
Martin  J.  Bailey  [Bailey,  1980]   is an  in-depth  evaluation  of
the risks vs.  the  benefits  of  not  regulating.   The "centerline"
estimates are found to:

              "give  the  surprising  result   that  the  unregulated
          release  of  CFCs   [if  the  theory of  ozone  depletion

          proves  to be  valid]   would  produce  benefits  ranging
          from  equal  to   almost  double  the  costs."   [Bailey,
          1980, p.ij
          An important part of the report is a section on "Immed-

iate  Decision  versus  Deferral",  which  discusses  the  value  of

reducing  the  existing uncertainties  before making a  regulatory

decision.   It  is  also pointed  out  that,  if  the U.S.  prefers

prompt regulation  of  CFC  emissions,  it can only  present  a mixed

and inconclusive  case to other  countries   (a key  point,  because

one of EPA's  stated objectives for  regulating  now is  to obtain

international cooperation on regulation of  CFCs worldwide.)

          The report notes:

              "Because  the  growth  path  of  CFC  emissions  is
          exponential, the  next  10 years  of  production  and  use
          will commit the economy to  only  about  13  to  14% of  the
          eventual  risk of  damage from  CFCs  if  the supplies  of
          Fl   [fluoride]   ores   are   exhausted,   as   expected
          within  the  next 10 years  or  so.   During the  next  10
          years,  scientific  knowledge  of  all  aspects  of  the
          problems  should  improve  markedly.   Hence,   even  if
          worldwide restriction of CFCs  production  and  use fails
          to  develop  quickly,  nearly  all  the   risk   can   be
          avoided—the risk  that  the case  for   restriction  may
          become conclusion, as a result of  new  knowledge, after
          several years."  [Bailey, 1980, Abstract of  report]

              "All  these  perspectives on  the problem,  combined
          with  the long  time  periods  involved,   imply   a  high
          value to  improvements  in  knowledge,  which  can  reduce
          the  choice  of  a  damaging   or   needless   regulatory
          strategy."  [Bailey, 1980,  p.4]

              "Clearly, there is  a  high payoff  to  improving  our
          knowledge    and   narrowing    the    uncertainties."
          [Bailey, 1980,  p.  80]

              "...further   regulation  can  safely  be   deferred
          until  more  knowledge   accumulates."    [Bailey,  1980,

          and concludes:
              ...the need  is  for a  narrowing  down of  the major
          uncertainties  within  the  next 10  to  15  years.   The
          emphasis  should  be  on well-verified  projections  and
          predictions  not   on   quick   [regulatory]   responses.
          The  rush  to  regulate has  outgrown  our knowledge  in
          this area, apparently quite  needlessly;  there is ample
          time   to   reach   reliable   findings   on   whether   an
          environmental  hazard   exists  in  the  use   of CFCs  or
          whether   instead   they   are  beneficial."    [Bailey,
          1980, C-3]
          We find it noteworthy  that  the  report  has been omitted
from EPA's ANPR discussion.

      4.  Conclusions from Systems Control Inc. Study

          The   SCI   study,    [SCI,   1978]   prepared   for   the
National  Science  Foundation,   evaluated   internal  and  external
costs   associated   with   several  alternative   strategies   for
controlling CFC  emissions.  Among  its  conclusions was  that,  in
most of  the  cases  examined, the minimum  cost alternative  is to
wait until ozone depletion is  detected.   It  should be noted that
at  the  time  of  the  study  (late  1978)  the  lowest   detection
"threshold"  considered  was  2.5  percent,  while  in   1980  the
threshold  is  already down  to  approximately  1.5  percent or  less
(See Section IV and Appendix E).

          In the  SCI study the  cost  advantage of  the  "Wait and
See" approach  increases as the  detection threshold  is lowered.
Consequently  this  advantage of   the  Wait and  See  approach has
increased as a result of improvements in ozone trend  analysis.

      5.  Summary

          The conclusion  to be  reached  from the above analyses
is  that the most  appropriate  regulatory policy  is  a cautious


approach of  "Assessment  and Surveillance" for  an  ongoing series
of limited periods,  with suitable scientific  review  during  each
period,  so  that  the   wisdom  of   that   policy  is   frequently

          There  are  two  further  factors  which support  limited
postponement of action:

          *   The  economic and  other  risks  of unnecessary  or
              premature  regulation  are  sufficient  to  warrant
              great  regulatory  caution.   (This is discussed  in
              greater detail in section I.)

          •   There  is  an  independent  technique—ozone  trend
              analysis—which,  apart  from  periodic  scientific
              reviews, permits us to monitor our environment and
              which  provides   an  early  warning system.   Ozone
              trend  analysis  provides  a  desirable  redundancy  in
              environmental monitoring.    (This  is discussed  in
              greater detail  in  section F,  Section  IV - Science
              and Appendix E).

          We believe the  factors  discussed  above are  the factors
which  should  be considered in  reaching  regulatory  decisions  on
the need for  short-term  or immediate actions.   They  have been a
major  part  of  the   reasoned  approach   adopted by  the  United
Kingdom and the EEC.

          The  reasoning   followed  by  EPA  (as  described  in  the
ANPR)  in  reaching  its conclusions  on  regulatory  action ignores
these  factors,  concentrating  instead on   arguments  which  are
inappropriate  for  reaching prudent  and   unemotional  short-term
regulatory decisions.   (Section  J discusses these  arguments and
approaches being used by  EPA).



      1.  Introduction

          Statistical  analyses  of  ozone  measurement data  con-
sistently point  to  recent  increases  in both total  column  ozone
and upper Umkehr  layer ozone concentrations.   The  uncertainties
imply detestability  of a  long  term  trend  at  or  below  the  1.5
percent  level.   In  contrast,  1979 models  calculated  current  de-
pletion to be 2.1 percent, with approximately 1.5 percent to have
occurred in the seventies from CFC-11 and CFC-12.  Other steadily
increasing chlorocarbon emissions  (e.g.  methyl  chloroform)  would
increase those numbers by  approximately  half  (2.1—^3 percent).
Model calculations using current data  revise  these  figures  down-
ward by  as much  as  a factor of two,  to as low  as  1.5 percent -
still outside  the  95  percent  confidence limits  placed on  the

          This conflict  between  measurement and  models is  not
unique.    Model  predictions  of  other  effects  based  on  best
available data  for  volcanic  eruptions,  nuclear explosions  and
the eleven-year  solar  cycle  are  also  not  reproduced  in actual
ozone observations.

          Two  explanations  are  possible  for  these  continued
differences  between model  calculations and  ozone  observations:
i)  In  each  case, an  opposing trend may have masked  the calcu-
lated change.   ii)   Models  may be  consistently over-estimating
depletion  due  to  inadequacies  in  chemical   treatment  or  to
unwarranted  assumptions.    In  other  words,  the  theory is  not
quantitatively   correct.     These    possible    explanations   are
examined in more detail in the following sections.


      2.  Opposing Trends

          Ozone  measurements  have   not   verified   the  several
concentration  fluctuations  calculated  to have  occurred  from  a
variety of  perturbations,  including  the  CFC  effect,  either  in
magnitude  or  in  qualitative   features.    Intuitively,   it  is
unlikely that  opposing  but  unsuspected trends in each  case  have
countered  the  calculated  trends  just sufficiently  to  obscure
detection.   Nevertheless, such intuition  is  perhaps insufficient
reason to reject the possibility.

          Even if  one  assumes for the  moment that a CFC effect
is  occurring  but  being  cancelled by  other  effects,  the simple
reality is that  ozone  levels  themselves  are  not currently being
reduced below  "normal"  by CFCs.   From  the statistical  analyses,
one  also  knows that postulated  opposing   trends  must  themselves
be  long-term  effects   and  immediate  catastrophic  reversal  is
unlikely.  Thus,  in this  scenario of  opposing  trends,  for  the
near  term  at  least (say  up to  twenty years) , any  CFC  effect is
mitigated  by  the  unknown  opposing effect.   Potential  depletion
is less, secondary effects are less,  the risks are reduced.

          One  must also  consider  what else  will  take  place in
the  next twenty  years.   First,  one may expect  continual refine-
ments  in  both  model calculations  and ozone  measurements.   Both
will  improve the regulator's ability to make decisions.   Further-
more,  the  assumption  of  opposing  trends   reduces the  risk asso-
ciated with delaying a  regulatory decision until it  can be made
on a  sounder basis.  Measurements  to  date show  no current threat
and  imply  a  reduction  of future  threat for  a period  long enough
to  encompass  regulatory deferral for  further  research  and even-
tual  action  (if  the evidence  justifies it) — and all of this at
considerably lower risk than that perceived just one year ago.


          As this discussion points  out,  perceived risk is not  a
static  quantity.   During any period  of  regulatory postponement,
ozone measurements  would  continue  to be  updated.  As  the  data
set  lengthens,  the  statistical analysis  improves  in its  ability
to  separate  the  CFC  trend   from   unknown   intermediate   length
trends,  and  only  very long term trends  could counteract  the CFC
trend without  being  detected.   To  the  extent  the  depletion  is
still undetected  in  successive  years,  confidence  in  the  wisdom
of  regulatory  postponement increases.   Even  the  time  scale for
possible future depletion  increases.

          A  final consequence  of  continued absence of  detectable
depletion  is that  opposing  trends  become less likely  to mimic
the  calculated  increasing CFC  depletion  curve.   Eventually the
postulate  of opposing trends become  highly  unlikely,  leading  to
the  second  possible explanation for  current  results:    Theoreti-
cal calculations may  overestimate any CFC  effect.

      3.  Reliability of the Theory

          The  discrepancy  between  ozone  measurements  and model
calculations may  well lie in  the  theoretical models themselves.
Having  discussed  the  possibility   of  opposing  trends,  we  now
consider the alternative.  The  detailed  discussion of  transport,
chemistry,   tropospheric  processes  and   models   appearing   in
Appendix  E  define  a  large  number  of  uncertainties   associated
with model  calculations.  The  1979  calculations by the Lawrence
Livermore   Laboratories'   model   were   certainly  overestimates
relative   to the   currently   accepted   chemical   scheme.   Other
preliminary   developments   seem  likely   to   reduce   calculated
depletion  still further.  If  one accepts  several such  develop-
ments as  being  accurate,  calculated  depletion through  1978  is
reduced and  may then fall  within the uncertainty range  for  trend
analysis  of the  ozone  measurements.  Hence, in  the  absence  of
opposing  trends,  ozone  trend  analysis  provides  a   gauge   for

confidence in model calculations.  With current  trend  results,  a
lower  calculated  ozone depletion  is  more  likely  to  be  correct
than a high one.

          Thus,  the regulator  obtains a  great  deal  of  direct
information  from  ozone  measurements.    First,   ozone   is  not
currently decreasing as  earlier model calculations  would  imply.
Therefore, the  immediate  concern for  stopping a  trend which may
be already underway  is  alleviated.  Second, large  (even  16 per-
cent)  calculated  steady  state  depletion  implies  rather  larger
(approximately  2  percent)   present  day  calculated  depletion—
which  is  simply  not  consistent with the current  data.   The wis-
dom of continuing to rely on 1979  model calculations in  spite of
this  evidence  is  suspect.   To  the  extent  that  the  calculated
steady state depletion  is smaller, the calculated annual  change
in ozone  is also smaller.   Therefore,  ozone measurements  tell us
that the  need  for  precipitous immediate action  is also  removed.
To  put it  simply,  the  smaller the  potential  effect, the more
time available to study it before making  regulatory decisions.

          A  logical conclusion  to this  analysis  is  that  both
current uncertainties  and recent  analyses  of  ozone measurements
support  a deferral  of  regulatory action  in  favor  of  further
research.  The question  then  becomes: "How  long  a deferral  is
reasonable?"  To answer that, one must consider the early warning
capabilities of  ozone  measurements  and  how those  capabilities
improve with time.



          The  feasibility  of  an early  warning  system  based  on
ozone measurements  depends  not on  the  ability of  the  system to
confirm  the  theory,  but rather  on  the  ability of  the  system to
detect  change in  ozone.  The  ozone measurement  analyses  dis-
cussed  here  imply that  a  net long-term change  of  approximately
1.5  percent   is  detectable with  confidence,  regardless of  its
cause.   Calculations suggest  that immediate  cessation  of  pro-
duction  at  that  time  would  allow  overshoot  to  half-again  that
value,  i.e.   approximately  2.3  percent.   The practicalities  of
the  regulatory process  would  entail  some further  delay,   so  a
more  conservative  estimate  of overshoot might imply  an eventual
depletion of  3 percent  if  the  regulatory process were begun when
ozone measurements  indicate  a decrease  in ozone of  1.5 percent
below "normal".

          However,  this  analysis  of  overshoot  is  essentially  a
worst  case.    It assumes  a  case  calculated  using  1979  model
imputs.   To   the  extent  these  model  calculations  are  over-
estimates of  current depletion,   (as  seems  to be the  case  based
on  new  information)  they are  also overestimates of  the rate of
depletion  and hence of the  overshoot  level.   Each  additional
year  of  measurements which show  no trend  reduces both overshoot
and  potential steady  state  depletion  still  further.   That is,
the  perceived problem gets smaller,  and response becomes easier
and more effective.

          A  deferral is justified  by the  current  data  -  ozone
has  not  decreased  as  model  calculations   indicate   it  should
    Ozone  levels  fluctuate  above  and below  some  average value.
    Ozone  depletion is a decrease  in the average  of  the latest
    values  compared  to  the long-term  average  of older  ozone
    concentrations, i.e., the "normal" concentrations.

have.   Each  additional  year of  measurements  with  no  downward
trend provides  even  stronger support for  further  deferral since
a  decreased  potential effect  can  be more  easily   dealt  with by
the regulator.

          Additionally,  a  deferral  in regulation  will  permit
research to  continue,  and  any subsequent decision  to be reached
on a more firm  basis.  A number  of  critical projects in progress
(discussed in Appendix K)  will be  completed in  the near future.
Confidence in  model  calculations  is likely  to be  increased as
laboratory work  and  atmospheric  measurements continue  to refine
the  current  picture  of  the  stratosphere.   Uncertainties  will
likely be reduced, and a proper decision will be facilitated.

          Finally, the  early warning  system itself  is  expected
to improve with time  for  several   reasons.   A longer  data  base
reduces the  statistical  uncertainty associated  with detection of
a long-term  trend.  The  shape of the calculated CFC  trend itself
is better  contrasted  with  other long-term trends  as more years
are  included.   The  ability  of   a data   set  to  separate  a
relatively long  periodic trend from a  very long  term monotonic
trend  in-  creases  with   the  length  of the  data  set,   and  the
possibility  of masking by opposing  trends  is  reduced.  Thus, the
capabilities   of  the  early  warning  system will   increase  with
time—better   sensitivity  and  a  more  accurate  search  for  a
particular kind of trend.

          Careful  attention to  a   well  organized   early  warning
system  based on  ozone  measurements  will  indicate,  with better
precision each  year,  the actual  changes taking  place in  ozone.
Current precision  is  sufficient  to  permit  speedy  observation of
change  well  in  advance of  large depletion.   To the  extent   that
ozone change is not  detected, maximum  likely CFC  induced ozone
depletion has  increasingly  smaller   upper limits placed  upon it.
Regulatory deferral contingent on  periodic reevaluation  has the

significant  advantage  of allowing  for  a better  decision  if and
•when  it  must be  made.   In the  face of an  uncertain  theory and
•conflicting  measurement of both 1) the  quantity of  interest  -
ozone concentrations -  and 2) the crucial link in the theoretical
reaction  chain  - chlorine oxide concentrations  (See  Section IV
.and Appendix  E)  - any present day  decision  to  regulate would be
made without  adequate scientific justification.


      TO RISK

          CFCs and the potential depletion of  the  ozone is truly
an international issue.  This is so for these reasons:

          •   CFCs  are produced  and  used worldwide,  with  the
              largest producer  nation  (U.S.)  accounting for only
              approximately one-third of the total.
          •   If CFCs prove  to  deplete  ozone,  CFC  emissions from
              all  uses,   in  all  countries,   will  contribute
              equally,  i.e.   a  pound   of   emissions   from   a
              developing country will  be  just as  bad  as  a pound
              from the U.S.
          •   A  country  cannot  unilaterally  protect  its  own
              overhead  ozone.   If  ozone  is  depleted,   it  is
              depleted world-wide, regardless  of  whether a given
              country emits CFCs or not.

          Therefore,  the  problem,  if  it  exists,  can  be   solved
only through a global  effort.   To  this  end,  the question of risk
must  be  addressed   and   managed  internationally.    Unilateral
efforts  will  have  little  impact  on  the  overall  problem  if  it

          The  issue  of risk  as it  applies  to  individual coun-
tries' populations and  to  the  world  community,  and as it applies
to  assessments  and  actions  by  individual  countries,   is  an
exceedingly  complex  one.   Even  the  decision  by an individual
country  that  a  chemical of known benefit, but  uncertain risk to
the  population  of  that   country,   should  be  controlled   is  a
complex  one.   In the instance  of  CFCs, it  is  ambiguous whether
such  a  unilateral decision  would have  any  benefit  in reducing
the  perceived risk,  regardless of  the degree  of  any eventual
certainty  that  the   use  of  the  chemical  poses   a  risk   to  a
country's population.


          Because of  this  complexity,  discussions  of  risk  and
the international situation branch  off  into the science  (how it
is differently viewed around  the  world),  international  politics,
and how an  international  solution to the problem can be  forged.
Individual  facets of  the problem,  like  risk management,  cannot
be discussed in  isolation from  related topics.   Therefore,  these
and other  parts of  the  international  aspect  to  the  CFC/Ozone
Issue will be discussed together in Section VI.



          If  the  currently at  issue uses  of  CFCs  were  "frivo-
lous", that is, of  no consequential redeeming  value to society,
or if there were  readily available  alternative  products  or pro-
cesses,  which at little  cost  to  anyone could  be used in place of
CFCs and provide the same end products,  with the  same  degree of
safety,  etc....then  the  need  for addressing  the trade-offs from
regulation  may  not  be   critical.   Under  this   circumstance  the
only major question  before the policy-maker would  be:   "Is there
an unreasonable risk from the continuing use of CFCs?"

          However,   this   is not  the  case  with  CFCs.   CFCs  are
highly essential  compounds to  a  vast   variety  of  products  and
processes considered to  be  highly beneficial,  and  in  some cases
essential, to today's way of  life.   CFCs fill needs for society,
else  they  would not be  in  demand.   An analysis  of  the  needs
filled  (See  Section II)  indicates  that  the  needs  are   suffi-
ciently basic that  they  must  be filled  regardless  of  the  avail-
ability of  CFCs.   Thus,   restraint  on  CFC supply  will  result in
pressures  to  meet   the  underlying  needs  in  some  manner.  The
chief manner  will  be the use  of the best  available alternative
product or processes.

          But as  also discussed  in Section  II, the  use  of  the
currently available  alternative  products which  would be employed
(if only because there were no  other choices)  would result in an
increase in risk  to workers  and in some cases, consumers, over
the  situation now  with  CFCs.   Also,  to   the  extent  that more
energy  is  required  due   to unavailability  of CFCs  (See  Section
II-K  and  Appendix  C) , there  would  be an increase  in  health  and
environmental risks associated  with energy production  and use.
And  last,  as  CFC   regulation  would  create  unemployment  in  the
industries  supplying  precursors   for   CFC  manufacturing,  CFC
manufacturing  itself,  and  the  numerous   manufacturing,   trans-


portational  and  service industries  associated with  CFC use  and
products  dependent upon  CFCs,  there  is  a  need  to  address  the
social and welfare risks induced by  unemployment.  A  few examples
of the above risks are  discussed below.

          Specific  human   health  and   welfare   risks   would   be
associated  with  a regulated  reduction  in  the  availability  of
CFCs  due  to the  unique combination of  physical properties CFCs
provide.   The  most  important  is  the  combination  of  nonflamm-
ability and low toxicity.

          Consider  flammability.   If  problems  of  equipment  re-
design  and  conversion  are  ignored,  hydrocarbons  can be  substi-
tuted for CFCs  in some  uses,  for  instance pentane can be used as
a blowing agent  in the  manufacture of certain polystyrene  foams,
and  propane  technically  can  be used  as  a  refrigerant.   Should
such substitutions occur  however,  new fianunability and  explosion
hazards are  created:  1)  in the  transportation of  the  hydrocarbon
by rail or  roadway,  and at the storage  point in  the  manufactur-
ing  plant  site,  2) in  the  use  of the  hydrocarbon substitute  in
the  manufacturing plant  (This  is  particularly  true  if   the pro-
cess involves the  release  of  the  hydrocarbon  in  the  plant—as is
the  case  with  pentane/polystyrene  foam  production), and 3)  if
the  substitute   hydrocarbon is not  released  as  a  part  of  the
manufacturing  process,   as would  be  the  case  with a  propane
refrigerant, new flammability and explosion  hazards are  created
in  the  transportation  and  warehousing of  the finished  product,
at  the  point  of  consumer  sale,   and  during  the  life  of  the
product in the consumer's  hands.
7This  last  hazard  is  perhaps  the  most  significant  since  main-
tenance of  adequate safety  standards  for flammable materials  in
consumers'  hands  is  notoriously difficult.   So serious is  such  a
potential  hazard  in  the  case  of  refrigerants,   as  an  example,
that  propane  is  banned   [ANSI,  1971]  along  with  other  hydro-
carbon  refrigerants  from  use  in  institutional, public  assembly,
residential and  commercial  occupancy  applications.   Ammonia  is
under  similar  restriction.

          A  parallel  set of  additional hazards  is  created  when
the substitute material  is  substantially more toxic than  the  CFC
presently used.   As  examples, methylene chloride  may  be  used  as
a  alternative blowing  agent  for  certain  types  of polyurethane
foams, and ammonia or  methyl chloride technically may be  used  as
refrigerants.  But toxicity hazards are created in  the  workplace
if  the  substitute  is  emitted  (as  is  the  case  with  flexible
polyurethane  foams),  or  hazards are  created  for  the consumer  if
the  substitute,   meant  to  be  retained in  the  product,  should
escape (e.g.  from a refrigerator or  air-conditioner).

          Other problems can develop from   the use of alternative
solvents.   Again  flammability  and  toxicity  problems  may  be
created  in  the  workplace where  the  alternative solvent  is  used.
More  insidious  effects  involve  the  potential  for  contamination
of  products  with more   toxic and  less  inert  solvents.   Sucn
contamination could  lead to direct  toxic  effects  (for  instance
in  the  cleaning  of   medical  equipment),   or   to  hazards  from
failure or improper operation of containment  equipment.

          There  inevitably  would  be  unforeseen  risks.   As  a
CFC-using practice is  discontinued,  novel and relatively untested
technology  is  forced  in   —  with   its  own  risks. Such  novel
technology may  or  may not  be called for in  the  regulation,  and
any  risks  which  may   develop  from  the  use  of  new  products  or
processes may not be  foreseeable,  but  the  fact  remains  that  if
these risks develop, they are  a cost of  regulation.

          If  CFCs  are  severely  restricted,  unemployment  will
result.   Even if such unemployment  is only  temporary,  amounting
to  dislocation  of individuals from CFC industries  to  industries
geared  to replace  CFC  uses,  there  will  be  social and  welfare
costs  associated.  These costs are not  just  loss of  income,  loss
of  tax revenue  or increased cost of  social  services.    A recent
study  [Brenner,  1976]  found  that  a  one  percent  unemployment


(about  a  million  jobs)  over  a 6-year  period  is  statistically
related to:

          36887 total deaths, including
              20240 deaths from cardiovascular disease,
                920 suicides,
                648 homicides, and
                495 deaths from cirrhosis of the liver.

          Additionally, the study found the social impact
               4427 first admissions to state mental
                    hospitals, and
               3340 admissions to state prisons.

CFC dependent employment amounts to  roughly 780,000 (See Section
VII  -  Economic Considerations).   Obviously,  all  of  these  jobs
would  not be  lost due  to  a cap  on CFC  production.   But  as
losses  would  be   expected,   especially   in  the  small  business
sectors  (See  Section VII),  the  above statistics should  be  kept
in mind.

          Therefore,  in  conclusion, we  believe it  is necessary
in any  consideration of  regulation  of CFCs  to carefully assess
the  consequences  of  reduced CFC  availability  in  terms of  the
risks which such reduction might generate.   This is true even if
CFCs are  found unequivocally to deplete  ozone.  And  after  the
risks  from reduced  availability of  CFCs  have  been determined,
°Industry  has  not been  able  to estimate  even  approximately how
many  jobs might  be  lost were  EPA's  proposals  to  be  enacted
because EPA  has  not  provided sufficient detail  on its  proposals
(suchaicaplevel,  lead-time,implementation,etc.)toenable
any  meaningful  quantitative  analyses.    (See   Section  VII  and
Appendix I).

they must be  weighed against the  risks  from continued  CFC use.
Only  a  decision  which  minimizes  total  risk   is  in   the  best
interest of society.

          There already has  been  some effort to  address some of
these risks and  to  balance  them  against the potential  risks of
CFCs  [Du Pont,  1978;  NAS,  1979d;  Rand,  1980],   And   in  EPA's
Development  Plan   for   CFC  regulation  [EPA,   1980e]   it  is
              "Regulatory  actions  related  to  CFCs  will  cause
          increased use  of  substitutes which may  have  different
          but still  undesirable effects of  their  own.   To what
          extend do we attempt to do risk/risk tradeoffs?"
          So we  conclude  that EPA acknowledges  this  problem and
tne need to do something about it.

          It  is  strange,  therefore   that   the  ANPR  contains
neither discussion of these risks  nor  recognition  of  the need to
take them into consideration,  nor  does the ANPR solicit comment
on  them.   The only  mention  is  a  passing  reference  in  a  dis-
cussion of  criteria  for  banning  a CFC  use—no mention  is  made
opposite the Agency's  preferred  option of a  cap  as  an economic
incentive option.

          We find  a  rule-making decision  on  CFCs  which focuses
solely on the potential  long-term  risks from continued CFC  use,
ignoring known  risks (e.g. flammability  and  toxicity  of  alter-
natives) which would be incurred  from  a  restricted availability
of  CFCs,  to be  imbalanced,  short-sighted and  certainly  not in
the overall best interests of the public.


          A  growing world  population,  using advancing  techno-
logy, in  a finite  environment  of  which  we  have  limited under-
standing, will  generate pressures and problems  of extraordinary
complexity.   There  are numerous  examples—three  involving  the
atmosphere  are  the  increasing  concentration of  carbon dioxide,
acid rain,  and  the concern over  possible depletion of  ozone by
CFCs.  It is  immediately obvious  that  the concern can  be removed
by  banning  or  severely  limiting  the  products  in  question,  and
the environmental risk will be removed.

          However,  it  is inappropriate  to  stop  the  analysis at
that  point,  for  now  other  risks  emerge  from  this  corrective
action.   It may be  claimed,  of course,  that blame for  the  new
risks  lies  with  the entrepreneur  attempting to fill  the need
created  by  the regulation.   Whether or  not this  assignment of
fault is  legally  sound  does not eliminate  the  new risk.  Place-
ment of  fault  is  not   the  point.   The  "fall-out" from  any  new
risks is inevitably  society's cost or society's risk.

          Arguments  can be  generated  that, for  one  reason or
another,  seek  to  expedite regulatory  decisions  on environmental
matters  by  suggesting  society cannot afford the  time  to analyze
risk thoroughly.   In fact,  society  cannot afford not to make the
analysis thorough.   In  the absence of thorough analysis,  inappro-
priate  decisions  will  be made,  forcing  regulatory  costs  higher
and net environmental benefits lower.

          In  the  ANPR  and   in  previous  Agency  statements  and
documents,  we  have identified  a  number of  approaches  to  the
question  of  risk   which  we  believe are not  conducive  to  the
obtaining of a  proper risk determination  for the  CFC/Ozone  Issue:

          1.  A preoccupation with extreme future extrapolation.
          2.  A   conviction   that   immediate   decisions   are
              necessarily  required,  and  are  necessarily  better
              than deferred decisions.
          3.  An  excessive  emphasis  on  political  action  over
              objective scientific decision-making.

These factors are separately considered  below:

      1.  Preoccupation with Extreme Future Extrapolation

          Unfortunately,   the   publication  of,   and   incessant
reference  to,  extreme  risk  scenarios  seems  to  have  been  the
rule,  and  not   the  exception,  in  the  CFC/Ozone  Issue  [EPA,
       1980d; .i.y80e;  Jellxnek, I980a;  iy80c].
          These  scenarios   generally   are  predicated   on   two
unrealistic assumptions:

          a)   That  world  production   and  use  of  CFCs   will
      continue to  increase over  the  next several  decades — (EPA
      varyingly has used 7 percent and  9 percent  as  estimates  of
      annual  CFC  growth   for  the  next  several  decades) .    Of
      interest to  us  is  that the NAS calculated  potential  ozone
      depletion for four release scenarios (ATD)  provided by EPA
      {NAS,  1979aj .   Yet,   the  scenario  most  often  cited  by
      i£PA is case  D,  which assumed  a 7 percent per  annum growth
      in  CFC  emissions  from  1980   to 2000--the only  scenario
      which  assumed  uninterrupted  growth.    Two   points   bear
      making.  First, such a scenario  assumes  there will be  no
      further  regulation  anywhere  in  the  world.    In  fact,
      ongoing  regulatory   impacts  such  as  the  EEC  30  percent
      CFC-11  and   12  propellant  reduction  are   ignored   by  this
      scenario.  Second, and  even more telling,  these  scenarios
      fly in the face of what actually  has been transpiring  with

      total world CFC production—information which  was  provided
      to  EPA  well   before  publication  of  the  ANPR  [Hasten,
      1980;   Block,   1980].    As   developed   more   fully   in
      Apprendix J, the rate of production worldwide  for  CFCs  has
      been  essentially  constant  or   slightly   downward   since
      1975.   This  is the  trendline on which current need  for
      regulatory  action   should   be  based,  recognizing  that  a
      substantial   change    in    that   trendline    would    be
      justification   for  reassessing the  need for  action.   The
      trendline since 1975  corresponds to NAS Case  A (constant)
      or  possibly  Case  B  (some  reduction)  but  not  Case  D  (7
      percent per annum growth which EPA  cites).   Case  D  can be
      considered  as  an  intellectual  exercise,  but  its use  to
      describe likelihood is grossly misleading.

              Further,  as   has   been  pointed    out   elsewhere
      [Du Pont,  1980a;   Hasten,   1980;  CMA,   1980a],  Case  D
      implies  a  quadrupling  of  production  capacity  by  2000,
      representing numerous  business commitments  which  will  not
      be  made given  the  present  environmental   and  regulatory
      uncertainties,   even  if increasingly  scarce  capital  for
      such  an undertaking  were   available.    Even  if  EPA  were
      to totally discount information  on  use  and  growth provided
      by  industry,  it should  consider the  findings of its  own
9In  1979,  the  world  production   of   CFC-11   and  CFC-12  was
approximately 1600 million pounds.  Assuming, very approximately,
that production  was 75%  of  manufacturing capacity,  capacity is
estimated at  roughly  2150 million pounds.   Case D  assumes  a 7%
growth  in production per annum which  equates  to  a need  for  a
capacity  by the  year  2000 of around  8700 million  pounds,  a  6750
million  pound increase.   Using a conservative figure  of $0.85
capital  for  each  additional   annual  production  pound   of  new
capacity,  investment to  meet  case   D  growth  would total   very
approximately  $5.7  billion —  not  a very  likely  scenario given
the environmental and regulatory uncertainties.

              In  an  EPA  sponsored  workshop  it  was  recognized

              that  estimates  of  CFC  release  "even  beyond   10

              years   are   problematic"   [SRI,   1980,   p.   29],

              because    technical   obsolescence   and   technical

              innovation are highly important and  unquantifiable

              And Rand  stated:
                  "We  emphasize that  the estimated growth  rates
                  to  1990 cannot be projected to  continue  beyond
                  that  year.  The  CFC applications most  respon-
                  sible  for  the  current high growth rates  are  in
                  a phase of increasing market penetration,  as  a
                  result of either  increased use  of  final  pro-
                  ducts  or  increased  use  of CFCs  in  manufactur-
                  ing   those  products.   By  1990,   penetration
                  should be complete  in  most  existing  markets,
                  so  the  CFC  use  growth  rate  should  slow  to
                  approximately  that of  the  GNP,  unless  signifi-
                  cant   new  uses of  CFCs  are  developed  in  the
                  next    decade.    Moreover,   easily   extracted
                  fluorine  is  expected  to  become scarce  toward
                  the  end of  this century,  which will  increase
                  the  prices  of CFCs  and  provide incentives  to
                  develop   new   technologies   that   are   less
                  CFC-oriented." [Rand,  1980, p.  6]
          b)   The second suspect assumption made  for  the  extreme

      risk scenarios is that there will be no  ability to  improve
      the available  scientific information over  time and  react
      accordingly.   Obviously,  our  understanding of  the  quanti-

      tative  validity of the ozone depletion theory  will  improve
      as the research programs  already  underway  produce  results.

      Ideally, should  the  validity of the theory strengthen,  so
      should further regulations, and vice versa.

          A related point  is  that virtually all  reports  on this

subject   [e.g.    NAS,    1979a;    1979b]   have    focused   almost

exclusively on  calculated  long-term depletion.   While   the  NAS

calculated some interim depletion  values in the  PSCT  report,  no
attempt  was  made  in  the  NAS/CISC Report,  or  to  our  knowledge
since by  EPA,  to  consider the  significance of the  small  calcu-
lated ozone  depletion which would be associated with  a limited
postponement of regulation while  uncertainties are  reduced.   We
are presented with  an "all or  nothing", approach — a  choice in
no way supported by the scientific or political realities.

          In conclusion,  major  increases  in capacity  (as  would
be necessitated  to meet  such  growth forecasts)  will  not  occur,
given current  environmental  and regulatory  concerns,  prior  to a
drastic  reduction  or invalidation of current  computer  calcula-
tions  of future  ozone depletion.  Equally  unrealistic is  the
presumed  regulatory  inability  to  respond  adequately  in  future
years  in response  to evidence  of  any  developing  problem.   The
possibility  of  this combination of  assumptions  is  economically,
scientifically and politically inconceivable.

          Preoccupation  with  extreme  future  extrapolation  or
future  disaster  scenarios distracts attention from  the reality
of  the  slow theorized development  of  this  potential  environ-
mental  problem,  and the  redundant opportunities  which exist for
frequent  objective  reassessments,  and for  measured  reaction over
a substantial time period.

      2.  Conviction  that  Immediate  Decisions  Are  Necessarily
          Required,   and  Are  Necessarily   Better  than  Deferred

          As a leading country  in  technology and  quality of life,
it  is  inevitable  that the United  States will  be  among the first
to encounter,  recognize,  and be forced  to  deal with major envi-
ronmental concerns.  However,  such  early  recognition  generally
should  not  be translated  into  early calls  of  "crisis".   In the
case  of  CFCs  and  the  ozone,   a  "crisis"   approach is  an  over-

reaction to a  theoretical  problem  which throws into question  our
understanding  of  our  environmnt.    It  is   recoil   rather   than
informed problem-solving  and  decision-making,  and  is  a p_arti-
cularly  inappropriate  reaction  in  the  case  of  the  CFC/Ozone
concern  since  hasty  decisions  are  not only  unwarranted  but

          We   believe   a   crisis  approach   to   analysis  of  the
CFC/Ozone  Issue  can be  seen in EPA's  statements.  For  example,
in  dismissing  the   "Wait-and-See   Strategy",   EPA  considers  a
single  scenario,  a  hands-off policy  for  10  years  which  would
allow  an increase  in  emissions  by  1990 "commensurate with  an
eventual equilibrium  depletion  of  32  percent".   This  scenario
has assumed  the  unrealistic global 7 percent  growth  of  the  NAS
Case  D  scenario.    EPA further  states,   without justification,
that:    "little research and development  on  alternatives  to CFCs
would   occur   [during   a   postponement]...."    [EPA,  I980d,
p. 4]

          There is  no reason to  select an  entire decade as  the
time for postponement.  There is no  reason  to assume,  given  the
ongoing  scientific  research into the  theory and  recently devel-
oped  ability   to  monitor  the  ozone  layer,   that  were  it   to  be
determined  that  ozone  depletion is  occurring  at a  rate  which
would be harmful,  nothing  could be  done  about it until  10  years
had expired.   Equally,  there  is no  evidence  to  support a pre-
diction  that  a postponement automatically  would result  in  a  7
percent  annual growth  during the postponement.   And  there  is no
evidence to support  a  conclusion that the current major research
and development on  alternatives would  be eliminated  as  a result
of any postponement.

      3.  Excessive Emphasis  on^ Political Action  Over  Objective
          Scientific Decision - Making

          Due  to  the  subject matter,  it is  inevitable  that the
political process will be heavily utilized in major environmental
issues.  However, relying on  political process  to  advance a view
in  place  of performing  necessary research  and assessment  is  a
short-sighted   and   eventually   counter-productive   shortcut,
eliciting  like  response   from   those   with  dissenting  views,
regardless of  their  interest in  having  the issue  be  decided on
the scientific merits.

          The   EPA   Decision  Memorandum   repeatedly   evaluates
regulatory  strategies in  terms  of  the  international  political
impact.  For  instance,  the "Wait-and-See  Strategy" is  dismissed
by  the  comment "Finally,  the rest of the  world may be convinced
that U.S. does not  regard  ozone depletion as a serious concern"
[EPA, 1980d, p. 4].

          A more balanced approach would recognize  that:

          *    International conviction will  stem from scientific
               knowledge   developed   through   research,   in  the
               leadership  of   which   the  U.S.  can  effectively
               demonstrate its concern and  commitment.
          •    The  objective  of  regulation  to protect  strato-
               spheric  ozone  should  be  to  protect stratospheric
               ozone   by  optimized   regulatory   strategies   which
               balance risks  and  benefits, and  risks  and  risks.
               The  objective  of  the  regulation  should   not  be
               merely  to  place  a U.S.  regulatory  agency in  the
               "forefront  of  international attempts to reduce CFC
               emissions"   [EPA,  1980d,   p.  4],   or  to  signal
               other  nations  that   "the   U.S.   is   seriously
               committed   to   reducing   CFC  emissions".    [EPA,
               1980d,  p.  4].




          The  current   unconfirmed  concerns   over   calculated
potential  future  depletion  of  stratospheric  ozone  require  the
management of  a  complex set  of  conflicting data  and uncertain-
ties, and  risk and  benefit assessments.  Yet  EPA  officials have
claimed that the management choice  may  be  reduced  to  an "either-
or" proposition—either  the  theory eventually will be  proved to
be incorrect and  no harm will have occurred  from  regulation, or
the theory  eventually  will be proved  to  be correct  and  at that
time it will be  too late to  head off  serious  harm if regulation
had not been previously  enacted.  We  disagree  with both sides of
this proposition.

          An assessment  that unneeded  regulation  will  cause no
harm can  only  be made by  focusing exclusively  on the  potential
risk  of  not  regulating,  and  ignoring  the  environmental  and
economic  harm  potentially  caused by  regulating.  The  idea that
no harm will have been done  by premature  or  unnecessary regula-
tion does  not  have support among  scientists,  economists,  indus-
try or the consumer  (See Section VII).

          The other  side of   EPA's  "either-or"  proposition  (that
regulation must  occur  now or we  will have to wait  to  act until
it  is  too  late)  simply  is   not  consistent with  the up-to-date
facts available on the CFC/Ozone Issue.

          We believe that  proper  risk management  of   the CFC/
Ozone  issue  lies  in  the middle  ground —  deferral  of  a final
regulatory decision while  attempting to  improve the information
base   through   an   extensive  international   research  effort,
supported  by  industry  and  government,   and   continuous  close
monitoring  of  the  situation  for   evidence  of  any  developing
risk.   Such  a  strategy  of  "Assessment   and   Surveillance"   is
supportable because:

          1)  The   uncertainties  surrounding   essentially   all
              aspects of  this  issue  (the  science,  the effects  of
              depletion,  the  regulatory  cost  and  the  risk  of
              regulation) remain  so  great as to almost guarantee
              that  any   "either-or"   regulatory  decision   will
              prove to be wrong.

          2)  Currently  available  information indicates that  not
              only  is the  risk not as great  as  predicted a  year
              ago,  but   also   there   is  no   evidence   it   is
              developing as predicted, and

          3)  We  now  have the  ability to monitor  the situation
              opposite   any    developing   risk    (ozone    trend
              analysis),  and  rethink  the wisdom  of  a deferral
              strategy  as may  be  suggested  by  the  results  of
              this monitoring.

          This  period  of deferral  certainly  should  not  be  just
to postpone  regulation,  but  rather  a period  in which efforts  are
made  to  perform  work  in  a   number  of  inadequately   studied
critical  areas  which  bear on  the  question of risk  to the  ozone
from CFCs.  Study areas  should  include:

          1)  Increasing  the  number  of  actual measurements  of
              ozone  and  improving  the sensitivity  of  the.  ozone
              monitoring system.

          2)  Reducing the  uncertainties  surrounding  atmospheric
              science and modeling,  especially  in  areas in  which
              there  exists  conflict  between   measurements  and
              model calculations.   (In risk  management, distinc-
              tion  is  necessary  between   apparent  precision  and
              reality.   The apparent  precision of  calculations
              of  future  potential  ozone   changes  must  not  hide

    the   fact    that   real   confirmation   of   these
    predictions is lacking.)

3)   Reducing  the  uncertainties  associated  with  the
    potential effects  of  a depletion  of  stratospheric

4)   Working  toward  an international  concensus on  the
    science and the risk, and a  coordinated program on
    how to manage the  risk.   (The question  of  risk to
    the ozone from CFCs is a global problem.  A single
    nation  or  unilateral approach  to  risk management
    will   both   be   ineffective   and  create   major
    inequities   [See   Section   VI].    Accordingly,   we
    believe  there  is  a preeminent  need to  develop an
    international   scientific    and    regulatory   con-
    sensus.)   International  cooperation  is  needed  to
    reduce   uncertainties  and   to  perform  calm  and
    objective analyses  of the  consequences of various
    courses  of  action  with regard  to  risk-benefit  and
    risk-risk weighing.

5)   Properly focusing  the question of  ozone depletion
    risk.    The  overall  protection  of  stratospheric
    ozone should be the  objective,  not just preventing
    possible  effects  from  CFCs.   Evaluation  should
    consider   the  predicted   effects  from  natural
    causes,  e.g.,  volcanoes,  and  from the anthropo-
    genic  chlorine  containing  compounds,  e.g.,  methyl
    chloroform,  and  most importantly,  the predicted
    augmentation of ozone by carbon dioxide.

6)  Studying  the  risks  which   would   be   incurred  by
    regulation  of  CFCs,  and  balancing these against
    the potential   risks  which   regulation  would be de-

          signed to  reduce.   We believe  that proper  management
          of risk  requires  evaluation and  consideration of  all
          subjects  which  bear  on  risk.   Failure  to  take  into
          account  all  critical components  to the  risk  equation
          will   result  in  a  risk  assessment  which   will  not
          provide an accurate  view of  the  situation.   Regulation
          based on  an incomplete  or  inaccurate  risk  assessment
          may  be   bad  regulation  for  everyone   and  subject  to
          legal challenge.

          In conclusion:

          Postponement   of   CFC   regulation  could   marginally
increase the risk  to  future  generations should  the theory  prove
to be quantitatively valid.  However,  in the time frame expected
to  be  required for   resolution  of   the   uncertainties,   it  is
difficult   to   comprehend   how  such   an    increase   could   be
significant opposite the major advantages of postponement:

          1)  Reduced risk of  unnecessary regulation.
          2)  More time  to  identify and test safe technological
          3)  More time  for  analysis  and  selection of  the best
              regulatory plan.

          The  need to  reduce  the  uncertainties  is  great,  and
there  is near  consensus  among groups  as  diverse as  industry
consultants  (See   Appendix  F), the  European  Economic Community
[EEC,   1980],   other   countries'   environmental   agencies  [UK
DOE,   1979],   EPA   contractors  [SRI,   1980]  and  EPA  consul-
tants   [Bailey,  1980],   that  there  is   time   to  reduce  the
uncertainties  without  incurring unreasonable  risk  and that such
effort overall  will be cost-effective.

          The  conclusions  in   this   regard  from   a   workshop

sponsored  by  EPA  in  March,   1980   [SRI,   1980]   to   evaluate

"...the critical issues that are hindering EPA's  ability  to make

a  fully  supportable  decision  on  future  CFC  regulations"  are
especially noteworthy:

          •   "...the  degree  of   uncertainty   in   the  balance
              between costs and  benefits  of  control  is  so  great
              that the making  of control  decisions  is  seriously
              complicated; the decision to control  cannot always
              be  unambiguously  proven  correct.   Consequently,
              further  research   to   settle   major  issues   by
              reducing   uncertainties   was    seen   as   highly
              important   and    cost-effective."    [SRI,    1980,
              p. 9]

          *   "The   author    [of   the    workshop    proceedings
              report]  concludes  that  critical  uncertainties  in
              the  issues  seriously   complicates   some  control
              decisions  even   when  they  are  justified  on  the
              basis  of   the   best   available  information,  and
              therefore,   that  further research  is  needed  and
              cost-effective."   [SRI,  1980 p. iii]

          •   "All   [Workshop   participants]   agreed,   however,
              that further  research  would  be  cost-effective  in
              making  a better decision." [SRI, 1980, p.  52]
          These conclusions are all the more interesting in that:

          *   The workshop  and  report took place  in  1980,  after

              the release of the NAS reports.

          *   The workshop was limited to participants invited by
              EPA.   Participants  included  EPA  contractors,  con-

              sultants and  EPA personnel.   Industry was excluded.

          •   No mention of the workshop  findings appear in EPA's

              ANPR discussion of its regulatory proposals.

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          RESPONSE                                              7
          AND RESOLUTION OF ISSUE                              17
          PROCEED                                              20
          CONTROL                                              23
      H.  SUMMARY                                              34

                                            International Aspects


          Since  the  inception  of   the  Chlorofluorocarbon/Ozone
Depletion  Theory,   it  has  been  clear  that  the  problem  if  it
exists, is global because:

          •   CFCs are produced  and  used worldwide, and
          •   It ultimately makes  little  difference  where CFCs
              are  used  and  emitted geographically  because they
              mix in  the  atmosphere such  that  any potential de-
              pletion of  the  ozone  layer  impacts  all countries
              to varying degrees.

          And,  therefore,  solutions  to  the   potential  problem
must be global because:

          •   No  country  can   specifically  protect  its  ozone
              layer even  if  all  CFC  use  within  its boundaries is
              terminated, and
          •   No country  can  have much  direct  impact on the over
              all  potential problem  of  ozone  depletion through
              unilateral  regulation.

          EPA and  its  contractors have  acknowledged these real-
ities as evidenced by the following  quotations:

              "  single nation  accounts  for  a  large  enough
              portion  of  world  use or  production  to  be able
              unilaterally  to  control ozone depletion."   (ANPR)
              "Even  the  most   stringent  restrictions  on U.S.
              emissions  can have only  a modest  payoff  in ozone
              protection  in the absence of  regulatory action by
              other   countries  that  contribute  to  worldwide
              emissions."   [Rand, 1980, p. 251].

Yet, strangely,  the  actions EPA proposes  in the ANPR are  not in
step with  the current global  perspective  on this  issue,   nor do

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the proposals  work toward  insuring  the needed  global agreement
on the issue.

          In the  ensuing  sections, we  first  discuss the differ-
ences in logic  and approach to this global  issue  being taken  by
the governments  of the world.  This  is followed  by an analysis
of the  illogic and limitations  of EPA's  unilateral program and
proposals, and  the consequences we foresee.   We then  underscore
the need  for  a global  assessment  and   resolution  of the science
as a  necessary first  step  towards an  effective global solution
to the issue,  and  suggest how EPA, by  changing its  approach, can
take  a  leadership  role in  obtaining   this  solution.   Last,  we
examine  the  international   trade   implications  of   the  control
proposals advanced in the ANPR.

          However, before moving  to these topics  a further  per-
spective should  be reiterated.  EPA  has  addressed  its analysis
and proposals  on  the  premises  of   a)   the validity  of the  1979
NAS ozone depletion estimate of 16.5 percent  (based on 1977 CFC
release  rates),  and   b)  world  use growing  at  9  percent/year.
Both of  these  are  faulty.   As discussed at  length in Section  IV
(Science), V (Risk) and Appendix F,  the incorporation of current
information into  the  models reduces calculated  depletion  by ap-
proximately half  or more  from  the 1979 number,  and analysis  of
actual ozone measurements indicate the  problem is not  developing
as predicted.  Secondly, as  discussed  in Appendix  J, EPA's fore-
casted CFC  growth  is not  consistent   with  the  declining  world
production figures for  1974-1979  and the  reality  of the dampen-
ing effect  on  growth from  ongoing  regulatory  uncertainty.    ^ri
short, the potential  problem is neither as  severe as EPA claims
it to  be,  nor  could   it  conceivably  worsen  to the  extent  EPA
claims it would.   These realities  eliminate  the  need to act  now,
whether  unilaterally  or  internationally.   As  we will  see,  the
actions of other  countries  are more consistent  with these real-
ities than is EPA's program.

                                            International Aspects


          National  responses  to  the  CFC/Ozone Depletion  Issue
generally can  be  categorized in one  of two  ways.   One response
has been  to  focus on  worst  case  scenarios,  minimize  the uncer-
tainties  and  immediately place the  problem  into  the  regulatory
and political machinery.  This  approach has  been embraced by EPA
and has led the Agency  to  issue the  ANPR to achieve the Agency's
goal  of  "stimulating  international  cooperation in  this [control
of CFCs] area." [EPA, 1980h, p. 1].

          The  second  response, being  followed by  the  United
Kingdom,  the   Commission of  the  European  Economic  Communities
(EEC)  ,  Japan  and   others   has  been  to  review the  developing
science periodically—a  process of monitoring  the  level of cer-
tainty  and  degree   of  risk  from  the  concern—and then  decide
when,  and  to  what  extent,   to  involve political  and  regulatory

      The U.S.  approach resulted  in  essentially a  total  ban of
CFC  aerosol  propellants in 1978.   The  European   approach  has
resulted in an  agreement to  implement a voluntary  3^ percent cut
back  in  CFC-11  and CFC-12  aerosol  propellant use   from  1976
levels,  by  the  end  of  1981,  while   continuing to monitor  the
science and periodically review the need for  further regulation.

          The  U.S.  approach  has been to call  for a total cap on
U.S.  production of  all CFCs for all  the  remaining  CFC uses, re-
gardless  of  essentiality,  partly  in  an  attempt to  pressure by
example  other countries into taking  further  regulatory action.
    Almost  all  comparisons are  made  between  EPA  and  the  EEC
    countries  because  by EPA's ANPR  calculations (ANPR table  2)
    and  ours,  the U.S. & EEC account  for  between 75 and 80  per-
    cent of world CFC  production  and use.

                                            International Aspects

The European approach has been  to  put  a  cap on CFC-11 and CFC-12

plant capacity and  to  continue  to study the  science  in conjunc-

tion with  periodic  reviews of  the need for  further  regulation.

No nonaerosol rules have  been proposed so  far anywhere except in

the United States.

          The U.S.  approach may  be  summarized by  the following

quotations from EPA documents:

          •   "Worldwide  regulation  of CFC emissions  is needed."
              (emphasis added)   [EPA,  1980e,  p. 2]

Yet, elsewhere, EPA states:

          •   "The  [recommended] decision  [is] to initiate  addi-
              tional    [U.S.]    regulation   of    CFCs   without
              experimental  proof  of   the  ozone-depletion theory
              	"  (emphasis  added)  [EPA,  1980h, p.  2]

          •   "The  decision  of   the  Agency [is]   to   initiate
              further  regulation to address  the  as_ yet  unproven
              risk  p_f  ozone depletion despite the  apparent  lack
              of  such  a  determination  abroad	"   (emphasis
              added)   [EPA, 1980h, p.  2]

          In  contrast, the European  approach may  be  summarized

by the following  quotations:

          •   "...strict   regulation  is  not  warranted."    [UK
              DOE,  1979]

          •   "...a  delay  of  5  years  before  any  decision  is
              taken   on  CFCs   can   be   reasonably   accepted."
               [EEC, 1980]

          Given  these  two simultaneous reactions  to  the  same set

of data  and  scientific  uncertainties,  two  consequences  emerge:

          1)  Countries,  including  the  U.S.,  which  adopt   the

               "U.S.  response"  place  themselves  at  an  economic

                                  International Aspects

    and  international   trade  disadvantage   opposite
    those adopting the "scientific" response.

2)   Countries adopting  the  "scientific"  response  have
    implicitly  rejected  the  "U.S.  response"  approach
    and consequently  are  likely to  be  swayed  only by
    scientific developments,  improved  modeling, actual
    measurements, etc.  They  are  unlikely to  be swayed
    by entreaties  to embrace  the "U.S.  response",  or
    by publicity surrounding  regulatory  plans  under
    which the EPA might  further  emphasize  its  commit-
    ment  to the  "U.S. response".

                                            International Aspects


          In the CFC Development Plan EPA states:
          "The  present  regulatory  initiative  to  limit   [U.S.]
          production  so  that the  potential for  ozone depletion
          is limited to present  levels,  is  part of  the effort to
          stimulate coordinated  worldwide  action." [EPA,  1980e,
          p. 1]

We interpret this  to  mean that  the  Agency  believes its proposed
U.S.  production cap will  have  an impact  on  eventual ozone deple-
tion  (if  it occurs)  and  succeed  in getting  other  countries to
regulate CFCs  beyond  their  current plans.  We believe that  both
conclusions  are  wrong and,  further,  that  the proposal  would
create a significant  imbalance  in  regulatory  costs  vs. potential
benefits to the United States.

      1)   Proposed U.S. Cap on Production Will  Have Inconsequen-
          tial Direct  Environmental  Impact

          In 1975  the  Federal Task  Force on   Inadvertant Modifi-
cation  of   the   Stratosphere,   [IMOS,   1975]   identified  the
single largest  national  use of  CFCs as  the  aerosol  industry in
the  United  States.   At   that  time,   approximately  a  quarter of
world CFC production  was  utilized in this  market.   Whether  sub-
sequent regulation of that  market  was  justified  remains  highly
debatable  but   it  represented  the  only single  use   and  single
nation  market  that  when eliminated  would  make  a   significant
impact (25%) on global CFC emissions.

          Any  futher   unilateral national  response,   whether of
single CFC  use such  as  aerosol propellants  or all uses  in any
country,  will  not have   a  significant impact on   global  CFC
emissions.  This  may   be  seen from  an  analysis of  numbers  pre-
sented in the ANPR.

                                            International Aspects

          EPA estimates  that  35.8  percent of  total  world use in
1977  occurred  in  the  United  States.    EPA  also  estimates   that
eventual depletion  of  the  ozone  will  reach  16.5  percent should
emissions continue  at  1977 levels.  Therefore,  one  may  conclude
that  even  if all  U.S.  uses  were  banned  immediately,  but other
countries were  not to  act, the maximum impact on  the  eventual
ozone depletion  numbers would  be  35.8 percent  of  the predicted
16.5  percent depletion,  resulting in  an eventual  depletion of
10.6 percent.

          In the  ANPR,  EPA also  presents estimates  of  ultimate
depletion,  assuming that  instead  of  emissions remaining  constant
at 1977  levels,  they  grow worldwide at  9 percent  annually until
1990.  Without debating  here  the  reasonableness of this  forecast
(see  Appendix  J) ,  under  this  scenario  EPA  concludes  that   the
U.S.  contribution  to  eventual ozone depletion  would  be  7.5  per-
cent  (absolute)  of  the calculated  32.0 percent  total  eventual
depletion,  or only 23 percent  (7.5/32.0)  of the problem.  Clearly
then, a  total U.S.  ban under  this  scenario  would  only have  a
small impact on the eventual problem.

          Of course,  EPA  is   not  now  proposing a  ban,  but is
proposing a  cap  on  U.S.  production  at  current  levels.  Under
this  scenario, EPA's  numbers  show that  the  U.S. contribution to
ozone depletion  would be  4.5 percent  (absolute)  of  the calcu-
lated  29.0   percent  total eventual   depletion,  or   16  percent
(4.5/29.0)  of  the  problem.   So   the  direct  potential  environ-
mental gain  (calculated  by EPA) from  capping  U.S.  production in
1980  versus  letting  U.S.  production increase  until  1990 (at  the
assumed  world  growth  rate  of  9  percent)  is only  a  net  decrease
in eventual  ozone  depletion from  32 percent  to 29  percent,  a  9
percent  (  32   )  relative decrease   in  the  potential  eventual
problem.  But, under this  scenario,  the U.S.  contribution to  the
potential  eventual  problem   would   decline   from  7.5  percent

                                            International Aspects

(absolute)  to 4.5  percent   (absolute),  a 40  percent  (   7.5   )
relative decrease.

          In  conclusion,  the  proposed  U.S.   cap on production
would not directly  result in a  significant  reduction in ultimate
ozone depletion,  were it to occur.    In  fact,  if the  theory  is
correct, even a total  immediate  U.S.  ban would not result in the
eventual  problem  being significantly  reduced.   Therefore, EPA's
statement,  quoted at  the  beginning  of  this  section,  that  the
present regulatory  initiative  to limit  (cap)  U.S. production  is
"so that  the  potential for  ozone depletion  is limited to present
levels" simply is not supportable even  by EPA's numbers.

          As  EPA  also can  draw  the  same conclusions from these
numbers,  we  have to  assume  that  the  major  objective  of  the
Agency's  cap  proposal  is  political,  i.e.  "to  stimulate coord-
inated  worldwide  action"   [by  pressuring  other  countries   to
regulate through  the setting of  U.S. example]

      2)  Why U.S. Production Cap Will  Not Result  in  EPA's Goal
          of Worldwide Regulatory Action

              EPA has stated that:

              "Worldwide regulation  of CFC emissions is needed.
              However,  worldwide action  does  not appear  to  be
              forthcoming."  [EPA, 1980e, p.  2]

And as discussed  previously, one of  the stated objectives of the
U.S. cap  is to stimulate other countries  to regulate.

          The   Agency  then   supports  this   action  with  the
convoluted  logic  that:

                                            International Aspects

              "...while  action  by  other  nations  is  not assured
              if  the  United States  acts  at  this  time, inaction
              by the United  States  would  almost certainly assure
              inaction  by  the rest  of  the world."   [EPA,   ]980e,
              p. 2]

These  few  statements  raise so  many issues  it is  difficult  to
know  where  to  begin.    However,   the  following  points   seem

              a)   We  would agree with  EPA that major  worldwide
regulatory action  is  not forthcoming at this  time but  we differ
sharply  with  EPA  as  to  the "why".   The above statement,   when
taken  with the  Agency's  stated  justification  that  a  cap  will
"stimulate coordinated worldwide  action",  seems to suggest  there
is a  lack  of ability  on  the part  of  other  countries   to under-
stand  the  problem, or  that foreign  nations   are  indifferent  to
possible environmental  threats—and  therefore,  the only  way  to
resolve this problem  is  through  the political tactic of the  U.S.
setting an example.

          We  believe   that worldwide   regulatory  action  is  not
forthcoming because  assessments  of  the issue  (the  science,  the
uncertainties,  the risk)  by others lead to  the conclusion  that
further  regulatory action  is  not needed  at  this  time.  Upon  a
reading  of  the  United  Kingdom's   [UK  DOE,   1979]   report  and
the  ECC Commission's   [EEC,  1980]   report  there  can  be  little
doubt  that  the  science  has been reviewed  thoroughly,   but  found
wanting opposite the justification  for  further  regulation.

              b)   The position of EPA that further regulation  is
needed  has been  quite  well  known   by  other   countries  for  some
time  [Blum,   1980; EPA,   1980a].   Therefore,  we  must question
the  logic  that  only  through further U.S.  regulation  will  other
nations be  stimulated to  regulate.   If they  have not  chosen  to
act as  EPA feels  necessary,  it  surely  is not because EPA has not
made  its  position known.   Perhaps   it  is  because  others  do  not

                                            International Aspects

agree with  the  Agency's analysis—in which  case we  fail  to see
how  further  U.S.  regulation or  "example setting"  by  the U.S.
will resolve  the underlying differences  in the  assessments.   A
U.S. cap on production  will  not  be  an effective signal to  others
that there is an  urgent need to  regulate  absent the availability
of more persuasive facts that  the  problem is indeed sufficiently
serious to  require  further  immediate action.   It seems unlikely
that the rest of  the world  will rush to  decimate its CFC  indus-
try  in  response  to  EPA's  example,  and  urgings  for regulation,
when such urgings are based  on a tenuous  theory.

              c)   It   can   be  argued  that  the  United   States
already  has  taken  substantial  action,  which  if   "leading  by
example" is a viable tactic, should  have  resulted in substantial
worldwide  regulatory action.   Specifically, the  U.S.  showed  a
willingness to  promulgate a ban on  half of  its use  of   CFCs—
aerosol  propellants—in  1978.  We   find it   significant   that,
although a few  small or nonproducing  countries  followed suit, no
major industrialized nation  has.

          If a  50 percent cutback  by the United  States  was not
effective  in  obtaining  the  international regulatory cooperation
EPA  believes  is  needed, what  probability is  there  that further
U.S. regulation,  such as a  production  cap,  will, in  and  of it-
self, have the  desired  effect?   Discussion  of  logic, support and
probability of  success  for  the proposition  that unilateral U.S.
regulation will force  regulation  by  others, is  notably lacking
from the ANPR.  For  EPA just to  say its policy will be effective
is hardly  adequate.   The burden is on  the  Agency to demonstrate
that  its  proposals  will  result   in  environmental benefit  in
excess of costs.

              d)  Perhaps  the  most questionable  aspect of  EPA's
logic is the statement  that  although  further U.S. action may not
in and of  itself, assure action by others,  inaction by the U.S.

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would  assure  inaction  by  the  rest  of  the  world  [EPA,  1980e,
p. 2].

          A number of points are pertinent here:

          i)  An  arrogance  is   expressed  that   unless  the  EPA
              regulates  no one  else will  take   any  action.   We
              presume  this means  EPA believes  that  others  will
              be   incapable  of  making   risk  assessments  and
              reaching  a  regulatory  determination on  their  own
              without EPA's regulatory example.

         ii)  The  Agency  is  narrow-minded in  its view  of  what
              constitutes  "action".   The  clear  implication  is
              that  the only  consequential action  is regulatory
              action.  Yet,  the EEC, for  example,  can hardly be
              accused of  taking  no action—a  commitment has been
              made  to  study the science,  to  periodically review
              the results,  and  to  periodically reassess the need
              for  further  regulatory action.   We  view this  as  a
              significant  and wise course of action.

              Likewise,  EPA's  assessment  of  potential  actions
              available to EPA  is  limited.  The  choice of action
              does  not  have to  be between regulating now or not
              regulating   now.   An   alternative   action  by  EPA
              would  be  to  work  to  obtain   the  needed  inter-
              national  resolution  on  the  science  and  to pursue
              time-trend   analysis.    A   firm  commitment  to   a
              resolution  of the science  could not be viewed by
              anyone as  a  lack of  action.

                                            International Aspects


          1)  Potential for Counterproductive Results

          The political approach  being  taken  by EPA could have  a
number of results  which would be  counterproductive to any  even-
tual resolution of this issue.

          a)  It can  be argued that  any  further U.S.  regulation
could be viewed  by the rest of the  world  as  affording more  time
before  having  to  seriously  consider  evaluating  whether   the
problem is  real  and,  if  it  is,  to what extent action is called
for.  This  probably  will  not be  true  of  countries  in  the  EEC
(who  already  are engaged  in  periodic  reviews  and  assessments) ,
but  certainly  could   be  valid  for  those  nations  not   yet  so
involved.   And   even  in  Europe,  a  knowledge  that  the  U.S.  is
continuing  to  act  to  limit  the  potential  for   any  eventual
problem could lead to a  perception  that  this  creates more   of  a
safety margin for  evaluation  before  any  further decisions  would
be  necessary.   EPA  expressed  concern  in  the  ANPR for   this
possible  outcome,   yet  then   concluded  the  cap  proposal  would
minimize its  possibility.   Once  again we  question the logic and
support for  a conclusion  that the  potential  for  a problem  has
been eliminated just  because EPA has  said that  it  has.

          b)  Another  possible  result  would  be  more  serious.
The  political approach  taken by  EPA  could  create  a backlash.
The  CFC/Ozone Issue  is  a  complex  scientific  problem.   Others,
for   example,   the  UK   [UK   DOE,  1979]   and  the   EEC   [EEC,
1980], are  attempting  to  manage  the problem by first attending
to  the  science and, only  then,  following   with  political  or
regulatory  actions  as may be  needed.  EPA's  continuing political
push  for  further   regulation, absent  attempts  to  resolve  the
underlying  differences  in the scientific assessments  between the
large producing  countries,  could  create  the  perception  that EPA

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is being extreme—wanting  regulation regardless of  costs  or the
facts  of  the  matter.   To  the  extent  that  EPA's  approach  is
perceived this  way,  and results in  offending  other  governments,
the  approach  will  be counterproductive  to obtaining  the  inter-
national assessment  and cooperation that most  agree are needed.
The  issue  would  become further  polarized—exactly opposite  to
what is needed.  This threat is not academic.

      2)  Imbalance Between Costs and Potential
          Environmental Benefit

          In  section  C  we  raised  questions as  to the potential
effectiveness   of   EPA's   unilateral   regulatory   approach  to
obtaining regulation by other  nations.   To  the  extent  we are
correct  in  our assessment  that the Agency's  plan  as presently
proposed will  not achieve  its  goal, the  possibility  is created
for a gross imbalance between  the  potentially  large  cost of this
plan  to the  U.S.  but  only  marginal   theoretical  environmental
benefits.  Others, including EPA  contractors,  have  also examined
this question, concluding:

          "In  the  absence   of  control  actions  by  other nations,
          the  benefits  accruing to  the United States  alone from
          stringent  domestic control measures  are  less than the
          costs of those measures."  [NAS,  1979b, p. 259].
          "Moreover,  if the  U.S.   pursues  a  regulatory program
          while most of the rest  of the world  does  not, the con-
          tinued  unregulated  emissions  abroad  will   limit the
          effects  of  the   U.S.  program  to  a  modest worldwide
          effect, with  a hopelessly unfavorable balance between
          costs and benefits to the  U.S."  [Bailey, 1980, p.3].

The  cost to the United  States  of  EPA's proposed cap and economic
incentive control options is discussed  in detail in  Section  VII.

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      3)  Loss of Politial Option

          In  the middle  1970s,  before  the  U.S.  aerosol  pro-
pellant ban,  the U.S accounted for  roughly  50 percent  of  world
CFC production and use.   The EPA  then  banned  U.S.  production and
use  of CFCs  as  aerosol  propellants   in 1978.   Prior  to  the
initiation  of  this   regulatory  process,  U.S.  aerosol  propellant
uses of CFCs  amounted  to approximately half  U.S.  production,  or
25 percent  of  the world  total.   If  one accepts the  "leading  by
example" logic,  it  is most  surprising that  this  large  "signal"
has not  resulted in significant  regulatory  actions by  the  rest
of the world.

          The  situation  today  is  that  the  U.S.  uses  approx-
imately  36  percent  of  total  CFC produced,  and  assuming  EPA's
present growth/year,  by the year  1990 the U.S.  contribution  to
the eventual  ozone   depletion  problem  would  be only  23 percent
(7.5% depletion  from U.S. contribution	)_
(32.0%  depletion -  total world  contribution)  (ANPR, Table 3) .
However,  EPA is proposing  to  cap  U.S.  production   at  current
levels, and  absent  action by other  countries,  the Agency calcu-
lates  (ANPR, Table  3)  this  will result by 1990 in the U.S.  con-
tribution to the eventual ozone depletion problem falling to
only 16 percent  of the problem  ( 4.5% depletion from U.S.)
                                (29.0% depletion - world)

          The question we ask is  this:   If  the  major  U.S. action
of  cutting  production  by  50  percent  did  not  result  in  major
regulation  worldwide,  and,   if  as we  predict,  the current  pro-
posed  action (to cap  U.S.   production)  also will not  have the
result  of  major  regulation worldwide,  what  conceivable  chance
will  the  U.S.  have  to  influence  the  eventual  problem  in   1990,
when  at  that time  the  U.S. will  only contribute 16  percent  to
the total potential  problem?  What pressure will  be available at
that   time   to   the  EPA,   especially  when   through  preceding

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excessive  reliance  on  the  political   approach  it 'may  have
discredited its input into the international scientific arena?

          Clearly,  the  U.S.  must  not  allow   itself,  through
premature reliance on a  heavily  political approach,  to end up  in
a  situation  where  little  has  been  gained   but the  political
approach tool  is  no longer  viable.   It is much better to use  the
scientific  approach  now   (which  sooner  or  later  has   to   be
addressed  anyway)  and  reserve  the  political  approach  to such
time and place where it may make a meaningful difference.

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          In  the  previous  sections we  have  presented the global
nature  of  the  CFC/Ozone  Depletion  issue  and  seen  that  no one
country  unilaterally  can  have  a  significant  impact  on  the
outcome  through direct regulatory  action,  even  including  total
bans.  We have  discussed the  differences  in  the approach to  this
issue  between EPA  and  other  nations,  principally  those  of the
EEC.  Using EPA numbers, we also have  shown  how EPA's unilateral
cap  proposal  will  not  have  a   significant  direct  environmental
benefit  absent  action  by  other   countries.  And we  discussed our
reasons  for  believing  that the  unilateral  approach  by  EPA  will
not  result   per  se_ in  other  countries  moving  to  regulate—a
repudiation of  the  "leading by example" premise.

          The  main reason  for   the  projected  failure  of  EPA's
unilateral  approach is  that  it  is  a  political answer  to  what
remains  a  complex  scientific question.   That  other  major coun-
tries accept  the  problem as a scientific  one, and are working  to
resolve  it  accordingly, has  been demonstrated through  numerous
quotations  taken  from  recent official  documents such as  the  UK
DOE  [1979] and  EEC  Commission [EEC, 1980] reports.

          Whatever  actions the U.S.  EPA follows,  we  believe  most
foreign  countries  are  likely  to continue to  seek  and react  to a
scientific  resolution.   Outside  the U.S. there is  little  incen-
tive  or  movement  to   adopt  an excessively  political  posture
opposite what  so  obviously are  scientific  concerns,  nor is  there
the  disregard  for the  economic  penalty  which  marks  the  U.S.
regulatory process.

          The   NAS [NAS,  1979b]  clearly  recognized   the   need
for  a  global  scientific  consensus,  sensing  that  only  through
such  a  consensus   can the  problem,  if  real,   be  dealt with.   In

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fact, it appears  that  throughout the world the U.S.  is  one of a
handful  of  countries  that  do not  place  a  scientific consensus
clearly  at  the  top  of  their list of priorities for  handling the
concern over stratospheric ozone depletion by CFCs.

          We come,  therefore,  to the inescapable  conclusion that
to effectively  influence,  in  any major way,  the  outcome  of this
issue, a cooperative global  effort  is required  and  that  effort
must begin  with  the basics — a global  assessment and consensus
of where the  science stands,  the degree of  uncertainty,  and the
risk of  waiting  for better information  in light  of  the results
from  ozone  trend   analysis—a   consensus   which  presently  is
clearly  absent.   If  the problem  is  real,  the sooner  this assess-
ment  is  undertaken, the  sooner  a  resolution can be  reached on
the need for  (and degree  of)  action, and the sooner appropriate,
coordinated,  equitable   international   control   action  can  be
undertaken.   If  the problem  develops  not to  be quantitatively
significant,  the  sooner  individual countries,  e.g.,  the  U.S.,
can  cease  unilateral  actions which  place their  industries and
economies at an international disadvantage.

          If  regulation  is  necessary,  the  response  must  be
essentially global   and be  based on appropriate  scientific and
economic  investigation.    The extent  to  which  the   EPA   reacts
without  the  knowledge   from such  investigations    is  largely
immaterial  in  terms of the  global   environment,  although  not to
the  U.S. economy.   Indications  are  that  political  lobbying of
foreign  governments by EPA  is  unlikely to  produce   significant
further  regulatory results,  but   will   continue   to  further
polarize world  scientific opinion,   directly  counter  to progress
towards  a scientific consensus.

          There   is  time  to   obtain   this   consensus  without
unreasonable  risk  to  the  world's   populations   and   environment
(See Section V).  The UK  [UK DOE, 1979], the  EEC  [EEC, 1980],

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and industry's  assessments  all find,  for  example, that  up  to 5
years  could   be   taken  without   substantial   risk.    And   the
existence of  ozone  trend analysis  provides  an  additional margin
of safety—a  margin which  could  be reviewed annually to assess
the wisdom of further regulatory deferral.

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          In its CFC Development Plan, EPA states:

          "The United States as the  largest  producer  and user of
          CFCs,  must take  a  leading role  in  this   effort   [to
          obtain   worldwide   regulation   of   CFCs]."    [EPA,
          1980e, p. 2]

          We  believe  the  Agency's  view  of  what  constitutes
appropriate  leadership  on  the  CFC/Ozone  Issue  is skewed.    The
Agency's view  seems  to  be that leadership means  being the first
to regulate.  We believe, on the  other  hand,  that the leadership
role should  be  in  obtaining the needed global  resolution of   the
science and  then,  _if_ it is needed,  to lead  a  global  coordinated
effort to obtain the appropriate equitable degree of regulation.

          It   is   likely   that  virtually  all  major  producing
countries would  appropriately  regulate CFCs  i£  current  concerns
over  ozone  depletion  were validated  throughly.   It   is   also
evident  that U.S.  political  pressure,  in  the  absence  of   such
adequate validation,  has  had  very  limited success,  and  it is
doubtful  that  much  further  regulation  elsewhere  will  occur
unless an accepted scientific justification is developed.

          There  is a critical  opportunity for  U.S.  leadership.
That  opportunity   is   to  organize   an  international   program,
involving   government,    industry    and   academia,    to   resolve
uncertainties  and  to  work  towards  generating  the  objective
scientific  information   needed.   However,  as  discussed  in   the
previous  section,   if  for  no  other  reason than  the  fact   that
other  key  nations  view  the  science  as  unresolved,   EPA cannot
lead  simply  by proceeding with,  and pressuring  for,  further
regulation.  Such  "leadership" will  be rejected.

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          There is another major  advantage  in  the U.S. leading a
"learn-before-regulating"  effort.  The  ozone  depletion  concern
of the  EPA (if it has  not already been  adequately demonstrated
by the  essentially complete  ban on aerosol uses),  can be demon-
strated  on a  continuing  basis  by  technical  leadership  in  an
international  scientific  program,  and,  at  the  same  time,  the
risks from  hasty  or  unnecessary  regulation in the U.S.  can  be

          We  suggest  elsewhere  in  this  submission  how  such
leadership  might  be  effected,  but basically  the  recommendation
is  that the National Research  Council  and  the  United  Kingdom
Royal  Society  jointly  convene  with  corresponding  scientific
societies  in France,  Germany,  Italy and  such  other countries as
are  appropriate,   to  form  a  scientific  review  committee  to
produce  an  international   review of   the  issue.    We  further
recommend  that  EPA postpone both regulatory action  in the U.S.
and  political   lobbying  for  CFC  regulation  abroad   until  such
reviews are made.

          By  supporting   such  an  attempt   to  reach  a  truly
objective  assessment, and  refraining  from  domestic  and inter-
national efforts  to lead the conclusions  of  the committee to any
preconceptions  of what  that  conclusion  should  be,   EPA  would
demonstrate both  its  concern  for reaching sound conclusions on
the CFC/Ozone Issue and its leadership abilities.
      A complete  review  of the science,  taking  into account  all
      the  most recent  developments,  would  be the  ideal.  How-
      ever,  if  such  a  broad  undertaking  cannot  be  effected,
      there  are  more  limited  areas  for  review  which  would
      maximize  the   payback—ozone   trend  analysis  being   the
      foremost among  these.

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          In  summary,  the  United  States  can  more  effectively
demonstrate   its  concern   and  leadership  by   coordinating   a
research  effort  which   will  stimulate  the  reaching   of  an
international   scientific   consensus,   than  by   international
political pressure.

                                            International Aspects


          The  following  discussion  focuses  on the  trade impli-
cations  of  the  proposed   economic  incentives  options.   Legal
issues relating to  regulatory  authority  over  imports and exports
are reviewed  in Section  III.  Detailed  comments  on the  economic
implications  of these regulatory  options  appear  in  Section VII
and Appendix  I.

      1)   Exports

          From  a  reading  of the ANPR, the  basic export  question
is whether  (under a cap  on U.S. CFC  production,  in conjunction
with some  sort of allocation scheme or  any  other regulatory op-
tion) exports of  CFCs should be considered part  of the  domestic
limit or  excluded  altogether.   We will demonstrate  why exports
should  be  excluded.   However,   regardless  of   the   regulatory
outcome,  special  care should  be  taken  to  insure  that the U.S.
world trade position  is not  unilaterally and unfairly penalized.

          a)   Inclusion of  Exports Under Domestic  Cap Would
               Eliminate Exports

          In  discussing  its thinking  that  a  U.S. production cap
should  cover   both  domestic use  and  export,  EPA  states  in the

          "  appears   unlikely  that  firms   would  continue
          exporting  because they would  be  placed in an  unfavor-
          able  pricing position  in the foreign CFC  market."

          We  agree  with  EPA's analysis.  The  CFC business, both
domestic   and  abroad,   is  extremely   competitive,  manifesting
itself primarily  in extreme price  sensitivity.  A  small  increase
in price  by  one  supplier  will result in  dramatic volume  shifts
to lower priced suppliers.

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          Were export pounds to be  incorporated  under a domestic
production cap, with  the resultant  increase  in  price  (projected
and  desired  by EPA  in  order  to  drive down  CFC  demand),  U.S.
producers  would be  in  the position  of  trying  to compete  in
export markets  with a  commodity  chemical at a price higher than
available from  foreign  firms.   This would  be  so because foreign
firms would  not be  subject  to  the  artificially  higher  prices
brought on by  the  cap and allocation system.  Under such condi-
tions,  U.S.   firms  would  lose  essentially  all   their  export
business.  Given  the  current  concern  over U.S.  trade  deficits,
such  a  scenario  created by  unilateral  U.S.  regulations  seems
totally  out  of  place,   particularly in  that,   as  we  shall  see
below, such action will produce no net environmental  benefit.

          b)   Restriction of Exports Would Have No Net
              Environmental Benefit

          While it may  be argued that  a domestic production cap
imposes  no  direct  restrictions  on  exports  per   se,  the antici-
pated higher prices  resulting  from  a production cap and alloca-
tion scheme  (discussed  at length in Section VII  and Appendix I)
will result in a loss of  the U.S. CFC export market.

          What  is  particularly appalling  to  us   is  that  even if
all U.S. exports of CFCs  were  eliminated,  there  would not be any
decrease in total world CFC use or emissions.

          As EPA acknowledges in the ANPR:

          "Under   [an]  approach  of  including   exports  in  the
           [domestic  U.S.]  production   ceiling,  foreign  firms
          could conceivably increase their  production  to  offset
          any  decrease  in U.S. exports,  which  would run counter
          to   the   long  term   goal  of   reducing  global  CFC

                                            International Aspects

          We  agree  with  this  EPA  observation  except  the  words
"could conceivably" should be replaced with "would".

          There  are  four  ways   to  meet  CFC  demand  in  a  given
foreign  country:   1)    U.S.  exports,   2)   exports  from  other
countries, 3)  production by a  U.S.  owned manufacturing  facility
in  that  country,  and  4)  production by  a foreign  owned  manu-
facturing facility  in  that  country.  Any  restriction,  direct or
indirect, for  example  through  pricing,  of the  ability of  U.S.-
based  firms  and facilities  to   export  would  absolutely  have no
impact on the  underlying demand for  CFC  in the subject  country.
The demand would still be met - but by foreign export  or foreign
production  facilities.   The  net  result:   loss  of  U.S. export
market;  gain  for foreign producers;  no  net change  in  amount of
world CFC use; no  net  change  in potential  environmental  problem;
so no environmental benefit from this unilateral U.S.  regulatory

          If  a regulatory policy  results  in  no benefit to  the
environment,  it should  not  be  implemented,   particularly   when
such  a   policy  would  severely   penalize  U.S.  industry   and
exacerbate a major U.S.  problem—balance of trade.

          c)  EPA's Defense of Proposed  Policy  to Include
              Exports Under a Domestic Production Cap is  Weak

          The  Agency  obviously  anticipated the  above  arguments
against  the  inclusion of exports under  a domestic production  cap
because  several paragraphs  in  the  ANPR  are  dedicated  to  the
    Yet  another consideration  is that  the  U.S. would  still  be
    penalized  even if  the CFC/Ozone  Depletion Theory  is  even-
    tually  totally invalidated.  This  is  so because a  cessation
    of  exports  by the  U.S.  will   result   in  a  dismantling  of
    export  organizations  which were years  in the making.   These
    could not be replaced  very  readily  or rapidly.

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discussion  of  why,  even  in  the  face  of  the  above  situation,
exports should  not  be exempted.   We  find these  arguments  to be
weak.  Consider the argument  in  the ANPR  given opposite the  fact
that  foreign  producers   would   increase  their  production  to
replace no longer competitive U.S. exports:

          "However,  some  nations  have  already  taken  action to
          limit   their   capacity  to   produce  CFCs   and    have
          indicated  that  they  will  consider  taking  additional

          The facts are that:

          i)  Only  countries  of  the   EEC  (nine)   have  limited
              capacity  and this  is  only  on CFC-11  and CFC-12,
              whereas  all  U.S.  CFC  exports  to  countries  around
              the  world  would  be eliminated by  the  production
              cap induced  higher prices.

         ii)  The bulk of  exports  are CFCs other than CFC-11  and
              CFC-12  anyway  so  the capacity cap  in  Europe is

        iii)  A limit  on capacity is  hardly  the  same  as a  limit
              on  production.    (Given  the European  phasedown of
              CFC-11  and  CFC-12  aerosol  propellants  there is
              excess capacity which could be utilized to produce
              the CFCs to  fill  the void created by the U.S.  loss
              of exports).

         iv)  The  statement  that  other  nations  have  indicated
              they   will   consider   taking   additional   action
              requires  explanation.   What  nations?   What  action
               (to what degree  and  with  what  effect)?  When?   How
              would   this   balance  out   the  penalty  to   U.S.
              business?  These  are all  unanswered questions.

                                            International Aspects

          The ANPR presents  a  second argument as  to why exports
cannot be exempted:

          "The global  problem  may  be  exacerbated  if  the United
          States is in the position of  encouraging other nations
          to take further actions  to control  CFC emissions while
          at  the  same  time  not  controlling  United  States  CFC

          Several   questions   are   pertinent   opposite   this

          i)  What  global   problem  will   be  exacerbated—the
              problem  of  other nations  not  agreeing  with EPA's
              assessment that regulation is needed?

         ii)  How does this  bear  on the question  of whether EPA
              should undertake  any  action  which would  eliminate
              U.S.  exports  without  any   potential  offsetting
              environmental gain?

        iii)  Are not  other  nations able  to cut  off imports from
              the  U.S.  if they believe  them  to be harmful?   Is
              EPA  the  only  body   which  is  capable  of   deciding
              whether CFCs are harmful?

          If, as  we suggest  in sections  E  and F, EPA were   to
concentrate  its efforts on obtaining an international assessment
of  the  science, followed  by a resolution between  countries   on
what  was  the risk  and what, therefore, needed  to  be done, the
Agency's  concern  over  exacerbating  the  global  problem  would   be
eliminated.   Further,  such  a  resolution,  leading  to  a global
cooperative  program  of regulation  (should  it be  needed), would
eliminate the unfair  impacts which would be  brought on  by EPA's
unilateral approach.

                                            International Aspects

          d)   EPA Expresses More Concern For Foreign Exporters
              To The U.S. Than For U.S. Exporters To Other

          The ANPR states:

          "...a mechanism must  be devised  to  regulate imports of
          CFCs and  CFC containing articles  so that  imports are
          neither given an advantage nor placed at a disadvantage
          in comparison to domestic manufacturers."

          We  already  have  seen  how  the  Agency's  proposed in-
clusion of  exports  under a  domestic  production  cap will elimi-
nate U.S. exports of CFCs.   The only  concern  expressed by EPA in
this  regard  is  that  if  exports  are  not  so  controlled,  it may
create problems  for  EPA  with foreign  governments.  No concern is
expressed by  EPA for the economic consequences  to U.S.  industry
or the U.S. economy  from such action.   Yet on the import side of
the equation,  EPA is concerned  that  imports  not be  placed  at  a
disadvantage.  It would  seem  that  it  is  acceptable to  penalize
U.S. industry but not  to compensate it.

          In  conclusion,  we   believe   that   any  U.S.  cap  on
domestic production should exclude exports.

          •   Failure  to  exempt  exports  will   result  in  an
              elimination of exports.
          •   Loss  of  U.S.  exports  will  be  filled  by foreign
              producers,   so  there will be no  net  environmental
          •   Loss  of  exports  unfairly penalizes  U.S.  industry
              and the U.S. economy.
          •   EPA's defense  of  this policy proposal  is  weak.

                                            International Aspects

      2)  Imports

          The agency presents three  options  for  treatment of CFC
imports:   a)   freezing  imports  at  current  levels;   b)  capping
imports at  current levels  in  conjunction with  a  permit system;
and c) putting imports  under the  total  domestic  cap and allowing
foreign  producers  to  bid   for  production   rights.    Before
commenting  on some  of  the implications  of  these options,  we
suggest  that   a  fourth  option  be  added  to  the  list—treating
imports exactly the same as exports.

          a)  Imports Should be Treated The Same As Exports

          As  policy,  the   United  States   is  opposed  to   trade
barriers,  which  any of   the  above  options  would   amount to.
However, given  the anticipated effect  of EPA's  proposed policy
on exports, we believe  it  is grossly unfair  to U.S. industry and
to the  nation to  not  attempt to balance out  the import/export
equation.   Simply put,  if U.S.  industry  will  not  be  able  to
export CFCs to foreign  markets, neither should foreign  producers
be allowed  to export  their product  to our  markets,  especially
under conditions  of  a limited domestic market.   Since  inclusion
of U.S. exports  under  a domestic  cap does  not  ban these exports
as  such,  but  only  renders  them  non-competitive   to foreign
suppliers due to  higher price,  foreign suppliers  (with a  price
advantage due to  not having to meet  the  imposed U.S. regulatory
requirements)   should  not be permitted  to expand  their  sales in
the U.S. market at the expense of U.S.  industry.

          If, as  EPA states, the  objective  is to devise controls
on global CFC usage, the U.S.  government must,  at a  minimum, be
concerned  with a  combined export-import  policy  which  does not
place the U.S.  industry at a  competitive disadvantage to  foreign

                                            International Aspects

          b)  If U.S. Production Is Capped, Imports Should be
              Capped Separately And On The Same Basis

          Developing  the  above  thoughts opposite   the  options
presented for  the treatment  of imports,  we  believe  that,  at a
minimum, it  would be necessary  to  either freeze  imports  at  the
level  in  the base  period proposed  for   domestic  production,   or
cap  imports  at  this level  in conjunction with  a permit system.
We  strongly oppose  the  option  of  permitting  foreign producers
unlimited  access  to a  capped  U.S.  market  as  it   would  mean
significant  loss of  U.S.  market  to  foreign  producers  for  the
reasons detailed  below.

          Under  a cap, the  cost to  a U.S. manufacturer producing
CFCs  would   have 3  elements:   1)   raw  materials,   2)   cost   of
manufacture,  transportation  and sales other  that raw materials,
and  3)  the   cost  of  the  production  permit.   A  foreign producer
entering into  the capped U.S.  market also would  have all  three
costs  except that item 2 would be  lower. . This  is  true for  the
following reason.  Under a  cap,  U.S. producers,  not being able
to  export competitively  and  having  a ceiling on  how much  could
be  made domestically,   would  find  their  cost  per   CFC  pound-
produced  increasing  at   a   rate  faster  than   that   of  foreign
producers.    The  difference  is  in  fixed  cost.   Fixed cost  items
such  as  overhead  will   go  up  yearly,  but   the total  amount
produced under  a cap  is  held  constant,  so  the  cost per pound-
produced increases.   Foreign producers,  on  the  other hand,  not
being  limited to how much  can  be  produced,   will   be  able  to
spread   these   cost  increases  over   an  increased  volume   of
production,  and   keep the  fixed cost  per pound  steady  or  maybe
even  lower  it.   Over time,   the difference between the U.S.  cost
per  pound   and  the  foreign  cost per  pound  could become great.
Assuming that all other  costs,  e.g., raw materials,  labor,  etc.,
remain  roughly comparable,  the  net  result will be the ability of
foreign  producers  to offset higher  permit pound   bids  by  the

                                            International Aspects

lower   cost   per  pound   of   production.    Therefore,   foreign
producers could  purchase  permits  at  a  price in excess  of what
could  be  justified   by  U.S.  producers,  given  the  restricted
demand  for   the   end  product.   Therefore,   over  time,  foreign
penetration of  a U.S. market  would  increase at the  expense of
existing U.S. industry.

          EPA states in the ANPR:

          "...this  option   [the   option  of  including  imports
          under  the  domestic  production  ceiling   and  allowing
          importers   to   compete   in  the   permit   market  with
          domestic  firms]...would  remove   the   possibility  of
          importers  enjoying  a  cost   advantage  over  domestic

          Economic  realities   indicate   that  this  conclusion is

          A  policy which  penalizes  the  cost structure  of U.S.
industry  over  foreign producers,  prices  U.S.  producers  out of
foreign  markets,  and  then permits   foreign  producers unlimited
access  to U.S.  markets  is extremely  inequitable  and unwise.  If
the  need  arises  for  U.S.  production  to  be  capped,   import  levels
also  must be  capped  but  on a  separate  basis.  If permits  are to
be sold  for  U.S. production,  separate permits also must be  sold
for  imports.

          c)  Taxing of Imported Finished Goods Made With CFCs

          There  would be  another  problem for U.S. industry which
would  develop under  a  unilateral  domestic  CFC  production  cap.
This  would  be   the  competitive advantage  created  for  imported
final  products  which  were produced  or  processed   by,  or  which
contained,  CFCs.  Domestic  manufacturers  would have  to  pay  a
premium  for CFCs  under  a  cap.  However,  foreign  manufacturers
producing  goods  abroad   which  are  dependent   upon   CFCs,  for

                                            International Aspects

example,  frozen  shrimp  or   berries,  would  only  have  to  pay
"normal" CFC  prices.   Upon  importation  into the  United States,
these foreign goods would be  at  a  cost  advantage to domestically
produced goods.   The  same would be  true  for  products containing
CFCs, such as auto air-conditioners.  In  fact,  it is conceivable
that  certain  products  dependent  upon CFCs  now produced  in the
U.S. would have  their manufacturing exported in order  to assure
CFC availability  at a reasonable  price—followed by the finished
goods then being  imported back into the  U.S.   Obviously,  all of
these  situations would  penalize domestic  manufacturers without
resulting  in  any net  potential  environmental  gain  from lowered
consumption of CFC.

          EPA's  contractor,  The Rand Corporation,  examined  this
problem and concluded:

          "Under   either   economic  incentives   or    mandatory
          controls   [if   they  were  to   be  imposed],  both  of
          which  increase the  costs of  producing  domestic  final
          products,   imported  final products  made  with   CFCs
          should  be taxed."   [Rand,  1980, p.  247]

          d)  Potential  For  Illegal  Imports Has  Not Been

          Given  the   likely  high cost of CFCs  under  a domestic
production cap,  there would  be temptation for some to attempt to
obtain  "unpermitted"  CFC at  a lower price.  To the  extent  this
situation  evolves,   EPA's   stated  objective   of  limiting  CFC
production would  be  undermined and those  U.S. users not involved
would be placed  at a  competitive  and  product  price  disadvantage.

          Rand  also touched  on this point,  concluding:

           "   As   noted  later  in   this   section,  one  possible
           enforcement  problem  raised    by   economic   incentives
           policies might be  prevention  of  illegal  CFC  imports."
           [Rand,  1980,  p.242]


                                            International Aspects

          "  Unlike mandatory controls on  the  behavior  of users,
          economic  incentives  policy  requires  enforcement  to
          prevent  illegal   imports   of   CFCs."    [Rand,  1980,
The ANPR makes no mention of this potential problem.

                                            International Aspects


          A paramount  fact of  the  CFC/Ozone Depletion  Issue  is
that the problem,  if  it exists, is global  in  nature.   This  fact
bears both  on  any assessment  of  the problem  and  importantly  in
consideration of  any  solution.  This cannot  be stressed enough,
for even  if CFCs eventually are  proved to deplete  ozone to  the
degree calculated  by  the  models,  and  the  potential effects  are
as projected  by the  NAS,  the  fact  remains that  without global
acceptance  and   commensurate   action  the  problem  cannot   be
solved.   Unilateral  action by any country  cannot  significantly
reduce the  risk should the theory and all its elements be valid.

          This   reality   has   been   addressed   throughout   the
evolution of  the issue  by most participants,  including EPA  and
its contractors:

          "It  should  be  noted that   effective  control  of  CFC
          caused  ozone  depletion  cannot  be   achieved  by  one
          nation acting  alone."   [EPA,  1980e, p. 2]

Yet EPA's  analysis  in the ANPR of the international  aspects  of
this  issue  does not  seem  to  us  to  reflect an understanding  or
proper perspective of this global reality.

          In the  first  place,  EPA's approach  to the issue  seems
to  be  one  which emphasizes  political  over  scientific  aspects.
We find that EPA  has  determined the  problem is real (despite  the
acknowledged  uncertainties)  and  has concluded,  therefore,  that
it  requires immediate  worldwide  regulatory attention.   Yet  the
very  countries  the  Agency's  program  is  focused   on,  the  EEC,
continue  to   view  the   problem   as   an   unresolved   scientific
issue—an  issue  which must continue  to be studied, but one  not
requiring  immediate  regulatory attention:   ".  .  .a  delay  of  5
years  before  any  decision is taken on  CFCs  can   be  reasonably
accepted."   [EEC, 1980]

                                            International Aspects

          Given these  sharp differences between  the assessments
and  programs,  we  believe   the   Agency's  proposed  unilateral
response is  inappropriate,  inefficient and not  likely  to obtain
the  stated  goal  of   "coordinated   worldwide  action."    [EPA,
1980e].    Specifically,  the  proposed  production  cap  will  not
have  any  consequential  direct  environmental  effect  if  other
countries continue to  produce CFCs as forecast.   (Indeed, even a
unilateral total  U.S.  ban  would  not reduce  the  problem enough,
if the theory proves to be  real.)  Further,  given the underlying
reasons  for  the differences  between the  regulatory  programs of
the U.S. and other countries—disagreements  over the science--we
fail to  see  how the  effort being advanced by EPA,  with a stated
objective ". .  .to stimulate coordinated  worldwide action," can
have much  chance  of  success  if  EPA  ignores   the  need  to resolve
the science  assessments.  The U.S. already has taken action  well
beyond that  of  any other  major producing country, yet apparently
this  "example"  has   not  been  sufficient   stimulus  to  obtain
worldwide  regulatory  action.   The question  must be  asked  then:
"On what basis  does EPA expect  such  contrasting  success for the
proposed production  cap?"  EPA  fails to  provide any  support in
the ANPR for such success, much  less  document  any  cost effec-
tiveness.  In  fact,  EPA's  own  contractors  [NAS,  1979b;  Bailey,
1980] found  that absent  control actions  by  other  nations, the
U.S. would be faced with ".  . .a hopelessly unfavorable balance
between costs and benefits."  [Bailey,  1980]

          A  recent  editorial  in  the New  York Times  touched on
all of the above points:

              "If  countries  around   the  world   continue  for  a
          decade to expand  their  use of chlorofluorocarbons, the
          American limits proposed by the  E.P.A.  would have  only
          a  trivial   effect.    So   E.P.A.  justifies  its   plan
          largely as  a diplomatic signal, to show  other nations
          that  the  problem  requires   international  attention.
          But that rationale  deserves further  scrutiny."

                                            International Aspects

              "A domestic  freeze would  inevitably drive  up  the
          prices  of  many  products—how   much   remains  to  be
          spelled out;  some  say only  a little.   But  a  nation
          already  burdened with rising  costs  should  not  take
          another costly  regulatory step for  insufficient gain.
          If  America  cannot  succeed  along  at   this  task,  the
          E.P.A.'s  proposals  need  to   be  measured  by  their
          diplomatic  value   in   persuading   other   nations   to
          cooperate.   So  the wisest  course  might  be to  make
          further  American  restrictions   contingent  on  inter-
          national   action.    The  need   is  for   more  global
          controls,   not   unilateral    disarmament."    (emphasis
          added) [N.Y. Times, 1980].
          There  must  ultimately  be  global  resolution on  this

issue,  followed  by  an appropriate  coordinated  program  to  deal

with the problem,  if  it  is  found  to exist.  Since EPA's proposed

program will not  advance  this objective  (in fact,  a  case  may be

made that  the  Agency's program will  be counterproductive),  what

then?  We  come  to the inescapable conclusion  that  there must be

a  return  to basics—a global assessment  and  consensus of where

the  science  stands,  the  degree of  uncertainty  and  the  risk of

waiting  for  better   information.   If  the  problem  exists,  the

sooner  this  is  undertaken,   the   sooner   a   coordinated  global
program  can  be  effected  to  deal  with  it.   If  the   problem

develops   to  be  insignificant,   the   sooner   the   individual

countries  like  the United States  can cease unilateral  activities

which   place   their   industries   and   economy   at   a  global

           There  is an  opportunity for  the  United  States  to  take

a  leadership  role  to obtain the   above assessment.    Several
suggestions  have  been made on how to  proceed—beginning  with  a

discontinuation   by   EPA  of   the  currently  favored   political
approach of  attempting to effect world  regulation by  example.

           Last,   we    have   examined   the  international  trade

implications  of  the  proposed  U.S.   domestic  production  cap in

conjunction  with allocation  or  auction schemes.   We find that,

                                            International Aspects

as  proposed,   these  options  would  place  U.S.  industry  at  a
competitive  disadvantage,  both  abroad  and  at  home,  yet  not
result  in  any  meaningful  potential  environmental  gain.   In
particular, any  option  incorporating  exports  under  a  domestic
production cap would result  in  U.S.  exports being  priced  out of
foreign  markets.   These  markets,  however,  would  be  met  by
foreign producers  who  are not  restricted,  with  the  result that
although  U.S.  industry  is  penalized,  there  would  be  no  gain
towards  EPA's  environmental  goal.   EPA  mounts  no  legitimate
defense in the  ANPR  for such a consequence.   On the  other side
of the  coin, we  find  that foreign producers, operating  under an
unrestricted climate,  could, over time,  develop  a  substantial
cost  advantage  to U.S.  producers who  would be  operating  in  a
severely  limited market.   Unless any potential  regulation takes
specific  steps   to  place  imports to  the  U.S.   under  the  same
constraints and  penalties  as   mandated  for domestic  production
and  export,  we  foresee  a  loss of  the  U.S.  market  to foreign


      A.  INTRODUCTION                                .       2

      B.  ECONOMIC SIGNIFICANCE OF CHLORO-                   4



      E.  INADEQUACY OF THE RAND REPORT                     37

      F.  MISCELLANEOUS POINTS IN THE ANPR                  61

      G.  SUMMARY                                           69

                                       Economic  Considerations

         In  the  ANPR,  EPA  considers  two  basic  approaches  to
further  regulation  of  CFCs:    (1)   the  standard  "command  and
control" approach,  including  product  and/or end use  phase-downs
or  bans,  and  technology-based standards,  and  (2)  a  so-called
"economic  incentives"  approach which would  limit  aggregate  CFC
production or use but  provide a theoretical flexibility  to  vary
product  mix,  end  uses,   etc.,   over  time  based  on  market

         Because  EPA  states  a  preference   for  the  economic
incentives approaches, our  discussion below focuses  principally
on  the  potential  micro-  and macroeconomic consequences of  these
regulatory  options.   We   also  comment  on:  (1)   the  lack  of
attention by  EPA  to command  and  control  regulatory options  for
CFCs,  (2)  the inadequacy of  the  Rand  Report  [Rand, 1980]  (the
major economic study performed  to  date)  to support  a  regulatory
decision , and  (3)  miscellaneous  points  in  the  ANPR which  have
economic  implications.   Our  commentary  is largely  qualitative,
necessitated  by  the  very   short  response  period  for  the  ANPR
relative to the time typically required  to develop  quantitatively
supported arguments.  The Rand Report  was  of little help for  this
purpose, principally because Rand's data bases  have not  been  made
available.   Nevertheless,   our viewpoints,  as expressed  below,
rely heavily  on  conventional  wisdom  in  their  development.    As
such, although rigorous  analysis  is lacking at this point,  such
viewpoints should be accepted as valid until proven otherwise by
 We include a  critique  of  this report in this section  (and  more
 detail in Appendix I)  because  it  is  the  only  study  performed  to
 date on economic incentives options as they would apply to  CFCs,
 and because EPA specifically cites the findings  of this study  in
 the ANPR  in  support  of the  Agency's  stated preference  for  the-
 economic incentives approach.

                                      Economic Considerations
standard techniques of  economic  analysis.   In other  words,  the
burden  of  proof is on  EPA  to show, through such analyses,  that
the conventional wisdom  is wrong in this  instance and that  its
CFC cap  proposal can be accomodated without severe adverse  eco-
nomic consequences.

         To help place all the ensuing discussion in perspective,
we begin  this  section   with  a highspot  summary of  the  economic
significance of  chlorofluorocarbons.    Regulatory decisions  on
CFCs will  affect major  industries,  with  large  employment, and  a
wide array  of  consumer goods.   Should  regulation  prove to  be
needed,   great  care will  have to  be  taken  to  insure that  the
regulatory option  selected  will  be the  most  cost  effective  to

         The fact that  Du  Pont is offering serious commentary on
the  relative  merits of some  of  the  regulatory options  under
consideration by  E?.\  in  no  way  should  be  interpreted  as  an
indication that we accept the need for,  or the inevitability  of,
further  regulation  of CFC uses.   As  discussed in detail elsewhere
in  our   submission,  the Du  Pont  position  remains:    Since  the
subject  and effects of potential  stratospheric ozone depletion by
chlorof luorocarbons, and potential  actions to deal with the  per-
ceived  problem, are matters of international  consequence,  we
believe  there  needs to be  an international  resolution of  the
underlying scientific differences prior  to  further  regulatory

                                       Economic Considerations

         Table 1 summarizes the economic significance of CFCs-11,
12, 22, 113  and 114 by their  major  end uses.  The  numbers  were
taken from published information where possible -- where not, the
numbers are  Du  Pont estimates.   The base year varies  depending
upon the reference.   CFC production and use are for 1979.

                                       Economic Considerations
Note;   References  cited  in  these  footnotes  are  not  cited in
       Section XI Bibliography

NE     Not estimated.
(a)    Du Pont estimates based  on  sales  information and Du Font's
       estimated market share.

(b)    Employment and other estimates were made  by Du  Pont in a
       series  of  white  papers on  the  Chlorofluorocarbon/Ozone
       Depletion Issue,  August, 1979.   Employment in refrigera-
       tion  and air-conditioning  has   since  been  increased  to
       include CFC-22 related  employment.

(c)    Report of Federal  Task  Force on Inadvertent Modification
       of  the  Stratosphere  (IMOS)"   "Fluorocarbons  and  the
       Environment",   June, 1975,  p. 98.  Employment data is for
       1974 except  as noted.

(d)    Includes service locations  and companies.

(e)    Air-Conditioning and Refrigeration  Institute:   "The Ozone
       Controversy",  June,  1978,  p.  21,  estimated  97,400
       establishments  for  1972.    An   annual growth  rate  for
       1972-1979 of  1.75  percent  is assumed,  leading  to 110,000
       establishments for 1979.

(f)    Bureau  of Domestic  Commerce,  Department of Commerce:
       "Economic Significance of Fluorocarbons",   December, 1977,
       p. 21.

(g)    Source as for  (e),  reports  $20.6  billion for 1972.

(h)    Source  as  for  (c) .     IMOS  data is  assumed to  include
       CFC-22.   The employment  in CFC  manufacture  has  been
       subtracted from the IMOS total for this industry segment.

(i)    IR&T Review Draft IRT-20000/1:  "The  Use  and Emissions of
       Chlorofluorocarbons in Mobile Air-Conditioning",  October,
       1978,  p. 53.   Total service facilities.

(j)    Motor  Vehicle Manufacturers  Association:   "Motor Vehicle
       Facts  and Figures - 1978."

(k)    Source as for  (i).  Replacement value:   $500/unit (p.  4).
       1976 installed units:   64,498,000,  growing at 4.7 percent
       per annum (p.  19).  1979 replacement  value = 64,498,000 x
       (1.047)  x $ 500 = $37  billion.   Du Pont's lower estimate
       of $33 billion  is  listed — the  difference is  within the
       uncertainty  of the estimates.


                                      Economic Considerations
(1)     IMOS  report,  p.  98 [see footnote (c)]  shows employment in
       plants  of  major  uses  of CFC solvents.

(m)     Du  Font's  solvent  equipment  manufacturers   (SEMs)  sell
       approximately  600  units  per  year  and we  estimate these
       SEMs   represent   50  percent  of   the market  for  such
       equipment.   Total sales are  thus 1200  units per year with
       average life  of  8 years.   Total in-service units approxi-
       mately 10,000.

(n)     Du   Pont  estimate  of  direct  foam  line   operation,
       maintenance and  supervision only [source as for  (b)].

(o)     Society of the Plastics  Industry  (SPI):   "The  Importance
       rof Chlorofluorocarbons and Polyurethane Foams",  Urethane
       Division Bulletin U-109,  March,  1980,  p. 12.

(p)     Rand  Corporation:   "Economic  Implications  of  Regulating
       Chlorofluorocarbon  Emissions  from  Nonaerosol  Appli-
       cations",   R-2524-EPA,  June,  1980,  p.  92.  Total CFC-blown
       foam  production  for 1979  is  489 million pounds at  average
       value of $0.75/lb.  (Du  Pont estimate)  =  $367 million.

(q)     Replacement  value is difficult  to  estimate.   Alternative
       blowing  agents   for  insulating  foam  are  not available so
       the  total replacement  value  is listed.   Our  estimate of
       $2500 million  is  contained in a  Du  Pont memorandum  from R.
       M. Kitchens to file,  dated December 12, 1980.

(r)     IMOS  Report,  p.  98 [see footnote (c)].  Estimate includes
       employment  for the production  of  the  foam  raw materials
       and  the foam  itself,  but not  the  products  made from the
       foam.  This  reference does  not  disaggregate employment by
       foam  type  or use  [cf  footnote (v) ] .

(s)     Source  as for (p) , pp.  47,  48.   Fifty companies,  70-130
       plants  (median 100).

(t)     Source   as  for  (p) .    Table  3.A.3  (p.  46)   shows total
       flexible urethane foam  production at 1,275 million  Ib. for
       1977,  and  1,420-1,690   million  Ib.  for   1980.    We
       interpolate  1400  million Ib.,  for  1979.   Table 3.A.I (p.
       45)  indicates  42 percent is  blown  with  CFC (=588  million
       Ib.,  foam)  and   the  product  has  an  average  value  of

(u)     Du  Pont estimates  costs  for  flexible  polyurethane  plants
       to  convert to alternative blowing  agents  at $400,000 per
       plant for 100 plants =  $40  million.    Du  Pont  memorandum
       from  R.  M.  Kitchens  to  file,  dated  December  12, 1980.
       [see  footnote  (y)  estimates for  comparable  changes  for
       polystyrene  foam  plants].


                                      Economic Considerations
(v)     IMOS  Report,  p. 98  [see  footnote (c)].    Larger  estimate
       includes  employment  in raw material, foam and end product
       production.    This  reference  does  not  disaggregate
       employment  by  foam type or use  [see footnote (r)].

(w)     Rand  Corporation Working  Note:   "Interim Report:   The Use
       and  Emissions  of  Chlorofluorocarbons   in   Urethane
       Closed-Cell   Foams",  WN-10401-EPA,   December,   1978.
       Appendix  A,  pp.  66-67,  identifies  29  nonurethane  foam
       producers.     Du   Pont   estimates,  based  on  market
       intelligence,  that there are 101 producing locations.

(x)     Source  as for  (w),  p. 16  (Table 3), estimates  473,600,000
       Ib.,  for  foam  produced in 1979.  Du Pont estimates average
       value at  $1.30/lb.,  for a total value of $616 million.

(y)     Rand  Corporation Working Draft:  "Economic Implications of
       Regulating  Chlorofluorocarbon Emissions from Nonpropellant
       Applications", WD-348-EPA, September, 1979, p.  201.  Plant
       conversions from CFC-12  to  pentane for  polystyrene foam
       production  is  estimated  at  $460,000  structural  changes
       plus  $80,000  per extruder line.   Labor  costs  increase by
       $90,000   annually;   energy  costs   increase  12  cents/lb.;
       insurance costs 2  percent of  capital.   Total  first year
       cost  =  [(29 x  460,000 + 101 x  80,000) x  1.02]  +  90,000  +
       (0.12 x 473,600,000) = $79 million.  Annual production see
       footnote  (x).

(z)     Du  Pont  estimate  of  companies  and  locations   based  on
       liquid    food   freezant  machines   sold  by  franchised

(aa)    Du  Pont estimate based on market intelligence.   Average
       annual  (season)  use  of equipment  (1,000  hours)  x average
       freezing  capacity (13,000 Ib./hour) x number of machines
       (30)  =  390  million Ib., rounded to 400 million  Ib., valued
       at  $1.00/lb.

(bb)    Du  Pont estimates 30 machines at average estimated cost of
       $300,000  each  = $9 million.

(cc)    Rand  Corporation Working Note:  "Interim  Report:   The Use
       and Emissions of  Chlorofluorocarbons  in Sterilization
       Applications",  WN-10275-EPA,  September,  1978,  pp. 9,  10.
       Rand  estimates  3950 units  based  on  Du  Pont  estimates
       provided  in 1978.  A subsequent assessment by Du Pont [see
       footnote  (b)]  indicates Hospital and  Institutional  units
       were  underestimated  by  700  units,  and   Industrial  units
       were  underestimated  by 20,  for a  revised  total  of  4670

                                      Economic Considerations
(dd)    Source  as  for  (p),  pp.  194-195.   Market  for  sterilant gas
       is  estimated at  11.7-14.3 million pounds  in  1976,  growing
       at  9.5  percent  annually,  which  corresponds to 15.4 - 18.8
       million  pounds   in  1979.   Taking  the lower  end  of this
       range,  and  Du   Font's  estimated  price   to  users  of  90
       cents/lb., annual value is $14 million.

(ee)    Source as  for (cc).  The Rand estimate for installed value
       is  $58  -  $84 million  (pp.  9-11)  based   on  Du  Pont 1978
       estimates.   Using the  revised  estimates  [footnotes  (b)],
       and market growth rates, a value of  $89 million  is  derived
       for 1979.

(ff)    Bureau  of Domestic  Commerce,  Department  of  Commerce:
       "Economic   Significance   of    Fluorocarbons",   1975.
       Fluorocarbon-dependent  employment  in  the  United   States
       estimated  at  approximately 600,000, or about 0.7  percent
       of  the  total U.S.  employment.   In addition, this  source
       estimated approximately 900,000  indirectly-dependent
       employees, for a  total  of 1.5 million.

                                       Economic Considerations
     1.  Introduction
         EPA indicates a preference  in  the ANPR for an economic
incentives approach to further CFC regulation,  presumably on the
grounds  that  such  an  approach  minimizes  adverse  economic
consequences.   However, depending on the degree of  CFC  emissions
reduction sought thereby,  this regulatory  approach  might  involve
grave economic  impacts for  certain  industry sectors and  for the
U.S. economy as a whole.

         There are three interrelated factors which suggest this
would be the case:

         •   Regardless of  the  precise  regulatory approach, the
             essence  of  its  impact  is  to  restrict  CFC  avail-
             ability to a  level below the market demand prior  to

         •   CFCs  are  "essential"  in  most  important  end  uses,
             i.e.,  as  a  public  policy  matter, the needs  which
             CFCs currently satisfy will have to be satisfied  in
             some alternate way.

         •   Satisfactory  substitutes for CFCs  (CFCs or products
             depending upon  them)  generally  are  not available.
             Those substitutes which  would  have to be used  would
             create  significant  safety,  energy  and  economic
             penalties to  producers,  users  and consumers .
  CFC  uses  and their  essentiality are  discussed in  detail in
 Section II.
 Footnote 3 appears on following  page.

                                      Economic Considerations
Accordingly, even under  a  regulatory  approach involving aggregate
production limits, with the  market  determining  which  former end
users  do  without  CFCs,   the  following  type  scenario  would
eventuate:  needs  currently  served  by "regulated"  CFCs would be
met at a cost which escalates substantially over time  -- as CFCs
become  more  and  more  scarce  relative  to  their  demand  and/or
higher cost substitutes  displace CFCs.  The eventual consequences
are predictable:  higher  inflation rate, slower rate of economic
growth,   increased  business  failures,  higher   unemployment,
deteriorating  international competitiveness and  an  ever-expanding
cycle  of  economic  dislocations  growing out  of  the  continued

         These  and  other  economic themes are  developed  in more
detail below.    (A more  detailed analysis of economic  incentives
options appears in Appendix I).  But first, to  set the stage for
this  discussion,  it  is  appropriate  to  review briefly earlier
comment  on CFC essentiality  (See  Section  II).   As a  class of
compounds, they are truly  remarkable.   Available commercially for
some  50   years,   they  still  have  no  important  functional
competition in  many  of  their original end uses.   Refrigeration,
air-conditioning, certain  other heat  transfer  applications and
thermal insulating foam  are prime examples.  This market scenario
is  unusual;   product  life  cycles  are  typically   much  shorter
because  consumer  preferences   and/or  underlying  relative  cost
positions  tend  to be constantly  changing,  with our competitive
free  enterprise  system  fueling the process.   CFCs have endured
basically  for one   reason  --  their  price  has  always  been
significantly  lower  than  their  perceived  value-in-use.    The
economic  implications of  this opposite  EPA's  intent  to further
regulate CFCs are particularly pertinent, as will be seen below.
 A discussion of  currently  available  substitutes  to CFCs may be
 found  in  Section II.   Discussion of fluorocarbon  alternatives
 appears in Section VIII and Appendix  B.

                                       Economic Considerations
         In  the following  discussion  of  specific  potential
economic impacts from  further  CFC regulation,  our  approach,  at
this  time,  is  of  necessity  qualitative,  indicating  the likely
direction of  economic  events  rather  than attempting to  quantify
their magnitude.  For purposes  of  this discussion, the  assumption
is that CFC production is "capped"  at current levels  and  this cap
is  gradually  reduced over time  to eventually  achieve a 50-70%
reduction in  CFC use.   Although the ANPR  does not  specifically
propose  additonal  CFC  regulation  following  imposition  of  a
production or  use  cap,  it  is  appropriate  to  consider  economic
consequences  in this light because:

         •   EPA has stated  its   intent to  push  CFC  emission
             levels significantly below  (i.e.,  50-70% range) that
             which  would be achieved  by  a cap [Jellinek,  1980a].

         •   From the standpoint of CFC  producers and  users, the
             strong,  continuing threat  of further CFC  regulation
             would   tend  to  have  the  same  effect as  further
             regulation itself,  due to the  necessity  for  business
             to plan its activities opposite  a  10  to  15 year time
             horizon   (this   point  is   elaborated   on  under
             "Uncertainty", below).

     2.  Impact on  CFC Prices

         EPA   does  not  dispute that  CFC  prices  would  rise  in
response to further  regulation.  In  fact,  EPA counts on this to
be  the engine  which drives  reduction   in   CFC  use over  time.
However,  EPA  is apparently assuming this process will  take place
in  an  orderly  manner  with  only  minor,   if  any,   economic
dislocation.    Unfortunately,  EPA's logic is  a gross oversimpli-
fication of  a  highly  complex,  dynamic   process.    In  our  view,


                                       Economic Considerations
under the  regulatory  scenarios  proposed  by EPA,  CFC prices would
rise  very  rapidly, at  times in  a  totally  uncontrolled  manner,
and,  in their wake, create substantial economic dislocation.  The
following analysis illustrates why this would happen.

         Figure 1  (page  VII-14)  portrays a typical supply/demand
relationship  and   the  resulting  so-called  "equilibrium"  price.
The  upward  sloping supply curve  means producers  will be willing
to supply more of  the product as  its price rises; conversely, the
downward sloping demand  curve means  users will demand less of it
as  the  price  rises.    Assuming  these  relationships reasonably
reflect  economic  behavior,   the  system  can  readily  adapt  to
change.   For  example,  if demand patterns were to  shift  due to a
technological change  creating  new end uses  for  the product, the
demand curve would shift to  the right, meaning that  more  of the
product would  be  consumed at each  level of price.   This  causes
the  equilibrium price  to rise  in the short  run  (Figure  2  - page
VII-15).    Producers,  noticing  the  demand shift and  reaping the
benefits through  higher  prices,  might then be  disposed  to add
production capacity,  thus shifting  the supply  curve to the right
at  each  level  of  price.   This  causes  the equilibrium  price to
decline (Figure 3 - page VII-16).  What this demonstrates is that
the  natural tendencies of the system permit an orderly process of
change that,  absent general  inflation,   causes  reasonable  price
stability over time.

        Typical Supply/Demand Relationships
                                               Supply Curve
                                               Demand Curve
PE = Equilibrium Price

QE = Equilibrium Quantity
                          Figure 1



Pro-Forma Supply/Demand Relationship

        After Demand Increase
                Figure 2


    Pro-Forma Supply/Demand Relationships
             After Supply Increase




                    Figure 3

                                       Economic Considerations
         However,   under   the  subject  regulatory  proposal,  the
supply and demand  relationships  for  CFCs would present a vastly
different picture.   Four  points  are pertinent:

         •   Absent regulation,   the  general  level  of demand for
             CFCs   would   increase over   time,  i.e.,  the  demand
             curve  would  shift to the right;

         •   Demand for most CFCs is  relatively  inelastic,  i.e.,
             demand is  not particularly  sensitive  to  price --
             this   would   be   represented  by  a  steeply   sloping
             demand curve;

         •   Regulations,  as  proposed,  will have  the  impact of
             freezing  supply at  some  level--a  supply curve
             perpendicular to  the X-Axis would depict this;  then
             as  reductions  in   the  cap  are  implemented,   this
             supply curve would  shift to the  left;  and finally,

         •   General inflation  will  likely  continue at  current
             rates, say 10% per  year, over the long-term  --  this
             also moves the  demand curve to  the right.

         Figure 4   (page VII-18)   is an illustration of these CFC
supply/demand  relationships and  their probable impact on price.
As indicated, these relationships complement  each other  in creat-
ing much higher CFC prices.  Moreover, with  the supply curve  ver-
tical and the demand curve steeply sloped, very small changes in
CFC  availability   or  demand  portend  very  large  CFC  price in-
creases.      Obviously,   such  a situation would  be  extremely
volatile.  For example, prices would  be  affected, not only by the

            Pro-Forma Supply/Demand Relationship

                    After Production Cap.

                                1  QEO
                              Figure 4


                                       Economic  Considerations
forces  just described,  but  also  by  artificial  forces — specu-
lators, hoarding,  rumors,  etc.   The volatility  that has  existed
in exchange markets for many years and more  recently in the  bond
markets  bears  witness  to  this.   Another  price  characteristic
worth noting is  that  after  a  rapid increase, prices seldom  come
down as  far as  they  went up,  even if  most  of  the increase  was
unrelated to underlying economic forces.

         The foregoing scenario  of vastly higher CFC prices  and
an extremely unstable price environment would have  many unfavor-
able economic  consequences; these  are described  in  later  sec-
tions.    The  point  to  be  made here  is  that  EPA misreads the
supply/demand forces affecting CFCs.    Whereas  EPA sees  only  a
gradual increase  in  prices  over  time reducing CFC use at  a  pace
industry can  manage,  we believe  the  more likely outcome  would be
a dramatic rise in CFC prices, particularly  as further  proposed
restrictions  are   imposed,   to  the  point where a chaotic  market
environment might ensue.

         The findings of Rand are worth noting:
         "Our cautious  assumptions about  CFC  demand  imply  that a
         very high  tax  or  permit price would  have to  be  set
         throughout  the entire  period  to  achieve a cumulative
         emissions reduction equivalent to zero growth."   [Rand,
         1980, p. 221] .
     3.  Inflation

         Rand indicates  that  regulation-induced  increases  in CFC
prices  will  not  contribute  to a  higher  general  inflation  rate
because such  increases  will  merely  create  transfers  of  funds
within  the  economy  and  will not have a  fundamental  influence on
the  money  supply  [Rand,  1980].    This logic is tenuous  in the
context of current  economic realities.     In   particular,   a
fundamental  consequence of  a  CFC  production cap  would  be  a
reduction  in  aggregate  supply.   Economists generally agree  that


                                       Economic  Considerations
such actions  are  inflationary.   Witness  the  public policy  move
toward so-called "supply-side"  economics  where  the intent is  to
increase  aggregate   supply  as  a  principal  means  of   reducing

         Also,  it  is  extremely unlikely  the  government would
permit  the  market   to   fully   determine  to  whom  and  in  what
magnitude these transfer payment funds should  accrue.   Rather,  it
is likely these funds would  flow to the government for  retransfer
in some discretionary manner.   This,  in turn, is more  likely  to
stimulate demand than supply, an inherently  inflationary action.
Other  factors  would  also cause inflationary  impacts:    (1)   the
greater magnitude of  CFC price  increases than envisioned  by EPA
or Rand would create  a larger flow  in inflation-inducing transfer
payments;   (2)  since  CFCs are necessary  in  the production of  so
many  products,  including  basics  like  housing  and  food,   the
downstream  effects   of  higher  CFC  prices  would  contribute  to
inflation;  (3)  capital  requirements  of current CFC  users  to
support shifts  to substitute products  could cause an  increase  in
the level of interest rates,  another source  of inflation.

         Another aspect  of   the inflation question  needs to  be
kept  in focus.   Inflation   is  viewed as  the nation's  foremost
domestic  problem and  efforts  to   reduce  it  or,  at  least,  to
control its growth dominate  public policy initiatives.   In  this
environment,  it would seem  that  government  actions which would
have the  effect of accelerating the rate of  inflation,  as would
the  proposed  CFC regulation, should  be judged  against  particu-
larly  exacting  standards  as   to  their  impact  on  the  public

     4.  Economic Growth

         a)   A generally accepted  fact of economic  life is  that
there   is   an  inverse   proportionality between  the  rate  of


                                       Economic  Considerations
inflation and the rate of economic growth.   Accordingly,  further
CFC  regulation,  with  its  attendant  inflationary  consequences,
would tend  to  slow the  overall  rate  of  economic  growth.   More
particularly, the principal  determinant  of economic growth is the
aggregate level  of  business  investment  in  productive  capacity.
The flow of  transfer  payments  which would likely  occur  following
further  CFC  regulation  (as described  earlier)  would  create  a
demand  bias  that  would have  the   effect  of  reducing funds
available for business investment.

         b)   On the  microeconomic level,  a firm's  ability  to  grow
is determined  principally by  its profitability.   CFC  user,  and
probably also producer, profitability  could be adversely impacted
by CFC regulation.   With the very large  number of  firms  involved,
the impact on overall  economic growth  could potentially  be fairly

         c)   Small  business  considerations are pertinent as well.
In most  CFC  user industries, small businesses predominate.   For
these firms, the more  appropriate consideration may not be their
continued ability  to  grow  but  rather  their  survivability.   A
characteristic of such firms is  a general  inability to  withstand
significant   adverse   changes  in  their  cost structure,  capital
requirements, or final demand.  Under  the  economic  scenario  of
further CFC  regulation developed thus  far, it is  apparent  many of
these firms  would  be  hard  pressed to survive.   Obviously,  this
downside possibility involves negative consequence not limited to
the economic arena.

     5.   Employment

         Continuing  to pursue  these economic interrelationships,
we see  that,  since  high inflation  and  low growth mean  higher
unemployment, further  CFC regulation  can  lead to  an  increase  in
unemployment.  Potential examples include  the following:


                                      Economic Considerations
         •    Failure  of  small firms as a result of CFC regulation
             would  cause an uncompensated loss of jobs;

         •    Many  larger companies,  whose  survivability  is  not

             the  issue,  might  nevertheless  face the necessity to

             close  down  plants.   Since many  of  these  plants  are

             located  in  small  towns and are a significant factor
             in  the local  economy,  ripple  job loss effects might

             also be  a prospect.

         Rand notes:

         "Plant  closures are an extreme manifestation  of a more
         general  consequence of  regulation.    Fixed  investments
         have been  made  in  the past in equipment, structures,  and
         human skills that cannot  be easily adapted  to  the  new
         regulatory  environment.     Under  regulation,  these
         investments  are devalued.   In the extreme case, a plant
         is closed  down, some if its  equipment might be sold,  but
         the rest is scrapped.  Workers are  laid  off, and while
         they eventually find other jobs, they cannot use certain
         skills  specific to their  earlier  employment.   But even
         if a plant  does  not close,  returns to  fixed capital,
         both physical  and human,  are less under regulation than
         had been  anticipated when the investments  were made."
         [Rand,  1980, p. 235].

     6.   CFC Substitutes

         In  assessing  potential   economic  impacts   of  CFC
regulation  via a production  cap,  a  critical  area  is the avail-
ability  and  cost  of  functional  substitutes  for  CFCs.   In
particular,  if  safe,  cost effective  substitutes  were generally

available and overall CFC  demand were not  growing, CFC emissions
could be capped  and probably also reduced at  some  reasonable pace
over  time   without  the  grave   economic  consequences  described

         As indicated earlier,  CFCs have always  sold  at a price
which is significantly  less  than value-in-use.  This is basically


                                       Economic Considerations
the  result of  the  interaction  of two  factors:    (1)  from an
end-use standpoint, CFCs represent a unique and highly desirable
combination of  physical  and  chemical  properties,  including  high
energy efficiency, low toxicity  and low chemical  reactivity; and
(2) from a production viewpoint, manufacturing processes are not.
particularly  complex,  necessary  raw  materials  have  been
available, and  it has  been  possible  to  expand  CFC   production
capacity at  a  rate  necessary to support demand  growth,  all of
which have contributed .to  the business being highly  competitive
at the producer level.   One  of the consequences  of this is  that
the process of  developing  functional  substitutes  for  CFCs is in
its infancy,   simply  because  there has  been no economic incentive
to pursue it  prior to the threat of CFC regulation.  Accordingly,
across all  the important  applications of CFCs,  end  users  face
relatively unattractive  options  were  CFC   availability   to  be

         •   Less   satisfactory  (safety, performance,  value)  but
             available functional substitutes;

         •   Large  investments in  new  plants;  retooling  of
             production lines;  redesign of  products to avoid or
             reduce CFC use;  or

         •   Investment  in  development  of  a  new product or
             process to replace CFCs.

Which option  a particular end user  chooses is  largely  an economic
decision but  one   importantly  influenced  by  several  qualitative
factors,  such  as legal  restrictions,  safety,   environmental
concerns,  confidence  in  new  technology,  lead  time necessary to
implement major investment  decisions,  and risk of  failure.   In
the end,  the  typical end  user would probably  face  a  rather  narrow
range of options to CFCs,  and the narrower the  range,  the more

                                       -conomic  Considerations

likely the options would involve significant cost and consequent
adverse economic impact.

         Section  II,  on CFC  uses  and  essentiality,  reviews  in
detail  the   lack,   or  limitations,   of  currently  available
substitutes for  CFCs  in their major  end  uses.    And in Section
VIII and Appendix B  we cover in detail  the  process of seeking and
developing commercially suitable new substitutes for CFCs — the
pitfalls,   risks,  long lead  times  and  status of  these  efforts.
However, for  perspective,  this  section will  review one  specific
example of the  process of  developing a  suitable alternative with
which Du Pont  is familiar  — the  search for  an alternative for
auto air-conditioning.   This  is  included  here to provide a feel
for  the  magnitude   of  the   job   involved  and  the  economic
consequences,   and because  we  believe the  realities  presented
herein for this  one  CFC application are fairly typical  for CFC
uses in general.

         Approximately 100  million  pounds of CFC-12  are  consumed
annually in the  auto  air-conditioning  market  (original equipment
and after  market).  This is considered  a significant  CFC  emission
source  by  EPA  and  one,  therefore,   that  presumably would   be
impacted by future regulations.   Ever  since the  potential for CFC
regulation became apparent,  the  auto companies  have  expended
considerable  effort  looking at options  to current  systems charged
with CFC-12.   Du Pont,  for  its  part,  has  mounted a significant
effort,  involving many  technical  man  years,   looking  for   an
alternative to  CFC-12  in   auto  air-conditioning.    The  current
status of  this -effort is as follows:

         After  screening  hundreds  of  compounds,   Du  Pont  has
         identified  only one candidate  refrigerant substitute for
         CFC-12 — FC-134a  — which appears to have  physical and
         chemical properties  that  would permit  it to substitute
         for  CFC-12  without major equipment modifications.


                                       Economic Considerations
         However,  the chemistry  of  this  compound  is significantly
         more complex than that  of  CFC-12,  such that we have not
         yet been able  to demonstrate  a  process for commercial
         scale manufacture,  nor  do we  feel  we are particularly
         close  to  such  a  breakthrough.    Moreover,  were  this
         breakthrough to  come,  it  would then still  require
         perhaps 6-10  years before  commercial  production could
         begin,  considering  the  lead times  for  toxicology  (2-3
         years),  bench scale  and pilot plant  work  (1-2 years),
         design   (1   year)  and  plant  construction  (2-4  years) .
         Finally,  even  assuming   FC-134a could  successfully
         be brought  to market,  its price  would probably have  to
         be  initially in  the  $10-$20  per  pound  range   (1980
         dollars).    Such  a high  price  would  be  necessary   to
         justify:    (1)  the high development  cost,  (2)   the high
         construction cost  for a new manufacturing  facility
         (especially given the high cost of money),  (3)   the risk
         in  proceeding  (e.g.,  if  CFC-12  were to  be vindicated
         from concerns over ozone depletion,  it would  continue  to
         be used and  there  then  would be  no  market  at all for  a
         high priced  replacement);   and  to  support  profitable
         operation at relatively low initial production rates.
 This compares with a  current  price for CFC-12 of  approximately
5$0.50 per pound.
 A new manufacturing facility would be sized to provide  adequate
 production  for  demand  many  years  into  the  future.    However,
 initial demand would  come nowhere near  filling this capacity  for
 two reasons:   (1)  it probably would take manufacturers  several
 years to phase out CFC-12  in  their equipment lines and  replace
 it with FC-134a,  and  (2) the vast  majority of demand  for CFC-12
 in  the  auto  air-conditioning  application  is not  in  original
 factory equipment  but  rather  in the sector  of  industry which
 services this equipment.  And  the reality  here is  that even when
 all new auto air-conditioning systems begin to use  FC-134a in  a
 given  year,  all  automobiles  manufactured  in  preceding years
 would have to continue  to use CFC-12.  Thus,  it could take 5-10
 years before the demand for FC-134a reached a level which would
 permit the  operation  of the  new manufacturing facility  at high
 enough rates  to  bring  the cost  per pound down as a  result of
 economics of scale.

                                      Economic Considerations
         If   a  direct  replacement   for  CFC-12  cannot  be  made
available,  the  auto  companies  indicate  the development and
retooling  costs associated with  implementing an  alternative
equipment design using  CFC-22  (a less severe  theoretical  ozone
depletor)  would be  in  the billions of dollars.

         There  is really no other long-range solution  other  than
limiting auto air-conditioning  in general.  EPA itself concludes
emission control  has only minor potential in this end use.

         As  discussed  more  fully  in  Section VIII and Appendix  B,
generally similar  circumstances  for  other  large volume CFC end
uses can be  cited:


            Substitutes  are  environmentally suspect and also  face
            potentially  stringent regulation.

            A large investment in  new  equipment  is required  in
            most  instances  when   an  alternate  solvent   is

         Blowing  Agents

            In  insulation  foams,  there are no substitutes for
            CFCs  which  can  produce  a  foam with   the   same
            insulating properties.

         -  Alternate blowing agents  (methylene  chloride and
            pentane) in  other applications involve  environmental
            or  flammability  concerns.

            The recycle  option  requires capital expenditures.

                                       Economic Considerations

         -  There  are  no  practical  substitutes  for  CFCs  in

            important end  uses.

         Low toxicity and  nonflammability are properties of CFCs

which  have  been  key factors  in  their  growth  over time.   CFC

regulation   will,   therefore,   necessarily   involve   safety

trade-offs.    In  addition,  a number of  the  compounds which have
been cited as potential CFC replacements in certain end  uses are

themselves  environmentally  suspect.    These  factors  raise some

very critical questions:

         a.   Is there the  possibility  that further CFC regulation

will, on balance, have  a negative impact on the environment?  We
quote from Rand:

         "In some  product  areas  - most  notably  flexible  foams,
         solvents, and sterilants  - a  significant opportunity for
         reducing CFC  emissions  lies  in  substituting  other
         chemicals  for CFCs.    The  alternative   chemicals  may
         impose environmental or worker  health  hazards  of their
         own.   In  the absence of  controls  on  the alternative
         chemicals, policies that  work well  in  reducing  the ozone
         depletion risk from CFCs  will increase the  risk of other
         hazards."   [Rand,  1980, p. 248].

         b.   As  a regulatory option,  is the economic incentives

approach likely  to be  more  or  less   effective  than command and

control  options   in  minimizing  overall  environmental   impacts?

Again, from Rand:
 The safety and environmental limitations of  currently  available
 substitutes for CFCs are discussed in detail  in  Section II.

                                      Economic Considerations
         "Although  even  mandatory  controls will  encourage  some
         firms  to  use  chemical  substitution   to  avoid  costly
         compliance with  CFC  regulations,  the  degree  of chemical
         substitution  should  be  far greater  under economic
         incentives than  under mandatory controls.  To the extent
         that the substituted chemicals are found to be hazardous
         to  worker  health  or  the environment,  this  greater
         substitution  is  a  disadvantage  of economic  incentives
         policies."   [Rand, 1980, p. 18].

         c.  What happens if chemicals which EPA is  counting  on

as CFC substitutes  are themselves regulated at  some future date?

Rand offers two  noteworthy conclusions on this point:

         "Economic incentives  rely more  heavily  on chemical
         substitution  because  that is less costly  in  many cases
         than alternative means  of  CFC  emissions control.   Under
         any policy strategy, the  attempt  to  control  substitute
         chemicals  will  make  the policy less  effective  in
         reducing CFC  emissions  than the estimates given  in this
         study,  which  assumes   no  other  changes  in  regulatory
         controls for  non-CFC chemicals."   [Rand, 1980, p. 248].

         "The estimates  of  emissions  reductions  and  compliance
         costs presume that  no  regulatory restrictions  will  be
         placed  on  chemicals  that might  be substituted for CFCs.
         The  effects of  this  presumption  are  not   trivial."
         [Rand,  1980,  p.  12].
It is clear from the above  that  any  regulatory  initiative  which

necessarily   relies on  substitution  (as  does  the  economic

incentives option)  must be  analyzed  carefully opposite  the cost
and risk  from  using substitutes  and the  future availability of

the  substitutes.    We note that  the ANPR makes no statements in
this regard.
 The question of risk from regulation and the need for risk-risk
 comparisons is taken up  in Section V.

                                       Economic Considerations
     7.   Energy

         It becomes apparent when  considering  the important CFC
end uses  that  CFCs gain a  significant  portion of their current
value-in-use  due   to  their  energy  efficiency.     CFC  solvent
systems   are  preferred  to  other  systems  in  certain  end  uses
because   the  lower  boiling  point  of  CFCs   means  less  energy
consumption.  In the insulation market,  foam  insulation materials
blown with  CFCs have  the  lowest K  factor (a  measure of relative
insulating  ability)  of any  available  insulation  material, and
this  is  due   to  the  inherent  insulating   properties  of  CFCs
retained in the foam.  CFCs also are the heat  transfer medium  in
heat  pumps, considered  to  have, important potential  for greater
energy efficiency in residential applications.

         Three emerging end uses for CFCs — (1)  use  of CFCs  as
heat transfer  fluid in solar energy applications,  (2)  use of CFCs
as the blowing agent in structural  foams,  and (3)  use  of CFCs  in
the  beneficiation  of  coal  —  derive  their  potential  from  the
nation's desire to reduce  its dependence on  imported oil.

      1)   In  the solar energy  application, CFC systems have been
shown to  represent  the best  combinations of  energy  efficiency,
thermal  stability  and operating  reliability among  available

      2)    Structural foams blown with  CFCs  provide molded  parts
with  high  strength  with  a  low  plastic  resin  requirement,
resulting  in  a significant  reduction  in weight.   Uses  include
automobiles and aircraft  and  other applications  where weight
reduction to save energy is an important consideration.
 A more detailed discussion of the energy efficiency consequences
 of CFC regulation appears in Section II-K and Appendix  C.

                                       Economic Considerations
    3)    In the coal application,  a process using CFCs to remove
         nonburning  matrix  and sulfur has  been commercially

         Growth of  solar energy,  structural  plastic  foams and
coal beneficiation  would contribute  importantly  to  solving the
nation's energy problems.  Such  growth would obviously  be greatly
restricted by  a  CFC production cap.   There  are other potential
energy savings developments  only beginning  to be explored  which
would likely  require CFCs,  for  example, waste heat recovery and
geothermal applications.   These also would  be  hurt  by  a  res-
tricted availability of CFCs.
         It is worth  noting that  certain  government  actions  in
other  areas   relating  to energy  run  totally counter  to   EPA's
regulatory thrust on  CFCs.   Specifically,  in the Department  of
Energy's  recent  energy  efficiency  requirement  proposals   [DOE,
1980] certain standards provide  for an increase  in CFC  use due  to
their energy efficiency.

     8.  Financial Markets

         Among the several options  to control  CFC emissions  cited
by  EPA  —  recovery  equipment,   redesign and  replacement   of
existing production equipment,  and alternate  product designs  —
most would force CFC end users  to make new capital  investments.

         Over  time,  these   regulation  -  mandated   expenditures
could become  significant  in  the aggregate which  could  negatively
impact the  nation's  financial  markets.   In  recent years,  these
markets have been extremely volatile; interest rates  have reached
unprecedented  levels,   particularly  in  long-term  markets.
Pressures  on   financial  markets  will  probably   continue largely
unabated based on our continued  high inflation rate,  high level

                                       Economic Considerations
of  government  spending  and  capital  expenditures  by   business
necessitated by environmental and  other  regulations.  With  this
scenario in prospect, is it appropriate through such measures  as
CFC regulation to  add to the burden on financial markets?

     9.  Impact of Uncertainty

         Perhaps  even  more important  than any of the  economic
issues  addressed  thus far,  is  the  impact of  uncertainty.    In
particular, it is the key  to  reconciling EPA's position  that  its
proposed  production cap  on  CFCs   can  be  accommodated  without
significant economic  penalty  and  the view of others,  shared  by
us,  that  such  a   production  cap  would  create  severe  economic
hardships.  We and EPA do not disagree on  the  direction  of future
events  following  imposition of  a  production  cap  on CFCs,  i.e.,
higher  CFC  prices and lower  CFC  consumption  through  non-market
restraints on demand.  The  area of  disagreement is the  magnitude
of  the  impacts  once events  run  their course.   EPA would  argue
that, by merely capping CFC production at  current  levels, the gap
between permissible supply and demand would be sufficiently small
initially,  and would  grow  each   year  in  sufficiently  modest
increments,  that  readily  available  options   to  reduce  CFC
consumption could cover  these gaps  at manageable  cost,  from both
the macro-and microeconomic viewpoint.  EPA would  also  argue that
this  same process  could  accommodate,  not only  control of  CFC
growth,  but  also  subsequent  reductions in CFC consumption  from
base  period levels.   The  precise  target  EPA has  in   mind  for
eventual CFC  use  reductions has  been stated as 50-70%  from base
period  levels [Jellinek,  1980a].

         Here  is  where  the  uncertainty   issue  comes  to  play,
specifically  in  the  context  of  its  role  in  business  planning.
Business at all levels must manage its affairs with a view toward
the long-term  because  the  most critical  decisions it makes  are
investment decisions  (those involving capital  outlays  for plants


                                       Economic  Considerations
and equipment)  where the wisdom of today's choice  cannot  properly
be judged until many years in the future.

         Recognizing this, business relies heavily on  the process
of long-range  planning  to develop  perspectives  on the  possible
direction of future events, the likely impact of  these events on
the firm  and the  actions required to either  avoid problems or
capitalize on  opportunities.    Essentially,  it  is  a  process of
adapting to  uncertainty;  the hoped  for end result  is  a reduction
in  uncertainty to  manageable  levels as  a  basis  for   prudent
investment  and other  decisions.   One  characteristic  of  this
process  is  particularly  pertinent  to this  discussion.     Since
business is fundamentally risk  adverse, a  potential future event
which would have a significant  impact on a firm  (particularly if
it were  negative)  would  dominate  that  firm's long-range  plans.
Moreover, the  higher  the  probability  of  the future  event, the
more impact on the firm's strategic thinking.

         What  impact, then,  would  EPA's  proposed  CFG  production
cap have on  an affected firm?   Two perceptions would quickly be
formed in the course of  developing plans:

         •   In practice, the  functioning of the cap mechanism
             (with its permit system and  reliance  on bidding  wars
             to determine  who   gets CFCs,  in what quantity and
             over   what   time  period)   would  be highly unpredict-
             able, and

         •   There would be a fairly  high probability mandated
             reductions  in CFC  use over time  would be  sufficient-
             ly large to significantly  impact all end  users,
             regardless  of essentiality and  lack  of  substitutes
             arguments,  but the timing and stepwise incidence of
             such  reductions  could not now be predicted.

                                       Economic Considerations
         In shorty  tremendous  uncertainty would be created.   How
would  a  firm  respond?    We  believe  that  the prudent  firm,
attempting to maintain its health  over  the  long-term, would have
no choice but to adopt an "assume the  worst"  posture.   In other
words,  since  (1)  the potential long-term  impact of the  cap is
severe  opposite  the  way  the  firm does business  today,  and (2)
perhaps a ten-year lead time is involved for the firm to attempt
to make the  kinds  of changes  necessary  to avoid  those  severe
impacts,  the firm  would   be  forced  (to  ensure  its long-range
viability)  to project the longer-term  EPA  50-70%  use reduction
scenario  back  to  today's  decision processes.   In  short, firms
would  act as though  CFCs have  been essentially  banned, not  just
capped.  Rand expresses  general  agreement with this view:

         "In  contrast,  firms  may perceive  tax  rates  or  quota
         levels  as  highly  variable,  subject  to regulatory whim or
         political  manipulation.   If so, firms might  be reluctant
         to  undertake long-term  investments  that  would  reduce
         emissions  for fear that  future regulatory  action would
         make  the  investment  obsolete  or  reduce  its  cost-
         effectiveness."   [Rand, 1980,  p. 242].
         The  uncertainty  issue  cuts  deeper,  however.    For
example, how would  public  policy deal with  the following kinds of

         •   CFC user firms who have  no current alternatives to
             CFCs would want  to take  steps to ensure CFC supply
             over very long periods of  time and  at   levels which
             permit growth. Since a very large volume of current
             CFC uses falls in this category,  the  effect  on CFC
             prices   would greatly  exceed  anything  EPA  is
             currently anticipating.

         •   CFC user firms who  take a gamble on new investments
             to  alter CFC  use  patterns,  and  guess wrong as to how

                                      Economic Considerations
             regulation  finally  affects  the  business,  would
             probably,  in  most  cases, face the survival question.

         •   Firms who  have capability  to  do  development work
             that might  eventually produce  CFC  substitutes  or
             alternate  downstream  products  that do  not  require
             CFCs would have  difficulty justifying  the  project
             from  the  economic  viewpoint  because   of  the
             uncertainties as to  payoff.

         To sum  up,  EPA's posture  that CFC regulation can  be
approached one step  at  a time at  a  measured pace is unworkable in
practice.  In particular,  EPA's first intended regulatory step —
the production cap —  will have  the capability  to create severe
and immediate economic consequences, whether  or not  further CFC
use  restrictions are  implemented.    In other  words, once  the
process is started,  it may be difficult to alter its course even
if  this  is desired.   Major interruption of  long-term business
plans  in  mid-course  would  be  simply  chaotic from  the economic
viewpoint.   Moreover,   the so-called  "protected"  CFC end uses
(those that  are  essential  and  without  available substitutes),
would not be  immune  from  the impact.   In fact,  it can be argued
that because there are  no  alternative options for these uses, the
impact of  uncertainty  over the  future  would  hit  firms in these
businesses the hardest.

                                       Economic  Considerations


         Command and control  regulatory approaches could  achieve
reduction of CFC emissions in several  ways:

         •   CFC product bans,

         •   CFC use bans or limits,

         •   Mandated minimum technology standards, and/or

         •   Mandated emission reduction techniques.

         Considering  the number  of  affected   CFCs,  their  wide
range of end uses,  the  several command  and control options  cited
above, and the  fact  that  given options  affect different  firms  in
the  same  industry  in  different  ways,  we  agree with  EPA  that
regulating CFCs  in this  manner  would  be  complex.   However,  as
noted  in  section C,  regulation  of CFCs  by  economic  incentives
options also would  be extremely  complex and, unlike command and
control options,  very little  is  yet  known  on  how the  economic
incentives options  would work in  practice  or  the probable  con-
sequences.     Therefore, we believe that command and control op-
tions  must  be explored in much greater  depth as a viable regula-
tory strategy.

         EPA sets  forth  reasonably  well  in  the ANPR  questions
that  need  to  be  answered  to  develop  command  and  control
regulatory options  that  reasonably  balance  economic  consequences
with CFC  emission  reduction goals.   Unfortunately, few,  if  any,
of  these questions  have  yet  been  answered  to  any  sort  of
definitive degree.   The applicable studies  in  hand  [Rand,  1980;
NAS,  1979d]  are seriously  deficient  in this  regard.    In-depth
study  is  required  to  fill the information  and analysis  gap.  The
fact  that EPA  prematurely has identified  a  preferred  regulatory


                                      Economic Considerations
option other than  command  and  control does not  excuse  EPA from
the  responsibility to  proceed with  rigorous  analysis of  all
relevant options, including command and  control.   In fact,  it is
arguable whether EPA will have met its legal obligations were it
to  continue  to  advance  a  regulatory option  without adequately
evaluating   competing   options   (See   Section  III   -   Legal

                                       Economic Considerations
     1.  Introduction

         On balance, the Rand  [1980] Report is a  useful  start  on
the difficult  task  of  assessing the implications of some  of  the
key potential  regulatory options which could be  applied  to CFCs.
However, there are a number of serious  omissions  and deficiencies
which  must  be addressed  prior to  making  a regulatory  decision
based on the report findings.

         The  study  is  flawed  opposite the  use   to  which   it  is
being  put  by  EPA because  it:  (1)   is  based  on an  obsolete data
base,  (2) does not adequately examine all  CFCs  being proposed for
regulation  by  EPA,   (3)  does not adequately assess all uses  of
CFCs which  would be  impacted  by EPA's proposals,  and  (4)  only
compares regulatory  options  under  artificial  time  and  technical
feasibility study  parameters.   However,   most  importantly,  the
study  is an  empirical  comparison  of  regulatory options  under
study  bounds  selected  by  the  authors,  not an   economic  impact
study  of  the  consequences  of  these  options  were they   to  be
applied  to  the  real  world of CFCs (all  CFC  products,  all  CFC
uses).    The fault  is not Rand's but rather EPA's for  attempting
to  justify  a  regulatory decision on the  basis  of  a report  not
designed  for   this  purpose.    A  couple  of  examples are  illus-
 A more  detailed  commentary  on  economic  incentives options  as
 treated by Rand  (and by EPA  in  the  ANPR)  appears  as Appendix  I.
 A companion product  is  Du  Pont's March, 1980 submission  to  EPA
 [Du  Pont,  1980c]  which critiqued  the Rand  Draft  Report  made
 available to  industry for  comment.   We note that  only  a  few  of
 our  comments   and none  of  the major  concerns  raised in  the
 critique have been addressed in  the  final  report  now being  used
 by EPA.  Therefore, we  attach our full  critique as part of  this

                                 Economic Considerations
a)   EPA [Jellinek,  1980c]  states  its preference for economic
    incentives options on the basis that these will be less
    burdensome than traditional command and control options
    for a given  level of emisssions reduction.   EPA cites
    [Inside  EPA, 1930] for  this  purpose Rand's estimate of
    real  resource  costs  for  a  no-growth-in-emissions
    regulatory policy  of $270-600 million  for a  ten year
    period.   EPA has used these numbers  out of context.

    •   Rand's  estimates  were  based   on  only  a  partial
        control of  CFC production.  EPA  has used the numbers
        in  the  context  of  total  CFC   production.    Rand
        examined   the   cost   of  control  opposite  the
        artificially   selected  base  which covered  only  310
        million pounds of CFC use [Rand, 1980, p.  35].  The
        1900  level  which  EPA proposes to  control   is  in
        excess of 300  million  pounds  (See Appendix J).

        Further,  Rand's base case did  not include  CFC-22 as
        evidenced by the  following quote:

        "Therefore,   we   have not  treated   CFC-22  as  a
        principle ozone  hazard,   and  home and  supermarket
        air-conditining systems are not  included in the list
        of analyzed products."  [Rand, 1980, p. 3],
        Yet,  the proposed  controls  in the  ANPR  include

        Further,  Rand   only  estimated the  cost between 1930
        and  1990.  In  reality, costs would continue to mount
        for  every year after regulation.

    •   Another point  is that the $270-600 million estimate
        is  only  for   compliance  cost.    As  we shall see,
        economic incentive options have  associated with them


                                  Economic  Considerations
        costs  called  transfer  payments,  which  are   in
        economic  incentives  options  have  associated with
        them costs  called  transfer payments,  which are  in
        addition to, and well  in excess of, the  compliance

b.  EPA's  statements  on  the  cost  efficiency  of  economic
    incentives  options generally have focused  on  compliance
    cost and glossed over the much larger  economic impact  of
    transfer payments  [Inside  EPA, 1980],  although in the
    ANPR  it was  acknowledged   that  "The  Rand  Corporation
    estimates that  total  transfer payments will  eventually
    exceed $2 billion."

    •   In  reality, the  Rand  Report  concluded  that for its
        "benchmark" emissions reduction  case (a reduction  in
        emissions by 1990 of only about 12  percent  from the
        no  regulation  case  [Rand,  1980,   p.  21S]  transfer
        payments would run $1.5-1.7 billion [Rand,  1980,  p.
        281].  However,  as  stated above, this was  based on a
        study base  of  310  million pounds  in  1976, not the
        800 million actual pounds  used  in  1980;  and  CFC-22
        was not included.

    •   A more  important point, however, is that  EPA's ANPR
        proposal is  not  for this  benchmark level  of  emis-
        sions reduction but rather for a ceiling  at current
        levels.   Rand  terms this zero  growth case  as "strin-
        gent" and concludes that transfer  payments  just for
        the  period  1980-1990 would  be  up  to  $6.2 billion
        [Rand,  1980, p.  230],  again  based  on only  the par-
        tial piece  of  the CFC  market examined.   Factoring
        all  CFCs  and  uses  in  would  put  this  number   at
        approximately $16 billion.  The statement  by  EPA  in
        the ANPR that transfer  payments "...will  eventually

                                       Economic Considerations

             exceed $2 billion" grossly understates the economic
             consequences of  the  proposed regulation  and,  at a
             minimum,  shows  a  poor  understanding  of  the basis  for
             the numbers  developed  in  the  Rand Report.

         The  underlying  reality  is  that due  to  the selected
bounds of  the  study  performed by Rand  (bounds which limited  its
analysis to less than half of the current actual CFC market)  any
citation  of cost  projections from the report must be strictly
qualified.   The Rand  study was an  empirical exercise,  not an
economic impact study  of  EPA's proposed production cap.

     2.   Data Base

         The Rand study had  three objectives:

         a.  To update and  extend data on  CFC  use and emissions.

         b.  To analyze the economic properties of  various  tech-
             nologies  and procedures  by which industry might be
             able to  reduce  CFC emissions, and

         c.  To  assess  the  economic implications of alternative
             regulatory strategies.

         Each  objective  depended  upon  information  generated in
the previous  objectives  and was subject  to  the  inherent quali-
fications  and  limitations  of  each previous  step.    This  point
cannot  be stressed too  strongly.   Readers  may  focus  on  the
findings  or  conclusions  from  the  assessment   of  the   various
regulatory strategies  while neglecting  the proper qualifications
and reservations  necessitated  by  the  limitations  in  the under-
lying  technical and economic data bases.

                                       Economic Considerations
         Therefore, the logical starting point for a critique of
the  report  would  be evaluation of  the  data  bases  (for accuracy
and completeness),  followed by  an  effort  to  improve these where
possible.  Unfortunately,  this task is made very difficult and in
some cases impossible  due to lack  of publication  of  the final
data bases employed.

         It is unfortunate the  final  report  is not organized as
described by EPA at  the  inception  of  the  study.   As an example,
in an interview with the  EPA  project  officer for  the Rand study
it was stated:

         "The idea  here  is  to produce  a  consistent set of data
         which everyone views  as reasonable."   "...the other idea
         is to allow anyone  to  use precisely the  same data we
         used to  reach  conclusions."  [Mader,  1978].
Rand did produce  draft  data  books which  were  sent  to industry for
comment.   Reviews  were made  and comments were returned to Rand
and  to  EPA.   But final data  books reflecting  the draft comments
have not been finalized and  published  for  "anyone  to use".   Fur-
ther,  the  draft  data  books  dealt almost  exclusively  with
emissions profiles  and  the technological  aspects  of CFC use, not
with the economics, e.g.,  demand functions.

         Consequently, our   critique  of the Rand  Report  is
necessarily limited.   In  those areas where  the  data appears in
the body of the report, it has  been reviewed and  comments appear
in  our  critique   [Du  Pont,  1980c]   (attached).    In those areas
where  the  raw  data  are  aggregated  or  not   reproduced  in  the
report,   our  comments center  on the analytical assumptions made
and the limitations on  the use of the  findings.

         One of the key limitations in not having  ready  access to
the full data base is that in  a number of  cases where we disagree
with  Rand's  conclusions,  it is not  clear whether  the  source of

                                      Economic Considerations
disagreement is the  basic  data or the reasoning leading  to  the
conclusions.	It  is hoped that the  final  data on use  and
emissions as well  as the details of the economic analysis, will
be made available  in the future for full examination and commentf
as originally planned.
         The authors identify major  data  deficiencies  and  in  a
number of instances recommend the need and direction for further
work.    As  a  consequence  of  these  data  deficiencies,   the  Rand
researchers  had to  make  a number of  assumptions  concerning  use
and emissions' data,  and  the  technological  feasibility  and
economics of  alternatives  and emission control.   Therefore,  we
provide   comments  on  these  assumptions,  and  discuss   the
limitations  which  must be  assigned  to  the assessments  performed
in the report as  a  consequence of the  assumptions  employed.   As
Rand itself  states:
         "The  methods  and  assumptions  [used  in  the  impact
         analyses]  deserve  close scrutiny because they influence
         the outcome of analyses presented  in  later sections  [of
         the Rand  Report]."   [Rand, 1980, p. 22].
  In many instances, not only is the data  not  available  but  the
  specific  logic  or  reasoning  leading  to  the  conclusions  is
  missing.  It often is not clear  to what extent  conclusions  are
  reached from hard  facts and clear  understanding  of the uses  and
  users, versus speculation or  estimation.   The development  of
  the CFC use and price combinations is particularly bothersome.
  Rand  states that  the demand  schedules represent  their  "point
  estimates" of use  versus  price  but neither  the  data  base  nor
  the estimation process  is  reported.

                                      Economic Considerations

     3.  Study Assumptions

         a.  No Regulatory  Restriction of Alternatives

             In the report  introduction, Rand states:

             "The estimates of  emissions  reductions  and compli-
             ance costs presume that there will be no regulatory
             restrictions  on chemicals  that might be substituted
             for CFCs.  The  effects of this  presumption  are  not
             trivial.   [Rand,  1980,, p. 12].
Not  only  are  the  effects  not  trivial,  but this  assumption  is
unrealistic.   Many of the potential substitute chemicals already
are  under   regulatory  control  due  to  concern  over  their
photochemical  reactivity   (e.g.,   perchloroethylene,  trichloro-
ethylene  and pentane);  some  are  already  under  regulation  for
flammability  (e.g., pentane and other  hydrocarbons);  a number of
the  key  substitutes  are  burdened with  unresolved  toxicity
questions (e.g.,  methylene  chloride and  trichloroethylene);
several are  likely to be impacted by water quality controls;  and
some are also implicated in stratospheric ozone depletion (methyl
chloroform).     A  move  to  CFC  substitutes,  which  already  are
regulated or  may be regulated  in  the  future,  would increase  the
cost  of  regulation  beyond  Rand's estimates,  because  these
estimates were  developed under  the  assumption  such  substitution
would be a regulatory  "free ride"   (See section C-5).

         b.  Discount  Rates

         Rand assumes  future compliance  costs of CFC regulations
should be discounted  back  to 1980  at 11 percent per year.  It was
stated that this rate  was  used by  Rand for consistency with cost-
benefit analyses  being conducted  for EPA by  the  University  of
Maryland  [Bailey, 1980, p.38;  Bailey,  1979].  We believe that if
future compliance costs are discounted back to current dollars at
a certain rate, then  the  quantifiable  future benefits  of  any

                                       Economic  Considerations
proposed  regulation should be at the  same rate.   We  are not
prepared to argue for or against any specific discount rate, but
feel strongly that the one used, implicity or explicitly,  should
apply equally to both sides of the  cost-benefit  equation.

         c.  Time Delay of  Emissions

             Rand makes the assumption  that:

             "The  ultimate  effect  on  the   ozone  layer   is
             essentially the  same  for  a  given  cumulative  emis-
             sions  level,  regardless  of  whether  the emissions
             occur in a brief burst or  over  a  period  as long as a
             decade."  [Rand, 1980, p.  32].
The statement is true for the ultimate  potential effect but needs
to  be  put  into  perspective.  The  key  to  this  assumption  is  the
parameter of "a  period  as  long  as  a decade."   A decade  seems  to
have been chosen to fit the arbitrarily selected boundary for the
comparative  effects  analyses  (1930  to 1990) .   But  the  banking
characteristics of some of  the  uses, especially insulating foam,
result  in  the  emissions occurring over 50  to 75 or more  years,
not over a decade.   In  those  instances, assuming other emissions
reductions were  mandated,  the  effect  would be  to  draw out  the
emissions  profile.over  sufficient  time that  the ultimate  poten-
tial  depletion  would not  be as great, due to  the  self-healing
nature of the ozone layer.

         d.  Transfer Payaments Not Inflationary

         Rand argues that tax or permit payments to government  by
industry are simply  transfers of  wealth within  the  economy and,
as  such,  are  unlike regulatory compliance  costs  which  reflect
increased  use  of  real  resources  to  avoid  CFC emissions.   And
since  such  payments  do  not  use  up  real  resources  and  are
eventually returned  (in some  unspecified fashion) to  the  economy,
they do not directly contribute to inflation.   We suggest this  is


                                       Economic Considerations

an overly fine distinction.  This point was discussed in section
C-3 so will not be repeated here.

         e.  Scope of Economic  Incentives  Regulatory Options

         Rand's quantitative analyses of  the economic incentives
policy designs assume all  applications  of CFCs  would be subject
to the policy.  Justifications  offered  for this feature are that:
i) overall  economic  efficiency  would be promoted by encouraging
pursuit  of  the  least  costly  combination of emissions-reducing
activities, and  ii)  it would be less costly to  administer.   Yet
on a more detailed examination,  such a  policy would have built-in
inefficiencies to  the extent  that   certain  uses of  CFCs   (uses
where  no  alternatives are  available and  little  or  no emission
reduction   is  possible  in  the foreseeable future)  would be
increased  in   cost  but  without any meaningful   associated  CFC
reduction.   This  is  not  a small concern.   Note  the findings of

         "The  non-aerosol CFC applications that  do not appear to
         have  technical  options  currently  --  of  which  foam
         insulation and refrigeration products are the largest —
         account for  the largest fraction  of  projected  CFC use
         over  the next decade."   (emphasis added)    [Rand,  1980,
         p. 236] .
Thus,  under EPA's proposal, the largest fraction  of projected CFC
use has  no technical  options, yet  would be required to pay the
higher prices  generated by the  production  cap.    This would  be  a
clear case of  regulation  with no benefit,  but high cost.

         f.  Legal Concerns

         It is assumed by  Rand  that the potential for collusion
among firms or predatory  behavior  in the permit marketplace would
not  be  a   concern  because  neither  activity  would  reduce  the
emissions-reducing potential of a  permit policy.  Nevertheless,

                                      Economic Considerations
this must  be examined  carefully  because of  the potential  for

anticompetitive  effects from a marketable permit system  such  as

presented  by Rand and  proposed  by  EPA.  The  procompeti tive
policies of the antitrust laws are important national  objectives

that cannot reasonably be ignored by EPA.   The  potential  impact

of the  proposed  permit systems could be contrary to  the policy  of

the antitrust laws. (For detailed comments  on  legal points,  see
Section III).

     4.  Limitations on Use  of Report Findings

         a.  Introduction

         The  following  quotations  from  the  Rand  Report  taken
together illustrate why  we  have very  serious  reservations  over
use of  the report findings  by  EPA to  support  a decision  that

economic incentives options  are the preferred regulatory option:

         •    "First,   in  several  of  the  applications  where  CFC
             demand  is  inelastic  by  assumption   (e.g.,  LFF,
             sterilants,  mobile  air-conditioning) ,  options  for
             reducing  emissions  have  been identified but are not
             reflected in the CFC demand  schedules solely because
             of  the lack  of  cost data."   (emphasis added)   [Rand,
             1930,  p.  227].

         •    "Of course,  without  more data  about CFC  demand
             schedules in these  applications,  we cannot predict
             the precise  magnitude  of  transfer payments per
             application."(emphasis added).  [Rand, 1980,  p. 230],

         •    "Although the   response  of  these  product areas  to
             economic   incentives  obviously  cannot be predicted
             precisely with  available information,  these  appli-
             cations   well   might   contribute   to   emissions
             reductions  under  an  economic  incentive  policy,
             especially  one as  stringent  as  the  zero-growth
             scenario."  (emphasis added)  [Rand, 1980,  p.  227],

         •    "Without  detailed information  on  individual  plants
             around the country,  it  is  impossible  to predict
             where  plant closures  caused  by transfer  payments
             might  occur."  (emphasis added)  [Rand, 1980,  p. 235],


                                      Economic Considerations
         •   "Transfer  payments  can cause  short-run  economic
             dislocations,  both because the  transfers  might not
             reenter the economy  instantaneously and because some
             human  and  physical  capital  is  firm-  or  industry-
             specific and  fixed  in  the  short-run.   Like  the
             short-run  phenomenon  of rents,  temporary  dislo-
             cations due  to transfer  payments  are omitted from
             this quantitative  analysis of policy effects in this
             study.   (emphasis  added)   [Rand, 1980, p. 27].

         •   "This  design  of  a  compensation   approach  is  far
             beyond  the  scope of  this  study."    (emphasis  added)
             [Rand,  19SO, p. 236].

         •   "Solvent substitution  is not,  of course,  a panacea.
             Other solvents  appear  to  impose  their own health and
             environmental  hazards,  and require  some increase in
             energy  utilization.  The  potential effectiveness and
             the desirability   of   using   policy   to   induce
             substitution  among solvents cannot be determined in
             this study,  and remain  important issues for further
             investigation  by  EPA.   (emphasis  added)   [Rand,
             19GO, p. 37].

         Overall, it is  clear  that although the  Rand  study may
have been  a  good start on  the assessment  of the practicability
and cost of imposing economic incentives options, much additional
work needs to b,e done.

         Detailed  discussion  follows on   some  of  the  major

limitations of  the report'findings:

         b.  Analytical  Conclusions Must be Extrapolated With


         The Rand comparative regulatory option analysis is based
upon the selection of a set of benchmark controls.  Care must be

taken in extrapolating  the  conclusions  reached from  this  bounded
analysis  to the  real world of CFC  uses  and regulatory  policy


         In the comparative  analyses,  Rand first selects a set of

"benchmark controls" (command   and control steps)  that  they feel


                                       Economic Considerations
could  attain  substantial  emissions  reductions  by  1990,  using
available technology,  without  undue economic  impact,  and which
could  be readily  enforced.    Economic  incentives  regulatory
options are then set  to  attain an identical emissions reduction
goal  and analyzed  against  the  benchmark  for   efficiency  and
economic impact.   Rand concludes from their analyses  that:

         "If substantial  emissions reductions beyond the  limited
         capabilities   of  mandatory controls  are  required,  the
         relevant policy  choice appears to  be  between outright
         bans  on CFC  use and economic incentives."   [Rand, 1980,
         p.  vii] .
         The validity of  this  finding   is questionable  —  the
weakness lying  in  the extrapolation  of results  from  a  tightly
bounded comparative analysis to the "real world"  of CFC uses and
policy choices.

         Although  Rand's   findings  flow  logically  from  the
analyses and  seem valid  in  terms  of  comparing  the  regulatory
options within  the  parameters  of  the  analyses,   they  would  not
necessarily  be  valid  were a different artificial or arbitrary set
of analytical  parameters  employed.  What  we are left  with  then is
a useful ordering and  comparison of  the  pluses and minuses of the
options, within limiting  boundaries,  but not a study which fully
compares the potential impact  of the regulatory options were they
to be imposed  in the  real world of  CFC uses.

         The scope  of  the selected  benchmark controls necessarily
bound  the comparative analyses.  Therefore,  it  is crucial that
the set of  controls selected for the benchmark regulatory option
be  realistic,  accurate and  complete.    This does not  seem to be
the case from  our perspective.   Under  the mix of  benchmark
controls selected  by  Rand,  total emission reduction potential
from a  baseline  case  of  no regulation  is only about 12 percent.
Preliminary  work at Du Pont indicates this  may understate, by at
least a factor  of three,   the   ultimate  potential  for  emissions


                                       Economic Considerations
reduction  from  a  mix  of  technically  feasible  and enforceable
command  and  control  regulations.    Should  this  preliminary
estimate be confirmed, Rand's  conclusion  that the policy choice
is limited to  outright  bans and economic  incentives  in not valid.

         Any  regulatory  recommendation  made  by  EPA should  be
based on what  actually is  possible or achieveable under various
options,  not  upon  an arbitrarily bounded  benchmark set  of
controls.   Consequently,  a  much  broader  comparative  analysis
would seem to  be required.

        . c.  Regulatory Cost Remains  Uncertain

         The cost  advantage of  incentives policies over direct
controls could be greater or smaller  than  estimated  by Rand.

         To determine  the  magnitude of costs  imposed on firms by
CFC regulation,  it is necessary to  obtain:   i)  information on the
size of the market for  goods whose  production  involves the use of
CFCs,  ii)  the  relationship  of the  cost of  using  CFCs  to the
finished  product  price,   and   iii)  the  production costs  when
alternative technologies  that  rely  less  on  CFCs  are   employed.
Due to the  difficulty  of obtaining this  information, Rand relied
on  engineering  estimates  to  develop the  scope  of  the  cost  of
possible substitutes  for CFCs.  The lack of good  data and the
consequent use of  this estimating method  introduces  considerable
uncertainty in estimating the costs  of  CFC regulation.

         d.  Criteria for Benchmark  Controls Too  Restrictive

         In its  selection  of  the benchmark control  option, Rand
groups categories of potential command  and control  steps based on
the  implications  of using  them.   Then by  imposing  a  number of
restrictions  or  boundaries,  the  benchmark set  of  controls  is
selected.   The  selection  requirements   used  are  immediacy  of


                                      Economic Considerations

emission  reduction,  adequacy of  technological  and economic
information/  and enforceability.    We  feel  the parameters of thg
requirements  employed are arbitrary and artificial, leading to an
overly restrictive set of possible mandatory controls.   Each
requirement  is  examined below:

         i.   Enforceability  - Giving  undue  importance  to  the
             question of perfect enforceability may well  deprive
             the rulemaker   and   the   impacted   industries  of
             imminently workable options —  options  which  could
             contribute significantly toward  the attainment of an
             emissions reduction  goal.

        ii.   Adequacy of Information  - Rand  excludes  certain
             potential control options  from  the benchmark  set due
             to the  need  for  further  assessment  of  their
             technical  feasibility  and cost.   This  most  often
             occurs with  the  options  requiring  the  use  of
             fluorocarbon alternatives.  We  agree that all of the
             necessary answers are not  yet  available  — but this
             does  not  seem   to  us  to be  a  valid   reason  for
             discounting  the  potential  of  these   technical
             options.    It   is  understandable   that adequate
             information could not be assembled on all promising
             control  options   given   the   time  and  dollar
             constraints  under   which Rand  had to operate.
             Certain of these options were sufficiently new that
             adequate  data  simply did  not  exist.    However,  it
             does   not  seen  defensible  to  select   regulatory
             options based on the  present Rand findings,  without
             an effort being made  to  fill  in the informational
             deficiencies identified by Rand.  These options have

                               Economic Considerations
      not  been  rejected  as  unworkable,  only  as  lacking
      sufficient  information upon which to evaluate them.
      An effort  should  be  made  to  obtain  the  required

iii.   Immediacy  of Emission Reduction  -  Another  fault  we
      find  with  Rand's  screening  process  is  the  criterion
      that  any  control  step  selected  for the  benchmark
      option  must produce "immediate" emissions reduction,
      i.e.,  the  majority of the  emission  reduction  gains
      must  begin  to  occur  before  1990.    The year  1990
      apparently  is  selected  as  it  is  the  limit  of Rand's
      data    base  emissions  profiles  and  economic
      projections.   The difficulty  of  obtaining  credible
      projections  well  into  the  future  is  understood.
      However, it does not seem unreasonable to demand the
      long-term  economic projections be performed.   If one
      is to  address  ozone  depletion  effects  30  to  100
      years   in  the  future,  one should  be  equipped  and
      willing  to  address   regulatory  options,   their
      efficiencies and  costs  within the same time  span —
      not to  limit the analyses to 10 years.

      Similarly,  in  dealing  with  a  long-term  potential
      problem,  it  makes  little   sense  to  limit  the
      evaluation  of  solutions to those effective  only in
      the next 10  years.   Due to  the relatively  long lead
      times  required  to  implement  many  of  the  more
      promising  control  strategies  identified,  the  real
      effectiveness of these measures often will  not occur
      until  after  1990.     Arbitrary  elimination  of
      longer-term  control  steps  from the  analyses  results
      in a   severe  understatement  of the potential for
      emission reduction command  and control steps.  There
      is another  problem  with  the  requirement  that


                                      Economic Considerations
             solutions  produce immediate payback.   This is  the
             questionable  regulatory  efficiency  (in  pounds  of
             emissions  reduced per  dollar  control  expenditure)
             under  these restrictions.  Were regulatory decisions
             to be  based  only upon emission reduction  achievable
             by 1990,  to  the exclusion of  potential  ultimate
             emission  reduction,   there  is  little question  that
             monies would  not  be spent efficiently.  Increasingly
             large   expenditures  would  be  required  to  achieve
             incrementally small  improvements by 1990,  when  less
             expenditure   on  other projects  could produce  much
             larger gains  (although the effects would not be  felt
             until  after  1990).   The goal should be   to  reduce
             total  emissions  over  time relative  to the perceived
             environmental risk  over time  —   not  to  maximize
             short-term   solutions   to  a  long-term  potential

     e.   Designs of Economic  Incentives Options Are Too General

         The designs of  the  incentives  options analyzed appear
more conceptual than workable.   Although  great  care is  taken  by
Rand  to  describe   and  bound  the  benchmark control option,  the
designs  of the  incentives options are much less  specific.   Many
potential  problems associated  with  design,  implementation,
administration and  impacts of the  options are  identified,  and  in
some  cases  potential  answers or  solutions  are  offered  and
evaluated.      But a reader is  not able  to discern the exact
structure  of an option,  how it  would work  or  what the effects
would be.  Rand's approach is  closer  to a sensitivity analysis of
the various facets  of incentives policies than an analysis of how
these  options  would  be applied   to  CFCs.     (For  detailed
discussion, see Appendix I).

                                      Economic Considerations
     f.   Transfer  Payment Concerns Not Resolved

         Rand concludes that  the  question of  transfer  payments
may  be  the  single  most  complex  aspect  of  economic  incentives
approaches.   A number  of  political  and  economic  issues  which
should be addressed prior  to  implementation  of these options  are
identified.    Although a  number  of  potential  solutions  are
discussed, none are convincing.   Uncoinpensated transfer  payments
—  acknowledged as a real cost  of  doing  business  — result  in
greater  regulatory costs than do  mandatory  controls.  Compensa-
tion  schemes  are  recommended  as  a  means  of  reducing  the
potentially  large cost  resulting  from  incentives  options.
However,  neither the potential benefits nor the beneficiaries of
compensation  are clearly defined, and  the  real cost of  some  of
the  compensation   schemes   may be  underestimated.    The lack of
resolution of  this issue  raises serious questions about  the
utility  of the report  conclusions on economic  incentives options
and EPA's stated preference for them.   We note that EPA  does  not
offer any solutions to these problems in the ANPR, even though
many of  these  concerns were  raised by us  in our critique	[^Djj
Pont, 1980c]  of the Rand Draft Report.

         We  cite  below representative  statements  in  the  Rand
Report on the  impact  and  importance  of  this  aspect  of  the
economic   incentives  options.   Taken  together, they indicate  a
problem   so  large  that we believe it is mandatory that  workable
solutions be  presented  before  EPA proceeds with a rule proposal
which is  based  on  incentives options involving  transfer  payments.

         •   "For  the  firms  that  pay  them,  transfer payments  are
             an expense that  will be  reflected in  higher prices
             to the consumer and a greater risk of plant  closures
             and worker  unemployment.   Because the transfers  are
             not a  real resource  cost,  the  negative effects  on
             firms  that pay them  will  be  offset by  benefits  to
             the ultimate  transfer   recipients.    Nevertheless,
             transfers  are  a policy concern  because wealth
             redistribution  and  its effects  on certain  consumer


                         Economic Considerations
prices  and  on  plant  closures  are  politically
sensitive issues."   [Rand, 1980, p. 18].

"Economic incentives would impose lower costs on the
economy as a whole, but  could  seriously  injure CFC
user   industries  unless  wealth  transfers   are
'compensated'."   [Rand, 1980, p. vii].

"An  uncompensated  incentives  policy  design  would
generate  large  transfer  payments,  ranging  from  a
discounted cumulative  total   of  1.5  billion  dollars
for the benchmark-equivalent  cost-minimizing design
to 6.2  billion  dollars  for   the  zero-growth  design
based on  cautious  assumptions  about  the  CFC demand
curves."  [Rand,  1980, p. 230].

"Uncompensated   economic incentive  designs  will
result in higher  prices for final products made with
CFCs  than will  compensated   designs  or  mandatory
controls.   Under  an uncompensated  policy,  firms and
their customers bear the  full burden of the transfer
payments and total costs of  production  are  higher.
Although prices elsewhere in  the economy should fall
commensurately,  in a  trillion-dollar economy  it
cannot be predicted in which individual  industries
this  effect  will  be  noticeable.    In short,  the
burden  of  transfer   payments  will  be   readily
apparent,  while  the benefits  might  not be."   [Rand,
1980, p. 234].

"However,  uncompensated  policies  would generate
transfer payments many times  as  high  as  compliance
costs,  and  CFC-using  firms  would  face  total
regulatory costs  much  higher  under  such  policies
than under mandatory controls.   Consequently,  there
is   greater   risk   of   plant   closures    under
uncompensated  economic  incentives policies."   [Rand,
1980, p. 29].

"Devaluation  of  fixed  capital occurs under any form
of  regulation,   whether  mandatory   controls  or
economic  incentives.    However,   the  magnitude  of
uncompensated  transfer  payments  implies  that  the
wealth  loss  from capital devaluation  in  regulated
industries  is much greater  under  uncompensated
economic   policies   than   under   other   policy
approaches.    For  these  reasons,  most firms  would
understandably   prefer   mandatory   controls   to
uncompensated  economic  incentives."  [Rand,  1980,  p.
235] .

                                       Economic Considerations
         •   "Despite the advantages  of  economic  incentives for
             reducing the real  resource  costs  of  regulation and
             achieving  substantial  emissions  reductions,  the
             adverse   impa.cts  on  user  industries   from  an
             uncompensated   incentives   policy   may   not  be
             acceptable.    If  this  is the case  and substantial
             emissions reductions  are  required to prevent serious
             environmental  damage, the achievement of regulatory
             goals  may  rest   on  the  ability  to  design  a
             compensated  policy  that does not distort incentives
             for low-cost emissions  reductions."   [Rand,  1930, p.
         g.   Inadequate Attention is  Given to Market Structure
             Effects of Regulatory Option Design

         The Rand Report  portrays  taxation and marketable permits
as capable  of  producing  broadly equivalent regulatory outcomes,
with the potential differences that  do exist  possibly creating a
slight preference for  a  permit  system.   But  we  believe  a permit
system could lead to increased concentration  of either producing
or using  firms.   And, as  the  efficiency of  a  permit  system is
dependent on markets  being  purely competitive  and  not  becoming
concentrated as  a  result of the  permit  system,  failure  to meet
these  conditions   could create  two problems.     First,  the
compliance cost of attaining a designated reduction of CFC would
not necessarily be minimized under a  permit  system.   Second, if
firms were  to  hoard  permits, a  permit  system  may  not  regulate
emissions to  their  optimal  levels,   i.e., a  permit .system may
unavoidably  lead to a  greater reduction  in the  use  of  CFCs than
would  be socially  desirable.     (For  detailed  discussion,  see
Appendix I) .

     5.   Needed Further Work

         a.   Consider Mixed  Regulatory Options

         Rand  only  treats   potential  regulatory options  in the
pure  form:   that  is,  combinations  of strategies  for  different


                                       Economic  Considerations
end-uses or over time are not analyzed.  A  regulatory mix  should
be considered.  This could be done by analyzing  options  available
for each use on a cost-effectiveness basis.   Such  analyses  should
include  regulatory  administrative costs  as well  as  direct  and
indirect  compliance  costs.    Cost-effectiveness  analyses  also
should  be  used to  evaluate  stepwise introduction of  regulatory
options over time —  in a manner  consistent  with  the  anticipated
increase  in  knowledge of  the benefits  of   regulation  (directly
related  to  knowledge  of  the  degree of  ozone  depletion and  its

         b.  Risk Trade-offs Needed

         Many  of  the  proposed and  potential emission  reduction
processes  or   alternative  products  which  would  be  utilized  in
response to  incentive options have  some  degree of worker,  con-
sumer  or  environmental  risk associated  with  them.    Obviously
these risks need to be  weighed  opposite the risk  from  continued
CFC use.   Option  impact  studies  need to consider  these  risks  in
predictions of the likely response of industry to  given  incentive
levels. If the perceived risk from alternatives  is high  (and  thij»
is not factored into the impact  analyses),  industry may not  take
the anticipated steps  to reduce  CFC use at a given	incentive
level — thereby markedly increasing the forecast  regulatory  cost
and decreasing the forecast benefits.

         c.  Alternative Approach to Policy  Evaluations

         The main problem with the  utility  of Rand's  findings  is
that  they  are  all  based  upon  comparisons  with  an  artifically
bounded  base  case  of  benchmark   controls.   The  result is  that
neither the incentive  options nor  the benchmark  set  of command
and control rules adequately encompasses the real  world  situation
in terms of total achievable emissions reductions  from all uses^
and the associated costs.     Consequently,  the  analyses  do   not


                                       Economic Considerations
logically  support a  regulatory  decision  which  would  have  to
address  the  effectiveness and  costs  of a  regulatory recommen-
dation upon the total  CFC market.

         Unfortunately,  no matter  what set of benchmark  controls
were  selected  for  comparative regulatory  analyses,  separate
groups might critic! ?,'* the selection as overly or  insufficiently
restrictive,  not  technically feasible  or  not enforceable.   We
suggest a better approach would  be for  EPA to  provide  a series of
emission reduction goals, either in total pounds  or as percentile
reductions from base  line (no regulation) projections.    Analyses
could then be performed  to spell out specifically how  these goals
could  be  attained  under  the  different  regulatory  options  or
option combinations under  consideration, in  what time frame and
at what cost.

         In  addition,  we  recommend  that  policy  options  be
evaluated opposite their  potential  impact on  environmental risk,
not upon pounds of emissions.   To  facilitate such an  evaluation,
we  urge  EPA  to  adopt  ranking  of compounds  by  their  "ozone
depletion  potential"  (See Appendix G) .  Having  clone  that, then
Rand's  analyses  and   a.ll  ensuing   analyses must  be done on the
basis of relative risk,  not straightforward pounds  of  emissions.

         d.  Broaden  Analyses

         Barring  such a  revised methodology,  an  effort  needs to
be  undertaken   to substantially  expand the  regulatory effects
analyses started by Rand.

         i.  Time Frame   -  Limiting the  comparative  analyses to
             those  options   which would  achieve  significant
             emissions    reduction   by   1990   is   extremely
             short-sighted.  The limitation biases  any regulatory
             selection  made   on  the basis  of  these  short-term


                               Economic Considerations
      solutions.    We  suspect  that  a bias  to short-term
      solutions  will occur at  the  expense  of steps which
      could show greater emissions  reductions  at  a lower
      cost/pound  over  the  long-term.   The  potential pro-
      blem  is  a   cumulative  long-term  (30-100  year)
      problem.     We  fail to  see  any justification for
      restricting  potential solutions to the  problem to
      only those which would show "immediate"  results.

 ii.   Technical  Assessments -  Rand  identifies a number of
      areas requiring  further  emissions or  technical data
      collection and assessment.  Due  to  lack  of technical
      data on the  potential for emission  reduction and the
      use of alternatives, a  number  of  promising  options
      are eliminated from  the  set  of benchmark mandatory
      controls.    We  agree  that   all  of  the  necessary
      assessments  are  not yet available but this does not
      seem  to  be  a  valid  reason  for  discounting  the
      potential  for  so many promising  technical options.

i ii.   Design

      Rand notes:
      "The study  identified  compensation techniques that
      can substantially  mitigate the  transfers of wealth
      under an incentives  policy.   Such  techniques promise
      to be  difficult  to  design and  implement."    [Rand,
      1980,  p. vi.] .
      "Designing  a compensation  scheme that does  not
      distort the  policy's  incentives   is  not a  simple
      matter operationally."   [Rand,  1980, p.  253].
      Clearly an  expanded analysis  is   needed  on option
      design implications,  especially in the  area  of the
      economic and political implications of uncompensated
      versus  compensated   transfer  payments   - both  the
      costs and  benefits.

                    '  VII-58

                              Economic Considerations

     Other  design  questions needing work are:

     Regulatory  control  point  -  production,  use  or

     The potential changes in  market structure under  a

     marketable permit system.

     Impact of uncertainty on choice of optimal design.

iv.   Option Implementation and Administration

     Rand notes:
     "For  economic  incentives  policies,  the distributive
     consequences depend  critically  on  how the policy is
     implemented."   [Rand, 1980, p. 229].

     "The  magnitude of transfer payments  depends  on  how
     an economic   incentives  policy  is  implemented."
     [Rand,  1980, p. 230].

     "An  incentives policy  might  seriously disrupt  the
     CFC-using  industries, depending  on the magnitude of
     transfer  payments;   compensated  economic  incentives
     could  mitigate transfer,  but  may be quite difficult
     to implement."   [Rand,  1980, p. 255].

     In addition,  further attention  needs to be given to
     the  following  aspects of  incentives options:
     The  public  sector  expense  associated  with  the

     development,  implementation  and  enforcement  of
     incentives  options.

     Enforcement issues, especially  if incentives options
     become  complex through  inclusion of exemptions.

                                      Economic Considerations
             How to  establish  regulatory predictability.   Thought
             needs  to  be  given  to  establishing  a  readily
             understood  decision  formula for  control  adjustment
             (e.g.,   level  of  taxes)  and  how to  communicate
             regulatory  intent  in  advance  (e.g.,  the  future
             permit  level,  where, how and when permits would  be
             available,  etc.),  so that  industry  may make  plans
             for emission  reduction.

         v.   Legal Issues  -  Work  is  needed  in  a number of areas.
             These are discussed  in detail in Section III.

         e.   Expand  and Add  Detail to Economic Incentives Option

         In  Rand's  treatment  of  economic  incentives  regulatory
options,  the designs  and  implementations  suggested  are too
general to allow detailed  impact  analyses  and  position-taking  by
industry.  One can discuss the pluses and minuses  of  the concepts
but has difficulty in arriving at a defensible endorsement of the
options because  important  structural  detail  is   lacking.   One
could accept the principle but  find  the  formulation  and applica-
tion to be totally unsatisfactory.  Consequently,  there remains a
great  need  for	EPA  or its  contractors to develop a detailed
explanation of  exactly what  these  options would  look like, how
they would  be  implemented  and  administered,  and how payments
would be handled.    Having  surveyed   the  potential problems and
knowledge  deficiencies, solutions now must be proposed.

         We  note that this comment was first made  to  EPA by  us  in
March,  1980  [Du  Pont, 1930c].   Yet,  the October,  1980  ANPR  shows
no  indication  that  any of  this  needed work  has  yet been per-

                                       Economic  Considerations

         Comments  below  relate  to  specific  topics,  points,
arguments, etc.,  contained  in the  ANPR  where  economic  implica-
tions  are  pertinent.   Those already  covered  in other  sections
will only be highlighted here.

     1.  Choosing a Regulatory Strategy

         EPA's thought process in approaching CFC  regulation,  as
reflected in the ANPR, appears to have been  to:  (1)  choose  a  CFC
emisssions target  based  principally on  its  potential impact  in
persuading the  rest  of the  world to  take action,  and then,  (2)
set about to determine how best to  achieve this  emissions  target
considering the  trade-offs  (including  economic)  involved.   Since
evolving public  policy  increasingly is placing as much  emphasis
on  "cost"  as  "benefit"  in the cost/benefit  regulatory  equation,
it would seem EPA's  process  of choosing  an initial CFC  emissions
target  should  have  included  economic considerations  at a  much
earlier stage.   Accordingly,  it would be appropriate for EPA  to
rethink its overall regulatory strategy based on  this approach.

     2.  Cost/Benefit Analysis

         Recent  Administrations, the  Congress  and  the regulatory
agencies themselves  have  strongly  embraced the need  for careful
cost/benefit analyses of proposed  regulations to  ensure that such
regulations will be  in  the  broadest  public  interest.   For  any
regulatory  proposal, this  requires  that the  decision  process
address two separate but related questions:

         •   Does  the  proposed  regulation  achieve  the  stated
             regulatory objective  at the lowest cost?

                                      Economic Considerations

         •   In structuring  the regulatory  objective  (specifi-
             cally,  in  determining  the  degree of  control),  are
             expected  benefits and costs equated  at  the  margin?
             (In other  words,  does   regulation  stop where  the
             incremental cost  begins  to exceed  the  incremental

         Let us adddress  these questions  in the  context  of  the
proposal to further  regulate  CFCs.

         •   Least Costly  Regulatory Approach

             EPA's   stated  regulatory  objective  is to hold  CFC
             emissions  from U.S. sources to current levels.   EPA
             further states  it prefers  the CFC  production  cap
             route  to  accomplish this  objective.  But is this the
             least  costly  regulatory option?  In our view, it is
             clear,  on the basis of information and analyses now
             available,   that  there  is   no   justification  to
             conclude  that  a  production  cap  is  the most  cost
             effective   means  of further  regulating  CFCs.   The
             ANPR  does not state a conclusion on this point,  nor
             does  it  even  offer  a  comparison of  the  relative
             costs  of  achieving the given  regulatory objective in
             alternate  ways.

         •   Equating  Marginal Benefits  and  Marginal Costs

             According  to  EPA,  the  benefit  of  the proposed
             regulatory step is not CFC  emissions  reductions per
             se   but    rather   the  potential   to  catalyze
             international action  leading   toward  CFC  emissions
             reduction.    So,  the real  benefift  of the proposed
             production cap  would  be  a  function  of  how  much
             better  a catalyst  it  is  than some alternate action


                                      Economic Considerations
             or  set of actions, with the  latter  not  necessarily
             being  regulatory  actions.   But,  what about  the  cost
             of  this  "catalyst"?  Our analysis above attempted  to
             deal  with this question  and, although the  results
             cannot  be  precisely  quantified  at this  stage,
             clearly  the  cost  of a  CFC  production cap would  be
             very  high in  economic  terms.   In this light, it  is
             impossible   to   reconcile  EPA's   proposed  CFC
             production  cap  with  conventional  cost/benefit
             methodology.  The "benefit" is highly subjective and
             theoretical,  if it  exists  at all; but, the  cost  is
             extremely high.

             In  view  of the foregoing,  we feel  there is  strong
             justification  to  insist that EPA  perform much  more
             substantive  and   rigorous  cost/benefit  analyses
             before proceeding with further CFC regulation.

     3.   EPA's Long-Term Regulatory Intent

         EPA states that  the  only  acceptable long-term  strategy
for  CFCs  is  "substantial  emissions  reductions."    However,  no
consideration  has been  given to the  economic impact  of  this
extreme control  option.   EPA  relies heavily  on  the Rand  Report
but  its most extreme  analysis was an option in  which  emissions
were  held  constant,  notJ^substantially  reduced  from   current

     4.   Product/End  Use Bans

         EPA places bans  low on the priority list of  regulatory
options, in part because of the potential  for overcontrol of  some
uses and  the undercontrol  of  others.    However,  if  EPA  followed
the analytical approach it outlines to deal with product/end use
ban  questions,  the likelihood  of  overcontrolling or  undercon-


                                       Economic Considerations
trolling a  particular  end  use  through selective  bans  would be
greatly reduced.

         Moreover,  under the  production  cap proposal, a  reverse
kind  of situation   is  just  as  likely  to  eventuate  —  truly
essential end  uses, with  no  substitutes,  might  suffer  severe
economic  hardship   while   less  essential  end  uses  might  not.
Determining   factors would  be  the  financial  strength  of  the
,-tffected firms and  the  availability of suitable  substitutes,  but
not the question of product essentiality  or  equity.

     5.  Economic Incentives or Disincentives?

         The  economic   options  presented  in   the  ANPR  are  not
incentive options.   True incentive approaches  would  include items
such  as tax  credits  to   encourage  investment  in  CFC  recycle

     6.  Tax or Surcharge  on CFC Use

         The Rand Report  devoted  considerable space  to  taxes as
an  economic  control option.    A  tax  may  avoid  some  of  the
uncertainty  associated  with an allocation or auction system.   EPA
may have prematurely seized on a permit system  as  the  preferred
economic approach.    Given  the magnitude  of  what is at  stake, we
believe all  possible options should be  explored.

     7.  Base Year

         Choice  of  the  base  year  for  a  proposed production  cap
should  recognize evolutions  in  the  marketplace,  swings  in  the
business cycle  and .other  structural  factors.   Using a  formula
approach which  combines  several  representative  years  might
accomplish this.  One concept we  feel  EPA should explore is that
of choosing a  base  year which is out into  the  future,  say 1985.


                                       Economic  Considerations
The  production  ceiling would  be  based  on  an  estimate,  absent
regulations, of  how large  the  market would be  at  that time  if
current demand trends  continue.   Since CFC  use  is only growing
moderately  in  the  U.S.,  incremental  contribution  to  world CFC
emissions would  be  small   in  relation to  total  emissions.   The
benefit  of   this  approach  would  be  that  it  would  reduce the
uncertainty facing business and allow  firms time  to  adjust  to CFC
use restrictions  at a more measured pace,  thus  reducing  potential
economic and societal impacts.

     8.  Term of  Permits

         Rand notes:

         "The  authorization interval  and  the  mix  of   maturity
         dates for outstanding  permits should be  chosen  according
         to  two   basic  principles.    First,  the  authorization
         interval should be long enough to allow  firms to buy and
         sell permits as needed  to  insure  that demand and  supply
         are  equalized.    Second,   the  interval   should  be  long
         enough  and the  mix  of  maturity  dates  should overlap
         enough so  that there are  not  major  swings  in the  permit
         price from one issue  to the  next because  of short-term
         fluctuations in demand."  [Rand,  1980, p.  240].
         Yet, EPA has not  addressed at all  in the ANPR  the  issue
of the term for permits.

         We  believe that  orderly business functioning  would
require  that  CFC permits,  however obtained —  granted or  auc-
tioned (to end users or producers)  —  have a long life — ideally
at least ten years — so that  investment decisions can be handled
on a  rational  basis.   Otherwise,  uncertainty  would breed  chaos
and,  ultimately,  significant  economic dislocation.   However,  if
the  duration  of   permits  exceeds  more  than a couple  of  years,
legal  implications  appear  to  begin to override.   Moreover,  from
the economic viewpoint, inefficiencies due to lack of competition
could develop.

                                       Economic  Considerations
     9.  Direct Allocation of Permits  to  Manufacturers

         This  approach  may  be  undesirable  from an  economic
viewpoint because some producers  may not  need  to  actively compete
with  each  other  for  business,  and  therefore,  may  have  little
incentive to operate  efficiently.  This  is  so because the  price
mechanism would not function in its typical  manner  to  equilibrate
supply and demand.  Moreover, this would be the  case whether  the
"transfer payments" flow to producers  or  the government.

         Shortages could develop under  this approach, and  price
could  not  be  relied upon  to  remove  them.    What happens to  the
users  who  are  shorted?   Will  the  government then  mandate,   in
addition to  the  production  cap,  formal  allocation  schemes
(especially  for  those  uses  deemed  to  be  "essential")   in   an
attempt to treat everyone equitably?   How would such a program  be
administered  without  a  significant  cost  and without   becoming
itself a major  source of  inequity?  (For further discussion,  see
Section Ill-Legal Issues).

    10.  Direct Allocation of Permits  to  Users

         This approach  would be unworkable  in practice 'because
of the  large  number of firms  involved,  the many and varied CFC
end  users  and  the dynamic  technological   and  market situation
which  operates  here.    Witness  the   tremendous  administrative
problems,  inequities,  etc.,  with  previous  gasoline allocation
schemes  which,   in fact,  are  probably  simpler  to  design  and
implement because of the standardized product  and  single end  use

         As in  the  case  of permit  allocation  to producers, this
approach could create  economic inefficiences at the producer

                                       Economic  Considerations
level.  This  is  so  because under a system of allocation of  per-
mits  to  users,  some  producers  may not have  an incentive to  be
efficient; and others, reacting  to the potential for  extreme  year
to  year  variation  in  production demand  on  them  by the  users,
could  conclude  that  the  associated  uncertainties  were  suffi-
ciently great  to  undermine  the  incentive to  remain in the  CFC
production business.

    11.  Government Auction of Permits

         a.   The  auction concept  is  nothing  more than  a  rather
complicated way to  impose  a  tax  on CFC use.   As  an  alternative,
EPA should explore  more  actively the more direct  approach of  an
excise tax on CFC use, which might be more equitable  and simplier
to implement and administer.

         b.   As  in any  free market  for a  "paper"  commodity,
speculators would become a major  factor.   Would EPA  permit this?
If not, how would auction participation be monitored?

         c.   Future  success/failure  for users  of  CFCs  will  tend
to  become  highly  dependent  upon  how they fare in  this  auction
process,  regardless  of  the  relative essentiality  of  their  CFC
uses  or  the  strength of their underlying  competitive positions.
What  steps  would  EPA plan to  take to avoid the  inequities  that
might result,  or  to  mitigate  against the   impact  of  such

         d.   How  will  EPA  deal  with those   situations, which
inevitably will come  up, where essential  end  users of CFCs don't
get enough to cover their needs and this causes economic or other
hardships  either  to  themselves   or  consumers?   A  mechanism  to
handle this would need to be developed.

                                       Economic  Considerations
         e.   The open  auction process  would inevitably  create
artificially high  prices since  there would  be  a  significantly
higher  perceived  demand  than  actual  demand  if  producers,  end
users and  others  all  participate.   What steps would EPA  take  to
avoid this?

         f.  As  time  passes,  the  auction process would create  a
significant  flow  of  dollars  to  the  government  with very
significant potential  implications from an  economic  growth  and
inflation  viewpoint.   How  would  these payments be distributed?
Who should have jurisdiction in this process  due  to  the  potential
impact on  the  economy (Commerce),  levels of  employment  (Labor),
financial markets (Treasury),  etc.?

         Rand  found   the  issue of transfer  payments  to  be  of
paramount importance:

         "Ultimately,  the resolution of the  implementation issues
         raised  by  transfer  payments  may  be  one  of  the  most
         critical policy  choices  required  by CFC destruction  of
         the ozone layer."  [Rand,  1980, p.  239]
We concur.

                                      Economic Considerations

         After examination of EPA's proposed regulatory options,
with particular attention to  the  Agency's  stated preference for
economic incentives options,  we  conclude:

     1.   EPA  drastically  understates  the potential  adverse
economic   consequences   of  its  production   cap   proposal,
particularly  the  consequences of  the  large  induced uncertainty
under such a system.

     2.    EPA's  comments  on  the  potential  mechanics  of  a
production cap/production or  use permit system demonstrate a lack
of  appreciation  of  the  complexities  involved;   as   such,  EPA
grossly underestimates the  practical  complications of operating
such a system.

     3.   The  Rand Report  [Rand,  1980]  upon  which  EPA relies
heavily  to justify  its   preference,  is  not  adequate  from  the
economic viewpoint as  a   basis  for  a regulatory  decision.   The
study, while  a useful  empirical  exercise,  was  not designed nor
performed  as  an  economic  impact  study  of the  consequences  of
economic incentives options.

     4.  In reaching  its  preference  for a production cap, EPA has
not considered  in  sufficient  depth  command and control options,
true economic  incentives  approaches such as  tax credits for CFC
recycle investments,  or use  of excise  taxes as a  demand dampening

     5.  A great deal more in-depth analysis in several areas is
required  before  a  defensible  conclusion  can  be  reached  that
economic  incentives  control  options can be  accomodated without
severe adverse economic consequences.   Moreover,  the burden of

                                      Economic Considerations
proof should be  on EPA  since  the Agency's proposals  appear  to
depart from conventional  economic  wisdom.

         We  find  it  particularly  disturbing  that  EPA  seems
already to  have  made up  its  mind,  without benefit  of in-depth
analyses,  that  a  CFC production  cap  is  the appropriate  regulatory
method.   In view  of the potentially  severe economic consequences,
EPA's position  is not tenable.   This becomes quite apparent when
we  consider that  EPA  has  barely  scratched  the  surface  in
assessing alternative options.

     6.   It is  possible that EPA advances a production  cap as its
regulatory  preference for  reasons  other  than the  potential  to
meet  regulatory  goals  in the  most  cost-effective  manner.  In
particular, from  a  political viewpoint, the cap proposal seems to
offer EPA several advantages:

         •   Unfocused  opposition  -  the   "you  don't need  to
             worry; the cap will affect somebody else"  argument;

         •   A  quick  regulatory solution,  without  the  necessity
             to  go through  the  rigorous  analyses demanded  by
             command and  control;  and

         •   Operation of the "new  toy"  theory,  which  tends  to
             attract supporters to  the proposed  regulation  for
             all  the wrong  reasons.

     7.    In  all  discussion  of  the need for CFC  regulation,  and
the  pluses  and  minuses  of  the  regulatory  options,  (whether
economic   incentives or command  and control),  it  must  be
remembered that CFCs have a huge quality-  of-  life, economic and
employment significance to  the United States:

                                       Economic  Considerations

         a.  CFCs  perform  a  wide  range  of  jobs  considered
             essential to today's way of  life.

         b.  For many  current uses  there are  no  safe  suitably
             performiny alternatives  available  —  nor are  there
             likely to be in the  foreseeable  future.

         c.  About $500 million of CFCs are sold annually.

         d.  More than 730,000 jobs are related  to  CFC use.

         e.  There  are approximately  260,000  domestic  business
             locations which use  CFCs.

         f.  The annual value  of  goods and services  which  depend
             to some extent upon  CFCs exceeds $28 billion.

         g.  The value  of installed  products which  use CFCs  is
             more than $135 billion.

         Regulatory decisions  on CFCs will  effect major  indus-
tries, many  workers and  the  consumer through the wide  array  of
CFC-dependent products.  Should regulation ultimately prove to  be
necessary, great  care will have  to  be  taken to insure  that the
regulatory option and  the degree  of  control  selected  will  be the
most cost-effective overall to society.





         E.  TIMETABLE

         F.  SUMMARY

                                            Search  for

         From early  in  the  controversy of whether continued  use
of CFCs will lead to a  depletion  of  stratospheric  ozone,  efforts
have been  underway  to  develop  acceptable replacement  compounds
should their use  be  required.   This effort  in no  way signals  an
acceptance  of  the  validity of  the  theory   but   rather  just  a
prudent and  responsible  decision  to  be prepared should the  need

         At  Du  Pont,  this   effort  to  date   has   cost  over  $15
million.     Unfortunately,   all  promising  compounds identified  so
far have  one or more  limitations,  such  as possible toxicity,  no
known commercially viable manufacturing process  to  make  them,  or,
as  yet  unspecified  criteria  for environmental  acceptability
opposite   the  potential  for  ozone depletion.   Consequently,  we
feel  that  if  fully  satisfactory  fluorocarbon  alternatives  are
available at all, they are  a minimum  of seven but more  likely  ten
years away.

         Periodically,  the  status  of  Du  Font's program has  been
formally   reported to  EPA  [Du  Pont  1978;   1980d]  and numerous
informal  updates also have been  made.   Nevertheless,  the Agency
routinely has issued  statements  of optimism on the  results of  our
work  [e.g.,  DeKany,  1980]  far  in  excess  of  what  we believe  the
facts can  support.   Consequently, we are including a section  in
the  submission  on   our  alternatives  program,   its  objectives,
parameters, status and  future.  More  detailed discussion  appears
in Appendix B.

         The  ozone  depletion  theory  predicts  that  certain
chlorine-containing, volatile  compounds are  sufficiently  stable


                                           Search for
                                           ATter natiVes

(or long-lived)  in the lower atmosphere that significant amounts
survive to reach the  stratosphere, where the chlorine is released
by  ultraviolet  radiation.    It  is  theorized  this  chlorine  may
deplete  ozone.    The  amount of  predicted  ozone  depletion  is
calculated  by  computer  "models"  designed  to  simulate  the

         The potential  for  this  theoretical depletion  of  ozone
can be reduced or avoided in two  ways.  If a CFC molecule can be
made marginally  less  stable,  most will  not survive the journey to
the stratosphere.  However,  it  must not be  so  unstable that it
contributes  to  smog, as  does,  for  example,  trichloroethylene.
Hydrogen-containing  fl
desirable middle ground.
Hydrogen-containing  fluorocarbons   have a  stability in  this
         Alternatively,   fluorocarbons  which  do  not  contain
chlorine could be substituted  for CFCs.  Fluorine is not involved
in the ozone depletion mechanism.

         Acceptable   CFC  substitutes  also  must  meet   other
criteria.    An  acceptable  alternative  must  provide product
performance,  low toxicity  and  safety-in-use.    Cost  must  be
compatible  with   value-in-use,  and  an  economic  incentive  for
manufacture must  exist.   Lastly,  a  commercial  process for  its
manufacture must  exist or  be  developed.
 For purposes of  this  discussion,  compounds  containing  at least
 one chlorine  and one fluorine  will  be referred  to  as chloro-
 fluorocarbons  (CFCs) , whereas  compounds containing  no  chlorine
 will be referred to as fluorocarbons  (FCs).

                                            Search  for

         As outlined  in  the  previous section the  most promising
candidates  were  identified  early  on  as  either   fluorocarbons
containing no  chlorine or  as  chlorofluorocarbons  containing
hydrogen.     This  led  to  an  examination  of  all  practical
fluorocarbon and chlorofluorocarbon compounds meeting one or  the
other of these  criteria.  Only fourteen  compounds  were  found  to
comprise this category:

              CFC-21                        (CHC12F)
              CFC-22                        (CHC1F2)
              CFC-31                        (CH2C1F)
              FC-32                         (CH2F2)
              CFC-123                       (C2HC12F3)
              CFC-124                       (C2HC1F4)

              FC-125                        (C2HFV
              CFC-132b                      (C2H2C12F2)
              CFC-133a                      (C2H2C1F3)
              FC-134a                       (C2H2F4)
              CFC-141b                      (C2H3C12F)
              CFC-142b                      (C2H3C1F2)
              FC-143a                       (C2H3F3)
              FC-152a                       (C2H4F2)
         These  compounds  have  been  or are  being  evaluated  for
product  performance  (as  refrigerants,  foam  blowing  agents  and
solvents), safety (flammability and toxicology)  and manufacturing
capability.  Only CFC-22, FC-134a, CFC-141b, CFC-142b and FC-152a
have  survived  all  the tests performed  to  date.   However,  the
results of all long-term toxicology studies, which  would  be


                                           Search for
necessary  before  more  broad  use  of these  compounds would  be
permitted,   are  not  yet  available.    Only  CFC-22  is  a  major
commercial  product.   CFC-142b  and  FC-152a are  manufactured  in
very limited quantities.   The  reasons  for discontinuing  work  on
the other candidates  are given  in  Section  VIII - F.


         Du  Font's  research and  development  effort on  alter-
natives is  continuing.

         The results  of long-term  toxicity  studies  on  CFC-22,
FC-152a and CFC-142b  are expected  over the next two years.  Field
tests of CFC-22 and  CFC-142b  in automotive air-conditioning are
underway.   Limited testing  of  'FC-134a  in  refrigeration and air-
conditioning  equipment   is  ongoing.    Basic  data on equipment
modifications  necessary in  refrigeration  and  air-conditioning
equipment  is  under  development.   Methods  to  determine  the
long-term   insulating  performance  of  alternatives in  rigid
polyurethane foam  are being developed.  Although no processes yet
exist  for   the  commercial   production  of  FC-134a or CFC-141b,
process research is continuing.

         Seven to ten years may be necessary to reach commercial
production  for  most  alternatives,  assuming  all  technical  and
toxicological programs yield  favorable  results.   Even  with
existing production  processes  for  CFC-22,  CFC-142b and FC-152a,
new  or  expanded  facilities  would  be  needed  for  increased
production and for raw materials.   The  ten-year  estimate includes
pilot plant construction and operation,  long-term  chronic

                                            Search for
toxicity testing,  development  of basic design  data,  acquisition
of a plant site, obtaining production equipment and environmental
permits, and plant construction and start-up.

         An  examination  of  the  regulatory  protocol  and  EPA's
priority  for  this  issue  suggests  that  regulations for  nonpro-
pellant uses  of  CFCs  could be promulgated  in  final  form  as soon
as 1981, and perhaps become effective a year later.  The gap
between the  regulatory timetable  and the  most  optimistic  .time-
table for  the development of alternatives  is a major  source  of

 F.  Surcnary - Chlorof luorocarbon Alternatives
Number      Formula      Boiling Point,  °F

CH2F2 (a)
CHF2CF3 (a)
CH2FCF3 (a)
            CH3CF3 ta)
        (a)        -13
                                                Potential Application      Flammable

                                                Slewing Agent                 No
                                                Refrigerant                   No
                                                Propellant                    Yes
                                                None (b)                      Yes
                                                Blowing agent,  refrigerant    No
                                                Refrigerant,  other            No
                                                Refrigerant                   No
                                                Cleaning agent - too          No
                                                  aggressive  (b)
                                                Blowing agent,  propellant     No
                                                Refrigerant,  other            No
Blowing agent                 Yes
Blowing agent, refrigerant    Yes
Refrigerant                   Yes
Propellant, refrigerant       Yes

                                             No  ft>)
                                             No  (b)
                                             No  (b)

                                                                                             Yes  (d)

Toxic  (b)
Weak Mutagen  (c)
Toxic  (b)
Not Known
Very Incomplete

Fjribryotoxic  (b)
Very Inconplete
  (testing in
Weak Mutagen
Weak Mutagen  (c)
Low  (c)
(a) Contains no chlorine.
(b) Work discontinued principally for this reason.
(c) Long-term toxicity test in progress.
                   (d) Developmental process only.
                   NC-Not Commercial.
                   NC(US)-Not Commercial in United  States,

     B.  RECOMMENDATIONS                                    13

                                Conclusions  and  Recommendations
         The  discussions   and   conclusions  in  the  preceding
Sections provide  ample  support  for  adoption  of the  "Assessment
and Surveillance"  regulatory option,  as outlined in  the  Introduc-
tion (Section I).  Assessment and Surveillance is the  only  option
that assures that the theory  will  be more  thoroughly  researched
without  unreasonable  risk  developing,  while  at the  same  time
avoiding  the  inefficiencies and  severe  economic  impact  of
unilateral   over-regulation.    The  availability of  ozone  trend
analysis provides  an  early  warning   system,  and  insures  that
prompt action can be taken  if it becomes apparent that  a  problem
is developing.   To date,  ozone  trend  analysis  has detected  ru>
depletion of the ozone  layer.

         Specifically,  we note that:

         •   There  are substantial  uncertainties surrounding  the
            1979 ozone depletion calculations.   Advances  in  the
            science,  made  since  those  calculations,  reduce  the
            calculated  depletion by  half  or more.   In the  next
            few years,  it  is  expected  that substantial  progress
            will  be  made   toward  resolving  the  remaining  key
            uncertainties.    The  research   is  already  underway.
            Importantly,  it can  be  conducted  under the  umbrella
            of ozone  trend  analysis.

         •   Given  the  availability of  ozone trend analysis  (a
            system to  survey trends in ozone concentration in the
 The summary  comments  which follow  are  brief because each  pre-
 ceding Section  (II-VIII)  contains  a full summary at the  end  of
 the Section.    In  addition,  the  Executive  Summary  provides  a
 high-spot  summary   of  all  key  points   discussed  in  the  full

                               Conclusions and  Recommendations
            stratosphere),  coupled  with  periodic  scientific
            reassessment,  the  risk  is  minimal  in  deferring
            regulation   until  more   accurate  and   complete
            scientific   information   is  available.     This
            combination  assures EPA  that significant  potential
            changes  in  the  ozone can be detected in time to take
            appropriate  action, if  it becomes  apparent  that a
            problem  is developing.

         •  Ozone  depletion,   if  it  occurs,   is   truly  an
            international problem.   Unilateral  action  by the U.S.
            will  have no appreciable  impact  on the  environment
            but will  have severe economic  impact on  U.S. industry
            and the  economy.  In light of  the  failure  of the U.S.
            aerosol   ban to  stimulate  foreign  action,   it  is
            difficult   to   see   how   unilateral   non-aerosol
            regulation  will  meet  with  any  greater  success.
            Rather,  a policy  of Assessment  and Surveillance  is
            more  likely  to  provide   the  scientific   background
            necessary  to  achieve  the  needed  international
            consensus,  and  regulatory  program,  should  regulation
            be determined to be required.

         In short,  we do not  believe  that the  initiation of  any
further  regulation  of  CFCs  at this  time  is   justified  by  the
current body of  scientific  information.   We believe further that
were such regulations enacted,  it  would not accomplish  the  EPA's
stated goals, but it would  create severe and  unfair  burdens  for
U.S. industry and the U.S.  economy.

         That industry  and  the  regulators  of that  industry
disagree is not unusual.  When  the disagreement is  over  the  facts
of  an  issue, it can be beneficial  to  proper  decision-making.
However, our disagreement with EPA over  the CFC/Ozone  Depletion
Issue  has   a  much   broader  basis  than  dispute   over   the


                                Conclusions and Recommendations

interpretation or significance of shared facts.  In this case,  we
believe very strongly that the Agency's programs and process have
been and continue to be inadequate in the areas of:

         •  Adherence to the scientific method

         •  Information gathering

         •  Interpretation of the data

         •  Balancing of risks versus benefits

         •  Balancing of risks versus risks

         •  Providing for needed research, and

         •  Bringing all elements of the issue together to
            enable reasoned decision-making.

         Some specific examples of these inadequacies, taken from
the history  of the  CFC/0-,  Depletion  Issue,  and  from  the  ANPR,

     1.  The Science

         In  the  scientific method,  scientists collect  and  then
analyze data,  postulate  a  theory to  explain  the data (generally
adding several assumptions to do this) and then, importantly, put
the theory to test by performing experiments to prove or disprove
key segments  of  the  theory,  particularly putting  to  test  the
assumptions.   Where  possible,  measurements  in the  real world are
also made  to see  whether  these  results  fit   the  matrix of  the
theory and  its predictions.   Generally,  the  theory  has  to  be
remodeled  several  times  before reaching  a  stage  which  can
consistently account  for all  experimental  data and measurements.


                                Conclusions and Recommendations
At this point,  one  can  say the theory has been  proved,  at  least
according to current  knowledge.   Scientists  try not to  be  "for"
or "against" a theory but rather to challenge the theory until it
can be  demonstrated  to  their satisfaction that  all  observations
can be accounted for by the theory.

         Unfortunately,  the  original  CFC/CU  Depletion  Theory,  a
good  theory based  on  the available  data  at  the  time of  its
advancement,  has  not  always  received  this  classic  scientific
treatment —  i.e.,   being  objectively put  to test,  questioned,
probed, dissected,  reassembled,  etc.,  by  the  qualified  scientific
community.  Perhaps  due  to the  almost "science  fictional"  flavor
of  the theory's predictions  (skin  cancer,   crop  failure,  fish
kills,  climate changes,  etc.,  due  to the   release  to  the
atmosphere of odorless, colorless  and seemingly  benign chemicals
used  throughout society  with  great  benefit),  the  scientific
process for  this  issue  became  distorted  or  at least  partially
subjugated to outside influences.   What  should  have  been science
spilled over into the  media and political arenas.   Participants
in the issue often  chose sides (others were forced  onto sides) --
one was either  "for"  or  "against"  the theory, with  those  in  the
"for"   camp  casting  themselves as  for the  protection of mankind,
and casting those in the  "against"  camp as against human health,
etc.,   for the sake of short-term profit.   As a  consequence, many
chose   not to play at all   [Margulis, 1980].   Unfortunately, many
of those in this latter category were  those who  were  most needed.

         Others, e.g., Allaby and  Lovelock  [1980],  came  to feel
that  the  treatment   of  this  issue  became  so politicalized that
they could not obtain objective hearings.
         And still others, most  of  whom  were  scientists employed
by industry, have had to  fight an ongoing  effort  to  get involved
in the  arena  at  all  because once one was  classified  as "against


                                Conclusions and Recommendations
the  theory"   —   in  this  case due  to  place  of  employment  --
presumably all  scientific  objectivity  was lost  — even  though
those "for the theory" presumably retained this objectivity.

         The search should have been and  should be  for  the  facts
— for  objective  analysis.   In contrast,  consider  the  following
         a)  The  industry research program  (CMA/FPP) has  invited
EPA  scientists  to  its  periodic  reviews  of   the  science  [CMA,
1980c], yet EPA has organized  forums, e.g., SRI  [1980],  in  which
the organizers excluded industry scientists.

         b)  The U.S.  delegations to  international conferences to
discuss the  issue have  not  included  industry  scientists or  their
academic   consultants  (This  is  in  contrast  to  the  European
delegations).    In  addition,   U.S.  delegations  have   consisted
almost exclusively of  individuals  both  in and  out  of  government
who  publicly  have stated  their conclusions  that  the   theory  is
valid or  proved.   Further,  U.S.   industry  scientists   have  been
excluded   from   report  writing   workshops  of  these  various
international reviews, for example, UNEP  [1979] and OECD [1980].

         c)   EPA's public pronouncements on  this  issue —  press
releases,   letters and  information sheets  [Jellinek, 1980a;  1980c;
EPA,   1980a;  1980c; 1980f;  1980g]  — have overstated conclusions
reached by available  studies, ignored conflicting  studies and not
acknowledged  new developments in the  science.

         d)   In  the  face  of  highly  uncertain and conflicting
information,  EPA has  prematurely,  and for all  practical  purposes,
conclusively   announced  that  the  theory has  been  sufficiently
proved  that   further  regulation  is  called  for,   and  as  justi-
fication relies almost  exclusively on worst  case  risk  scenarios
[Jellinek,  1980c;  EPA, 1980a; 1980c;  1980f;  1980g;  1980h].


                                Conclusions  and  Recommendations
         e)   And  last,  the Agency has argued that regulators do

not have  the luxury  of  following good  scientific  practices --

that regulators must respond promptly to  any  theory that  suggests

present  or  future  harm  to the public  or  the environment.

[Jellinek, 1980b].
         In  short,  we  submit  that  EPA  has  not  followed good

scientific practices on this  issue.  By  exaggerating  conclusions
from available  reports,  by selective  use  of  available  informa-

tion, by treating uncertain findings  as fact,  by  not giving  equal

credence to dissenting opinion (even  on occasion  discouraging  the

airing  of dissenting opinion) and by focusing on and  publicizing

worst case risk scenarios,  the Agency has turned  what  should have

been, and  should still be, a  scientific  issue  into  a media  and
political  issue.   The  specifics  of   the  above  examples   are

developed in the body  of the submission.

         The following  statements from Dr.  Philip Handler, past

president of the National  Academy of  Sciences  seem  pertinent:

         "A  primary obligation  of scientists  is to  communicate
         their  understandings  and  the  limits  of  their  under-
         standings.    Since  these   are  all  probabilistic,   it
         becomes very  difficult  for  the media to deal with  them.
         These  past  15  years,  those  areas  of  science   and
         technology that  seemed  to   carry  some  elements of risk
         have been overemphasized while the magnitude  of  specific
         risks   has  frequently  been   dealt  with  somewhat

He went on to say:

         "Scientists have called attention to the  carbon dioxide
         problem,  to  the  effect of   freon  (sic)  on  the   ozone
         layer,  to  the  consequences  of ionizing radiation, etc.
         Once scientists have reported  what they  know, discussion
         has frequently been taken over by  individuals who  claim
         to  represent   "public  science"  or  "critical  science."
         They  seize upon  a problem  and  adopt the philosophy  of
         the Delaney Amendment to the Food  and Drug Act,  which is
         that  only  zero risk is  tolerable,  with little concern


                                Conclusions and Recommendations
         for the  benefits  that  might  be lost.  By and  large  the
         media have shared  the  values  of these critics  and  much
         that appears  in  the  news is offered from that  point  of
         view.    Once  this happens,  public  discussion  becomes
         polarized, and those who try to state  the other side  of
         the case  all  too  easily  come  to be seen as  reckless  of
         the public health."  [Handler,  1980].
         The ANPR
         The  subject  ANPR does  nothing  to change  our views  or
allay our fears of the Agency's process.

         a)    The presentation  on  the science  fails  to  mention
critiques of the science justification relied  upon by EPA, [e.g.,
Du  Pont 1980a;  1980b],   fails  to  mention conflicting  reports,
[e.g.,  UK  DOE,  1979;  EEC,  1980],  and  ignores  information
available to  EPA,  [e.g.,  Brasseur,  1980;  CMA, 1980a] ,  on recent
changes in the  science — changes which  substantially  reduce the
calculated  "predictions"  of  ozone  depletion  upon  which  EPA
justifies  its  need  to  regulate  now.   Perhaps  even  more  dis-
turbing, the  results  from analyses  of actual  ozone  measurements
provided  to   the  Agency  [CMA,  1980a;  1980c]  —  results  which
indicate depletion is not occurring as predicted —  are  not even

         b)    The  question of risk  continues  to  receive  a  black
and white' treatment — regulate now  or wait until  its too late to
head off major  damage  -- while not  mentioning the middle ground
of waiting for  several additonal  years,  under  a  close  monitoring
of  the  situation,  in order  to develop  the   science  needed  to
resolve the underlying  key  uncertainties.   Neither  did  the ANPR
make mention  of the  findings of  its  own consultant  [SRI,  1980]
which issued a report based on a workshop of participants invited
by EPA  in  which   it  was  concluded  that  almost  all  the  key
uncertainties  could be resolved within roughly 5  years,  and that
it would be "cost-effective" to do so.

                                Conclusions  and  Recommendations
         c)   Submissions [Masten, 1980;  Du  Pont, 1980c;  1980e;
Block, 1980]  have  been made  to  EPA  pointing out  errors in  EPA
analyses,  for  example,  permit pound  calculations, growth  rates,
and erroneous  inclusion  of  non-emitting CFCs under the  intended
regulatory  scope.   And  EPA  acknowledged  overestimates had  been
made  [Muir, 1980].   Yet,  all  these errors  persist  in the  ANPR.

         d) The proposals for  unilateral  regulation presented  in
the ANPR make little sense from an effectiveness standpoint.   EPA
presents these  regulations  as  being necessary, among other
reasons,  to   "stimulate  coordinated  worldwide  [regulatory]
cooperation"  [EPA,  1980e],  yet  the  ANPR offers  no  analysis  or
support   for   any   finding  that  such  a   response   would   be

         e)   The  EPA's   presentation   in  the  ANPR of  economic
incentives  regulatory  options  for comment  is  not  adequate  in
content to support  the  apparent decision to  employ these  options.
The Agency bases its presentation on  work  done for it by  the  Rand
Corporation  [Rand,  1980] .   Industry  was  asked to critique  the
final   draft  version of  this  study.    Du  Pont did  so  [Du Pont,
1980c] , pointing out that the  study  was a good start   but  should
not be used as a document on  which to  base a  decison because:   1)
the data base  was  obsolete,  2)  the  scope of  the   study   was
artificially constrained  in  a  manner   not  consistent  with  real
world   production and  use of CFCs, and  3) the study  was not  an
economic impact study.   We  also  pointed out that we were  unable
to  provide  in-depth  critique  of  the  economic   incentives
regulatory  options  analyzed  by  Rand  because only the  concepts
were  presented —  no  "How to  implement?",   or  "What  would  they
look  like?",  or "How  would  they  actually  work?"  This was  in
March,  1980.    Yet, the  ANPR  presents  the  same unfleshed-out
proposals  for  comment.    Our  previous comments  and  questions
remain unanswered and unacknowledged  but now we asked  to  comment
again   on  the  same  exact  concepts.   Even  more disturbing  is  the


                                Conclusions  and  Recommendations
fact that EPA apparently has used the Rand  study  to  conclude  that
these  regulatory  options are  preferrable  [EPA,  1980e;  Jellinek
1980a;  1980c] ,  without having performed  the  necessary work  (as
pointed  out   in  our  March,  1980  submission)  to  allow  such  a

         A related  point  is that  industry  generally opened  its
books  to  EPA's  contractor,  the  Rand Corporation,  with  the
understanding that  the  final  data  base,  on which the  regulatory
options  would  be evaluated  by Rand  and  by EPA,  would be  made
available to industry to enable parallel analysis  [Mader,  1978],
Yet, to date, this data base has  not been  released.

         f)    Du  Pont has  met with  EPA  [Du  Pont,  1980f]   and
provided  submissions  [Du Pont,  1978;  1980d]  on  our efforts  to
develop alternative fluorocarbon products.   We have made it  very
clear  that great  difficulties have  been  encountered.   Yet,  EPA
has  informed  audiences  [DeKany,  1980]  that great  progress  was
being  made  and  EPA  was optimistic   that  Du  Pont  was  near  a
breakthrough.   Further,  the  ANPR  makes  no   mention  of   the
difficulties  in,  or  low  probability   of,  developing   safe
alternative compounds.

         g)    Du  Pont  has  outlined  the   risks  which  could  be
expected  to  develop  from   use  of  currently  available  products
(which  would have  to  be  used  were  EPA   to  be  successful  in
restricting the availability of CFCs)  [Du  Pont, 1978;  1980c], yet
no mention of these risks appears in the ANPR.

         h)   EPA was informed of  the possible energy penalty  from
CFC  regulation   [Battelle,  1980].    Yet  no  mention  of  energy
consequences  appears in the  ANPR.

         i)   And  last,  any  hope we  had been  harboring that  our
response  points  could  make   some  difference  in  the  Agency's


                                Conclusions and Recommendations
program  was  dashed  after  viewing  the  rulemaking  timetable  in
EPA's Chlorofluorocarbon Phase II Development Plan [EPA,  1980,
p. 3] — a timetable showing:

         •   A due date (Nov., 1980)  for the initial  draft of the
             proposed  rule  bef o re  comments  on  the ANPR are
             received (due by January 5, 1981). .

         •   A due  date  (Jan.,  1981)  for the final draft  of the
             proposed   rule  before  ANPR   comments  could  be

         •   A plan  to publish  a formal  proposed  rule  (March,
             1981)   3 months  before  EPA will  receive  a  final
             report  from  its  contractor,   just  hired  in  Oct.,
             1980,   to   study  in more  detail  various  critical
             aspects of  the  the economic   incentives  regulatory
             options now being favored by EPA for  use.

         Whatever vested  interest industry  may have  in  a  given
decision-making  situation,  there are  major  mutual  benefits  to
joint open cooperation with the  regulating  agency.  Without such
cooperation at  each step in  the decision-making process,  vital
inputs  are  lost which  could   minimize  the  economic  cost  of
regulation, identify adverse consequences of regulatory scenarios
and expand the regulatory options under consideration.

         We  reiterate  for  the  record  our  fervent  belief  that
regulatory decision-making which:

         •   fails to measure the validity  of the theory against
             real world measurements,

         •   fails to consider the need  for, or  the  consequences
             of,  intermediate delay  versus  immediate  action,


                                Conclusions and Recommendations

         •   fails to assess fully the consequences of regulatory
             action, and

         •   fails  to  balance the  risk  generated  by  regulation
             against the risk from no regulation,

is seriously  flawed,  and  a  luxury which  the nation,  its  busi-
nesses, and its citizens cannot afford.

         We  conclude,   therefore,   that  both  legal  and  policy
considerations mandate  that  EPA  defer CFC  regulation  until  more
accurate  and  complete  scientific  information  is  obtained  and
other necessary studies are performed.  We earnestly request that
EPA  commit to  a  solution of  the  uncertainties  in  the  ozone
depletion  theory  and  work  towards  an  international  consensus
before  reaching   a  decision  to  engage  in  further  unilateral
regulation of CFCs.   Specific recommendations for  action  by EPA
follow in the next section.

                                Conclusions and Recommendations

         The following are Du Font's  recommendations  for  actions
to be taken, or at  least  initiated, by  the  EPA,  which we  believe
will lead  to  a proper  resolution  of  the CFC/ozone  Controversy.
Should this resolution  dictate  the need for  further  regulation,
such actions as outlined  herein  will  help  ensure a  balanced  and
cost-effective regulation.

         •   EPA  should   promptly   arrange   for   an  updated
             assessment of  ozone  trend  analysis by  a  qualified
             outside body, such as the NAS.   If an outside review
             body cannot  be employed,  a joint  industry/govern-
             ment/academia  symposium  should  be  held to  review
             objectively the method opposite  the questions:   How
             sensitive is  it?  What is the  confidence range?   How
             and when  can it be  further improved?    A  companion
             recommendation  would be  for  EPA  to  support   the
             further development of trend analysis.

         •   EPA should arrange  for an  objective thorough review
             of the  science  (both the  theory  itself  and  effects
             of ozone  depletion)  by  an  international  panel  of
             qualified scientists.  A joint NAS/UK  Royal  Society
             effort  would  be a  logical  starting point.   Inter-
             national political organizations such as the  Organi-
             zation for  Economic Cooperation  and  Development
             (OECD)   are not  adequate  for this  assessment  due to
             the  limited   participation of  scientists  and   the
             political pressures present in such groups.

         •   Even if  an  international review  cannot  be promptly
             arranged,  EPA  should recontract  with  NAS   for  an
             updated review of the science,  followed  by a yearly
             reassessment.   The  predicted  problem is a long-term


                       Conclusions  and  Recommendations
    problem.   The  science  is  changing  rapidly.   Any
    regulatory  decision  based  on  the  science  at any
    point in  time  must  be  reassessed as the  scientific
    justification for that  decision  changes.

•   Between NAS reports,  EPA should meet quarterly with
    the Chemical Manufacturers  Association  (CMA)  Fluoro-
    carbon  Project  panel  (FPP),  and  other  appropriate
    advisors,  to stay current with the board  spectrum of
    scientific developments.

•   The Agency  needs  to  publish  the  parameters  of its
    decision-making on the  issue:

     i.  What  specific level of ozone  depletion does EPA
         consider to pose an unreasonable risk to health
         and the environment?

    ii.  What will  it  take  to  convince  EPA there  is or
         is not a serious problem, e.g.,

          a.  What sensitivity  of ozone  trend analysis
              is  accepted  (and  on  what  basis)?;  What
              ozone  trend  analysis  results would  be
              viewed as  a  significant  indication  of   a
              developing  problem?

          b.  What  other science developments would be
              viewed as significant?

          c.  What criteria does  EPA use  to judge the
              credibility   of   sources  and  reported
              developments,  and which  sources meet  these

                    Conclusions and Recommendations

       d.   What will EPA do  to ensure staying abreast
           of  developments?

       e.   What  is   the  process  EPA  uses  to  get
           developments assessed and to the attention
           of  the regulatory decision-makers?

       f.   What  must  happen   internationally  to
           convince  EPA  of the need or  lack  of need
           for further U.S.  regulation?  By whom?  In
           what time period?

iii.   How  does  the specific  proposed  regulation
      result  in reduction  of risk on  this  issue and
      what  is  the  magnitude of this reduction?  If in
      the   periodic   reviews  of  the  science  it  is
      determined  the risk  has decreased signifi-
      cantly,  what  are the  parameters  of regulatory

 The  Agency needs to redefine  the problem of  ozone
 depletion  generically and then determine and justify
 whether  CFCs  should be  treated  in  isolation  from
 other potential  depleting compounds and in isolation
 from  potential  ozone  increasing compounds.    The
 charge to EPA of the  1977  Clean  Air  Act Amendments
 is protection of stratospheric  ozone,  not  the  regu-
 lation of  CFCs.    What  is  the  justification  for
 including  CFC-22 under  the regulation  when methyl
 chloroform represents a greater total potential
 problem?   Conversely,  modelers now  include  the
 CCU/ozone  augmentation effect.   This  needs  to  be
 factored  into EPA's assessment.

                       Conclusions  and Recommendations
•   On the international level, EPA  should  abandon its
    excessively political strategy  in favor of an effort
    to  help   obtain   the   needed  global   scientific
    assessment and  resolution.    The  Agency  should
    publish  its plans  for  furthering  the  scientific
    resolution of  this  issue.

•   As pointed  out  in  previous  sections,  EPA must com-
    plete  a  significant  body  of  work  before   it  can
    support the  proposed  regulatory options.   Further
    assessment and  study are  needed  in  the areas of:

     i.   Emission  reduction and alternatives.   What is
         achieveable,   in  what  time-frame  and  at  what

    ii.   Impact of  economic  incentives options.   What
         would  be  the  actual  impact  on  industry  and
         consumers  if  the  options  were applied  to  all
         CFCs  and  all CFC uses as proposed?

   iii.   Energy penalty of  regulations.

    iv.   Risk   from  alternatives substituted  for  CFCs,
         and  a risk-risk assessment  of  continued CFC use
         versus use of  alternatives.

     v.   A detailed fleshing-out  of  the  incentives
         options for comment  — specifying  exactly how
         they   would  be structured,  how they would  be
         implemented and how  they would function.

•   We recommend that EPA hold a series of  informational
    exchange  meetings around  the country to discuss its

                       Conclusions  and  Recommendations
    proposals, hear  concerns  and gather information  to
    help its studies of i.-iv.  above.

•   EPA needs to employ a more  realistic timetable.  The
    current   timetable  shows  a  completion  date   of
    January,  1981  for  the final draft  of  the proposed
    rule.  The ANPR  comment  period  closes  January   5,
    1931. Further,  we  question how EPA  can  digest and
    evaluate  ANPR  comments  and  submissions  in time  to
    publish a formal proposed rule in March,  1981.  The
    proposed  timetable  appears  unrealistic  unless EPA
    has no interest in the ANPR comments and  has  already
    made  up  its  mind  on how  to  proceed.    Given the
    magnitude  of   the  issues  which   remain  to   be
    addressed, particularly  on  the economic  incentives
    options,  we  fail  to  see how a reasonable proposal
    can  be  finalized  in  this  period.   We ask for

•   Due to the untried nature of the economic  incentive
    options,  the numerous questions  and concerns  which
    have  yet to  be answered,  and  the total  lack   of
    experience with these regulatory  options  in the real
    world, if EPA  elects  to  proceed  with their use,  we
    would  strongly urge  that  a  pilot  test  first   be
    undertaken.   The options  should first be  applied in-
    to a  carefully monitored industry or industry seg-
    ment, and the  impacts thoroughly evaluated,  rather
    than  immediately  applying  this theoretical  regula-
    tory  approach  to  the CFC  industry  which has such
    broad and major impact on the total  economy.

•   If EPA decides to promulgate a rule,  (regardless  of
    which  regulatory  option  is  selected)   the   Agency
    should issue an annual report detailing:


                   Conclusions and Recommendations
  i.   Results  of  actual  ozone  measurements.    Has
      depletion  been  detected?   If so, how  much  and
      at  what  rate?
 ii.   Computer   calculated   or  estimated  ozone
      depletion  based  on  best  current  information.
      What  are the current model calculations?

iii.   Status  of  U.S.  versus   world  regulatory
      situation.   Has  the  U.S.  regulation  achieved
      the  Agency's   goals?    Have other  countries
      followed  EPA's  lead  or  is the  U.S.  example
      being ignored?

 iv.   The  continued  nee'd  for  the  regulation  as

  v.   The  economic   impact   of  the   promulgated
      regulation, particularly  if   new  regulatory
      concerns are involved.  This should  be compiled
      by  major  market  segment  and business  size,  as
      well  as a summary report.

 vi.   The identity  of  substitutes employed  in place
      of  CFCs  by  use category.   For  all  substitutes
      (and  especially new substitutes)  safety data,
      toxicity  data,  energy  efficiency,  development
      cost  of  replacements   and   redesign  cost   for
      manufacturers  should be monitored for  a period
      of  10-20  years  to  determine the  true  cost  of
      regulation  for  guidance  in future  rulemaking