Transcript of Proceedings
ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF PESTICIDE PROGRAMS
ADMINISTRATOR'S TOXIC SUBSTANCES ADVISORY COMMITTEE
VOLUME II
Washington, D.C.
March 20, 1980
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ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF PESTICIDE PROGRAMS
VOLUME II
U ADMINISTRATOR'S TOXIC SUBSTANCES ADVISORY COMMITTEE
6 I Rooms M-3906-3908
Waterside Mall
7 Washington, D. C.
8 I Thursday,
March 20, 1980
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9:00 a.m.
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APPEARANCES:
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Dr. Selina Bendix, Chairperson
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Professor Michael S. Baram
14 Dr. Theodore L. Cairns
Dr. Max Eisenberg
15 Ms. Becky F. Moon
Mr. Thomas W. Mooney
16 Dr. Edward P. Radford
Dr. Louis E. Slesin
17 Dr. William L. Sutton
18 Ms. Marsha Ramsey, Executive Secretary
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25 VOLUME II
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TABLE OF CONTENTS
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ECONOMIC ANALYSIS: HOW ARE THE RISKS, COSTS AND
4 BENEFITS DETERMINED AND WEIGHED PRIOR TO MAKING
CHEMICAL TESTING AND CONTROL DECISIONS?
Panel:
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DR. EDWIN CLARK
7 Associate Assistant Administrator
Office of Pesticides and Toxic Substances
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DR. NICK ASHFORD
9 Assistant Director
Center for Policy and Alternatives, MIT
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DR. DAVID HARRISON
11 Council of Economic Advisors
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ASSESSMENT OF TSCA
13 IMPLEMENTATION AND DIRECTIONS 94
14 By:
15 STEPHEN D. JELLINEK
Assistant Administrator
16 Office of Pesticides and Toxic Substances
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PROCEEDINGS
CHAIRPERSON DR. SELINA BENDIX: At this time, I
3 would like to call the meeting to order.
4 This morning, we are going to have a panel of eco-
nomists looking at the problems of economic analysis of the
6 impacts of regulating or not regulating toxic substances.
7 The panel will be chaired by Dr. Edwin Clark, Asso-
8 ciate Assistant Administrator for the Office of Pesticides and
Toxic Substances.
10 Next, to my right, is Dr. David Harrison, Associate
11 Professor of Economics at Harvard, now in the Council of Eco-
12 nomic Advisors in the Executive Branch.
13 Next to him is Dr. Nick Ashford, Assistant Director
14 for the Center for Policy and Alternatives at MIT.
15 Dr. Clark?
16 ECONOMIC ANALYSIS: HOW ARE THE RISKS, COSTS AND
BENEFITS DETERMINED AND WEIGHED PRIOR TO MAKING
17 CHEMICAL TESTING AND CONTROL DECISIONS?
18 DR. CLARK: I volunteered to start this panel to
19 talk a little bit about what EPA and the Office of Pesticides
20 and Toxic Substances is presently doing in terms of economic
21 analyses; and then let Nick talk for a little bit about some
22 of the problems involved, particularly on the benefit side.
23 And then let David talk about what the regulatory
24 analysis review group, which is run by the Council of Eco-
95 nomic Advisors - what they would like to see done in terms of
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these analyses.
I also have a representative here from our Office
of Regulatory Analysis who will answer any specific questions
about what we're doing.
Sammy, maybe you should come up and sit in front here
so that people can get at you quickly.
Judy Nelson could not make it.
TSCA, as you are all aware, is what is called a bal-
ancing statute. It requires some sort of balancing of risks
and cause or risks and benefits. These terms are often con-
fused, particularly when one talks about benefit-risk weighing
and benefit-cost weighing, or analyses, because the benefits
in the benefit-risk comparison are actually the costs in the
benefit-cost analysis.
So this is going to be very confusing for a while,
but maybe most of you know this already.
Essentially, what we do is, on one side, we look at
the risk associated with the continued use of a substance.
19 This is a risk to public health and to the environment. These
20 analyses are based primarily on animal tests, epidemiological
21 studies, exposure estimates, et cetera.
22 And we compare those risks with the costs of con-
23 trolling the substance.
24 Now, the costs of controlling the substance are, to
25 some extent,, the benefits of controlling the substance and this
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1 is where the confusion comes in when we use these terms, but
2 what we're doing is essentially comparing the risk that will
3 result from the substance's continued use to the costs asso-
4 ciated with controlling the substance.
5 . The risk side, at this point, is primarily a scienti-
6 fie process, making scientific estimates of the risks as I say
7 based upon the epidemiological studies, whatever evidence there
8 is like that we can find, and these are compared then to a
9 cost which is developed through the regulatory analysis.
10 Typically, these cost estimates of the regulatory
11 analysis start with an estimate of the compliance expenditures
12 that will be associated with a particular regulation. This
13 while process was developed in EPA with the more traditional
14 programs: the air pollution control, the water pollution con-
15 trol programs.
16 We have, for the most part, taken this methodology
17 developed for these regulations and tried to transfer it over
18 into the area of toxic substances control. It is not directly
19 transferable, as I will discuss a little bit at the end.
20 we have different sorts of problems and we are in a
21 process of trying to develop appropriate methodologies to deal
22 with these problems, but let's start with the way, then, we
23 are transferring it.
24 You're saying, "Okay, we're going to regulate. We're
25 going to issue a regulation." Let's take an example, toxic
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1 substances.
2 This regulation might be a labelling regulation. We
3 will estimate as a cost, versus the cost of just putting the
4 labels on the cans, how much is on the containers. How much
5 is this going to cost, outlays and expenditures by the firms?
6 Primarily, we go into this usually by hiring a con-
7 tractor who is familiar with the industry. This contractor
8 may or may not - depending on the knowledge available to it,
9 the information available to it - may or may not go out and
10 interview firms to find out what they think the cost' will be,
11 but will nevertheless try to come up with an independent esti-
12 mates of these costs.
13 We also have to look at the benefits that the sub-
14 stance will provide. Now, labelling is not a good example of
15 this. Our pesticide regulation would be a better example or
16 if we were to regulate something like asbestos that would be a
17 good example.
18 But the benefits that the substance provides our
19 society that will not exist if we restrict its use, now these
20 benefits are limited by the cost of substitutes for them, for
21 that substance.
22 For instance, if we regulate asbestos and we can
23 estimate that the use of asbestos -- I am not putting forth
24 a hypothetical analysis. I wouldn't say that we've done this
25 one.
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Say we decided to regulate asbestos and one of the
uses of asbestos was to control a fire in buildings - keep
3 buildings from burning down - then we could estimate the in-
4 creased incidence of buildings burning down if there were no
asbestos, and then we could then put a cost on the loss to our
6 society from the increased number of buildings that would burn
7 That would be the maximum cost associated with that
8 regulation; however, there would probably be substitutes for
9 asbestos in the control of fire. So the limit on the com-
10 pliance of these costs would be the cost of using a substitute
So these are two types of costs that we will esti
12 mate directly: the actual expenditures by the firm, and the
13 benefits of the substance in use.
14 Once we have these cost estimates, we then try to
15 look at how they will impact our economy and the industry be-
16 ing regulated. We will try to look at the likelihood of firms
17 closing because of this.
18 We will look at price increases in the industry and
19 estimate those, the impact on inflation so to speak. Particu-
20 larly under TSCA, we look at the impact on small firms. This
21 is a particular requirement, to look at that under TSCA, whe-
22 ther small firms will be particular hard-hit.
23 And, under TSCA, we have this requirement to look at
24 the impact on inflation. That is one of the areas where we
25 have substantial difficulties because we don't understand very
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much about the inflation process.
We will get all these costs together and this will
provide some basis of our regulatory analysis which is on the
cost side of these — Well, the benefit side, whichever way
you look at it. It's
It's a benefit, on the benefit-cost analysis side,
or it's a cost on the benefit-cost analysis side. That, of
course, is not the basis of our regulatory analysis under TSCA,
but it is not all we're doing in terms of economic analysis.
We are spending a fair amount of time looking at
economic incentives associated with regulating toxic sub-
stances. You were given a report this morning which summar-
ized a retreat that the senior officer from TSCA had last sum-
mer.
One of the conclusions that came out from that re-
treat is that we had to emphasize and analyze very carefully
the potential for providing economic incentives to the industry
to essentially do what TSCA wants them to do.
So that is one of the areas that we are involved in.
Another area is looking at the whole question of
innovation, a very difficult question. What is innovation?
How to we effect it? How can we reduce these effects? And
things like that.
They got involved in a number of other policy-type
analyses.
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That very briefly summarizes that side, and I'll let
Nick go on and talk about some of the problems of estimating
some of these economic analyses.
Nick?
DR. ASHFORD: Should I talk about 15 minutes or so?
6 I think that the prime motivation for requiring eco-
7 nomic or regulatory analysis is accountability of the agency
8 for regulating toxic substances: the accountability in terms
9 of whether it has been regulating a particular hazard to the
10 extent that the Act - in this case TSCA - requires; and, se-
ll condly, whether it's choosing the right kind of hazards to re-
12 gulate in a world where many more hazards are regulatable than
13 can be regulated.
14 I think the debate over cost-benefit finds different
15 prejudices that people feel about the accountability of this
16 agency and other agencies. I think those that tend to demand -
17 I say "tend", it's not a hundred percent corrolation - tend to
18 demand rigorous analysis come to this area with a prejudice
19 that the agency doesn't know what it's doing and is not using
20 public funds wisely.
21 Those that tend to resist that kind of analysis say
that the analysis costs money, delay regulation, and could be
23 better spent - they, too, are cost-effective conscious, but
24 it could be better spent moving on with regulations rather
25 than try to tune a system that doesn't fine tune.
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l I think there are some methodological problems in
2 I cost-benefit problems that you could exercise to provide fine-
3 tuned guidance as to how to regulate a particular substance or
4 what to regulate just is not possible.
5 I am not going to pound my fist on the table and say,
6 "You can't value a human, life." It's immoral and all the other
7 arguments with which I have sympathy or empathy. But talk
8 about the fact, when you really sit down to do the analysis,.
9 you run into such immense problems of two kinds that it really
10 becomes an analysts' game and a reflection of the analysts'
11 prejudices.
12 The two problems are: one, that the data just isn't
13 very good; and, number two, that there are methodological dif-
14 ficulties which, in order to overcome, require that you make
15 certain assumptions, and those assumptions are can take such
16 forms that the analyses can really come out any way you want
17 them to. .
18 I will try to be specific without being too technical
19 Let me work a word about costs and then, because Toby pretty
20 well covered it, move to the issue of benefits.
21 The issue of costs is difficult because the data in
22 terms of compliance costs mainly derives from the sector that
23 is likely to be regulated. I'm not being too unkind, I think,
24 if I say you would think there was a certain upward bias in
25 those estimates.
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But more to the point, bias aside, is that in any of
these estimates - and I have looked at hundreds, virtually, of
the so-called economic impact statements that have been per-
formed by agencies over the last few years -.you don't find
economies of scale taken into account in the total cost.
You don't find the issue of a learning curve, which
is the ability of an industry to comply more effectively as
they learn how to control a particular hazard.
9 Most importantly, you don't take into account the
10 technology-forcing aspect of a particular regulation that
11 gives rise to a different kind of technology of three kinds:
12 new kinds of direct-control technology, which is what the con-
13 trol business is about; and, secondly, process redesign tech-
14 nology; and, thirdly, the coming to market and development of
15 substitute products.
16 Now, mind you, we're talking about costs as being in
17 a transition period when virtually no costs were being ex-
18 pended by the firms to control many kinds of pollution to a
19 time when it would be built into the plant design and product
20 design.
21 We're in a transition period, and we're making up
for lost time and the money we spend is going to be very dif
23 ferent than what it will be the next time around.
24 Yet the economic impact assessment tends to focus on
25 that transition period and the estimation of those costs with
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l all the problems that emerge.
2 Now, before I go to the benefit side, let me make
3 some more points.
4 One is: Whenever you compare costs and benefits for
5 a particular regulation and approach, you can never do that in
6 the abstract. You would have to ask: What would have hap-
7 pened with vinyl chloride? What would have happened with lead
8 had EPA or any other agency not taken its particular action?
9 And the pharmaceutical regulation is a case in point.
10 It turns out that most of the money that may have been expended
11 to demonstrate safety would have been expended anyway by the
12 firm; and when you ask what the costs of a particular regula-
13 tion, you have to say costs again what? Against what would
14 have occurred with fear of products liabilities suits?
15 When you compare the EPA and the ambi-inhalant stand
16 ard, you have to ask: If there were no standard, what kind of
17 costs would have been expended by the firm in complying with
18 the OSHA lead standard which required process redesign?
19 So it's not fair to do an economic impact on the
20 ambient air and then 'do one for the OSHA lead standard, and
21 then add those two things together. Not only is that wrong,
22 you have to create a baseline that is sensible.
23 The second point is that the real effect of these
24 regulations is to force and develop new development, and the
25 beneficiaries of the regulation.
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1 If we were faced with a model that most pollution in
2 the toxics area was really trying to remove the last five per-
3 cent of the toxics, we are now in the point of diminishing
4 returns. One would say you have to draw the. line somewhere.
5 But the truth of the matter is, very little is regu-
6 lated that ought to be regulated on scientific grounds and
7 that, for a long time - a decade or more - we will likely be
8 able to redesign project technology, generate new products
9 which will benefits the firms substantially and lead to lower
10 citizen and work protection.
11 We are on the lower part of the curve, not the point
12 of diminishing returns for most of the toxics that are really
13 of serious concern today.
14 I think the facile assumption that we've gone as far
15 as we can go and we have now reached that point ought to be
16 looked at.
17 What about the issue of costs and benefits? There
18 had been a time when benefits - which is reduced disease, suf-
19 fering, psychic loss due to deteriorated environment - were
20 estimated in terms of market signals that gave evaluation in
21 terms of dollars.
22 In the workers' situation, people talk about hazard
23 pay as measure of risk of acceptable exposure to toxic sub-
24 stances. I think the time is rapidly diminishing when the
25 people really have much faith in the dollar evaluationof the
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health costs and so on.
They realize they're trying to monetize benefits in
3 comparing them to costs and asking whether the benefits exceed
4 the costs is not a very acceptable market measure.
5 What has succeeded the comparison of benefits and
6 costs in terms of dollars is the magic benefit to cost ratio.
7 At first glance, it's appealing.
8 Take something like NHTSA, National Highway and Traf-
9 fie Safety Administration, the number of talleys per dollar
10 expended. Why shouldn't we try to maximize the benefit to
11 cost ratio?
12 Here we have two different concepts coming in. We
13 have cost effective criteria, or health and safety effective-
14' ness criteria.
15 Cost effectiveness type criteria means really, tech-
16 nically, the following: Given that you want to reach a cer-
17 tain target of fatality reduction, let's see if we can mini-
18 mize in doing something in health effectiveness or safety
19 effectiveness.
2° In other words, hold it constant and minimize the
21 costs with cost effectiveness. What you're trying to do is,
22 given a given expenditure that the agency is given of that it
23 can impose upon an industry, how much health can you get for
24 the bucks? You maximize the benefits to be derived.
25 That sounds manifestly sensible except when you even
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as uncomplicated as traffic fatality prevention, then you
realize it's not just the number of fatalities. It's the
number of serious injuries, disfigurement.
On the benefit side of the ratio, you have to start
to ask: How many serious injuries is a fatality worth? Five?
Five serious injuries equal a fatality. How do you relatively
rank the different kinds of health and safety consequences?
And you find there is no real magic rule. There is
no unified theory which allows you even to aggregate the ben-
efits so that you can make a sensible comparison.
The glaring example of failure to look in a sophisti^
cated manner is with the OSHA benzene provision. Well, it's
not just cancer deaths from benzene, but it's other kinds of
blood disorders. It's pain and suffering.
These are the things that just haven't lent them-
selves to the consensus in terms of evaluation. So it be-
comes very difficult.
The second thing that is really difficult is: On
the compliance cost side, while it may be possible, let's say,
to calculate for the industry what complying with the one part
per million standard of toxic substances would be, you can
generate a curve, a probability curve as to what the variation
from compliance costs would be.
You get a rather narrow curve. That is, you can
estimate compliance costs within a fairly narrow range. How
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1 about the number of cancers prevented from benzene exposure?
2 You can take a simple-minded view of the world and
3 use a linear extrapolation theory, and you get a single number,
4 a single point estimate. But the trouble is, anybody who
5 knows epidemiology and toxicology, the complexity of the real
6 life situation, where other hazards exist, where there are
7 predispositions in some cases to disease, where there's a
8 history of past exposure —
9 Remember, we're in a transition period where there
10 are disease mechanisms of many kinds operating. Do you real-
11 ize a single model giving rise to a single point estimate,
12 which is analogous to a compliance cost estimate, is really
13 fraught with great difficulty?
14 The truth of the matter is, if you were to draw a
15 curve which will demonstrate the risk profiles compared to the
16 cost profiles to comply with the one part per million standard,
17 it would be from theoretically grounds, from mechanistic
18 grounds, from computation grounds very broad indeed.
19 And the truth of the matter is you can never really
20 get the curve.
21 It may be that the most likely estimate, most likely
22 single point estimate in the number of cancers from one part
23 per million exposure to benzene is five lives per year, but
24 with the taking of previous exposures the number could probably
25 be five hundred parts per year.
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1 It's not the most likely possibility, but what do
2 you do faced with a situation that there is a five percent
3 chance that it might be five hundred deaths per year. You see
4 it's no longer a single point estimate and you can't get the
5 data.
6 What you can say, perhaps, is that exposure to lead,
^ which is a classic toxin, might give you a narrower range of
8 uncertainty on the health effect than carcinogens. You might,
9 you might not. Different toxins are different.
10 But it really does require - I've done this in great
11 detail, it's hard to do - require a tremendous knowledge of
12 multiple exposure that people are exposed to.
13 The mobility of populations out of a polluted or work
14 area, age differences, sex is a determinant, in some cases, of
15 disease - smoking habits, lifestyle, alcohol - and it is very
16 difficult.
17 I must recall to you, there was a panel that sought
18 to look at all the data that has been accumulated between air
19 pollution and mortality and morbidity; and the conclusion of
20 that intense look by a panel of experts is that they have made
21 so many assumptions and not controlled for so many variables
22 that there is not very much we can do about the relationship
-3 between air pollution and disease, and we've been doing these
24 studies and spent millions of dollars on them for fifteen
25 years.
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1 Now, what do you do then? Do you just throw your
2 hands up and decide to be arbitrary? No. The answer is: No,
3 you don't do that.
4 We know from animal experiments that there are some
5 very powerful toxins out there. There are around two hundred
6 carcinogens that very few people would disagree need some sort
7 of regulation. There are classical toxins that have special
8 limits set for them because they were set on the basis of
9 acute exposure and animal exposure.
10 We have in the order of a thousand materials in com-
11 merce today that will take all the resources for many, many
12 decades to regulate if that's the mechanism of control.
13 Now, faced with that difficult decision-making part,
14 what does an agency like EPA do? Does, it conduct benefit-cost
15 calculations to decide which is the priority list?
16 I think not. :i think you can't do that. I think
17 what you'll have to ask is: What is the real impact and what
18 is the real benefit to be derived from regulation?
19 There are two. One is to legitimize, in the eyes of
20 the regulated and the general population, the fact that real
21 problems are being addressed, that we're going after whales
22 and not minnows. I don't believe we're going after minnows.
23 I think we're really going after some of the serious
24 problems.
25 The second thing you have to do, you have to give a
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1 signal to the industrial establishment that it's time to re-
2 design an industrial plant, to redesign an industrial process
3 and there are tremendous market opportunities for penetration
4 in international competition for .an industry that is ingen-
5 eous.
6 We had Monty Thodow at a conference a few days ago
7 stand up and volunteer that they think regulation has created
8 market opportunities for the company, and they think it is
9 about time that they got about the task.
10 I think this evolution in attitude is occurring cer-
11 tainly among some firms, not as many as we would like; but the
12 leveragine effect of giving enough signals to enough of the
13 sectors, not just the chemical-using industry, is really what
14 the payoff of regulation is about.
15 Now, if you do a benefit-cost analysis and construct
16 a benefit-cost matrix, what you can put in there and what re-
17 quires some faith and judgment and art is the answer to the
18 question: If you regulate benzene, will you have compliance
19 with toluene and xylene?
20 Will the people who could produce vinyl bromide be-
21 gin to control without regulation? The answer is yes., So
22 even if the benefit-cost matrix doesn't look so attractive fron
23 a particular substance perspective, if it leverages in an anti-
24 cipatory way - and, by the way, in a cost-effective way be-
-5 cause each firm has come to do what it needs to do for most of
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1 the substances that are not regulated - then you really have a
2 payoff.
3 I can't calculate the payoff any more than you can
4 calculate what the Internal Revenue Service managed to encour-
5 age in terms of voluntary compliance by its selective auditing.
6 You certainly couldn't compute all the fines that people have
7 paid for violating IRS rules and say, that's the payoff.
8 That's now much dishonest reporting we managed to
9 catch; and the value of the agency is that there's a tremendous
10 amount of voluntary and participatory activities, and that is
11 the real point.
12 How does an agency regulate? Let me suggest that it
13 should look at how many different sectors it is affecting,
14 where the chances for real improvement are, where the indus-
15 tries are that have not been innovative and stand a chance
16 either to be innovative themselves or to be replaced - yes,
17 replaced - by new entrants, new products.
18 And that is why we need to move the economy ahead in
19 terms of producing sensible kinds of products and product
20 exposure.
21 And, now, given what is necessarily a very broad view
22 and which is difficult to justify except by looking at the few
23 cases in which regulation has occurred, I would find it dif-
24 ficult as an analyst to stand in front of the Council of Wage
25 Stability and say how many dollars in terms of health costs
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l saved or how many bodies did you save in terms of benzene regu-
2 lation under the OSHA Act?
3 To give you an example, the tremendous leveraging
4 effect gave rise to a regulation that said, workers have a
5 right to refuse hazardous work. Well, that means that people
6 in the workplace who objected to dangerous hazards have a
7 right to refuse to work .with that substance.
8 That's the effect of OSHA regulation. That behavior
9 alone can do more than any single regulation ever issued,
10 argued about or having a cost-benefit equation.
11 So I've termed cost-benefit analysis in other places
12 a paradigm in a closet; and the reason I say that is because
13 what goes outside is not looked at, and what you looked at in-
14 side is to beset by darkness that really no rational approach
15 can give rise to guidance for an agency.
16 i believe in accountability. I believe in laying
17 out the ranges of uncertainty'of the kind of health effects
18 you think you can have, but if you devote too many resources
19 to that you'll be going after an ant with a sledge hammer and
20 you're not going to get where you want to go.
21 I've said this many times. I just question con-
22 tinually the continued demand for rigorous analysis, not
23 accountability. I applaud the demand for accountability and
24 if this is a way of getting accountability that may not have
25 been there in earlier times, okay.
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l But I think we have to move away from analytical
2 techniques and I've done these analyses. They just don't yield
3 very useful results in too many cases.
4 DR. CLARK: Given a short summary of what we're doing
5 and what Nick thinks can be done, then I thought we would have
6 David talk for a few minutes about what the- Regulatory Analysis
7 Review Group would like to see done.
8 DR. HARRISON: Let me just spend a couple of minutes
9 summarizing what the Regulatory Analysis Review Group - or, as
10 it's often referred to, the RARG - is and give a couple of
11 examples of what kind of analysis we would like to see done.
12 I will say that my general impression is the kinds
13 of things we would like to see done are not very different from
14 what Toby has described; and I think, in many ways, not very
15 different from the kinds of accountability that Nick has de-
16 scribed.
17 But let me basically describe what the group is.
18 What it is is an inter-agency group that consists of
19 several representatives from within the Executive Office of
20 the President and representatives of eleven major Executive
21 Branch departments that are responsible for implementing eco-
22 nomic and regulatory policy.
23 The group was established by the President in con-
24 junction with the promulgation of Executive Order 12-044, at
25 this point a well-known Executive Order, and the task of the
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Regulatory Analysis Review Group is to review, during public
notice and comment period for proposed regulation, a relatively
3 small number of regulations.
4 One of those is review the regulatory analysies that
5 Toby mentioned are required by this Executive Order 12-044.
6 AS was suggested, most of the staff is from either the Council
7 of Economic Advisors, which is a small group, of the Council
8 on Wage and Price Stability which has a somewhat larger staff
9 for this purpose.
10 The RARG is chaired by the Council of Economic
11 Advisors and the person with primary responsibility - member
12 with primary responsibility is George Eads right now.
13 The RARG has an executive committee that is made up
14 of four members: two of them are permanent, one is representa-
15 tive of the Council for Economic Advisors, and the other per-
16 manent representative is from the Office of Management and
17 Budget.
18 The other two members are rotating and the way the
19 rotation works is that at any one point in time one representa-
20 tive from an economic agency and another representative of a
21 regulatory agency; and, right now, the current rotating members
22 are from the Department of Labor and from EPA.
23 So, right now, EPA has a representative on the Exe-
24 cutive Committee.
25 in addition to the regulatory agencies, there is
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also representatives from the Office of Science and Technology
Policy and the Council on Environmental Equality, and also the
3 domestic policy staff.
4 Well, what the Executive Order requires is, as Toby
I think has suggested, that agencies do regulatory analyses of
6 major regulations.
7 Now, the Executive Order defined major regulations
8 as at least those regulations that impose a hundred million
9 dollars per year, and there are other procedures the agency
10 has developed, including EPA, to implement the Executive Order
and define under what circumstances they will do a regulatory
12 analysis.
13 EPA has a set of procedures that are thought to be
14 very good in terms of defining process for reviewing major
15 regulations and for doing regulatory analyses.
16 Now, the formal mechanism for the RARG review is
that when an agency issues its Notice of Proposed Rulemaking
18 it also issues a draft regulatory analysis and the executive
19 committee will vote to decide whether to review the draft
20 regulatory analysis, and the mechanism is a requirement that
21 two members of the executive committee vote to do a regulatory
22 analysis.
23 Then a Notice of Intent to Perform a RARG Review is
24 sent to the agency. There is a list of concerns that are sent
25 to the agency and the agency then can suggest that the list of
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concerns ought to be supplemented or clarified.'in some way so
that there is a procedure of making sure that the issues RARG
focuses on are the issues that the agency think are relevant.
Then, as the RARG draft is prepared, it is submitted
to all RARG members, this, entire group consisting of the re-
6 gulatory agencies. Any dissenting views are incorporated in
7 the final version and the RARG document is then placed in the
8 public comment, in the rulemaking record before the close of
9 the comment period.
10 Now, I might just mention that one of the — You
11 ask, how does the RARG go about selecting various candidates
12 for review? One of the things that has been very useful is
13 that we now have a calendar of federal regulations that pro-
14 bably most of you are familiar with that the regulatory coun-
15 cil puts out.
16 it will prescribe the menu of future regulations,
17 and there is some sense that that document provides what regu-
18 lations are important and so forth. But in decided which to
19 review, we basically look at which regulations we think are
20 those of which our review could be most useful.
21 I should point out that the primary purpose of RARG
is not to do a regulatory analysis because there are a very
23 small number of reviews that we actually undertake each year,
24 but to improve the agencies' rulemaking and regulatory pro-
25 cess.
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1 So we like to choose regulations where we think our
2 involvement could have some useful impact.
3 One criteria might be large cost of compliance. So
4 given the gigantic number of possible regulations to review,
5 one criteria would be the size of the sectoral impact. But we
6 also might review regulations that were relatively small or
7 their economic impacts were unknown, but when the particular
8 regulation would have a presidential value.
9 For example, recently we reviewed the EPA's regula-
10 tions on effluent guidelines for the leather tanning industry,
n which is the first in a series of regulations on water effluent
12 guidelines, particularly regulating toxic substances.
13 And the leather tanning industry was chosen for the
14 focusing of the review because it was a first, and presumably
15 the methodology used in that first one would be carried over
16 to others.
17 We have also recently reviewed EPA's air cancer pol-
18 icy for ;which there was no formal regulatory analysis done be-
19 cause it was thought - I think it is correct - possible to
20 quantify the costs and the benefits of the regulation and its
21 alternatives, but that that policy might have an influence in
/
22 subsequent regulations. It might have a large influence.
23 i should also point out that one of the restrictions
j
24 on the Regulatory Analysis Review Group is that it does not
25 review more than four regulations for any one agency in a year
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So that the total number of regulations, the maximum, was
placed at 20.
3 So you can imagine, there is a relatively small
4 number of regulations actually subject to review by this RARG
5 procedure.
6 Well, Toby suggested that I mention some of the
issues that come up and the recommendations that tend to be
made in these reviews.
9 MR. BARAM: David, before you go on, you said there
10 were for EPA, four reviewed by RARG out of 20, no more than
11 four, but you have a sister which also does economic analysis
12 of proposed regulations on virtually any regulation they
13 choose to focus on.
14 Is that right?
15 DR. HARRISON: That's right.
16 MR. BARAM: And they are under the White House and
17 part of the Executive Order function.
18 DR. HARRISON: The Council on Wage and Price Stabil
ity has a mandate. They have a mandate under presidential
20 order of some sort to provide —
2i MR. BARAM: Additional economic analysis.
22 DR. HARRISON: What I am describing is the RARG pro-
93 cess.
94 MR. BARAM: When they also continue to be involved
25 in these analyses of proposed regulations, also?
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DR. HARRISON: OMB is the other permanent member of
the executive committee or RARG, so that it's involved in any
decision. It has a vote in any decision, whether to do a RARG
review or not.
Well, what might be some of the issues that seem to
come up?
First of all, let me say that what these RARG re-
views tend to focus on is methodological issues rather than
issues of cause or interpretations of scientific data. . We will
sometimes ask for guidance or support from the Office of
Science and Technology Policy or the Council on Environmental
Quality on wome of the issues.
But typically the RARG might point out that there
appeared to be large variations in the costs or the effective-
ness on the part of an agency or various industries or other
interested groups, such as environmental groups.
But we typically would not come to any conclusions
on what the right costs were or what the right interpretation
of various scientific data was, and that makes sense given our
small staff - and it is a small staff that's involved in this *-
and the fact that our expertise in not in those areas.
The second thing is that, in terms of methodological
issues, my sense is that the overwhelming methodological issue
has to do with cost effectiveness. My impressions of that are
based largely on the evaluation of EPA's air cancer policy and
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1 the toxic water regulations, which are the RARG reviews I had
2 primary responsibility for.
3 To take examples, those are cases where one is regu*--
4 lating a great many substances, a great many sources of those
5 substances, and the question is: Is there a way to determine
6 roughly some sense of rough consistency among the various
7 regulations?
8 As it's reflected in the regulatory analysis, does
9 it encourage that sort of rough consistency? TO the extent
10 that the data is available, is it used in a way that would
11 encourage that kind of relatively consistency?
12 What you really want to do is avoid situations where
13 you're spending a high cost and getting relatively little for
14 it, or you want to encourage cases where there are low-cost
15 options that may not be taken full advantage of for increasing
16 the benefits of various sorts of environmental - or other.
17 Another review that is already review going is public
18 transportation regulations on fuel economy for trucks. The
19 same sort of issue comes up: Are we encouraging a cost
20 effective regulation to increase fuel efficiency in the general
21 automotive vehicle fleet?
22 So what one wants to do, I think, is to avoid rela'--
23 tively inflexible rules and automatic responses, given the
24 existing information.
25 I think Nick has alluded to some difficulties of
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l collecting information on some of these problems and it is
2 very clear that there are difficulties and this should not be
3 interpreted ."— at least, the RARG reviews I've been involved
4 with make it clear that this is not a council of perfection.
5 One doesn't have in mind trying to squeeze out ever
6 conceivable ounce of benefit and make everything completely
7 internally consistent. That is now what is involved. Given
8 the uncertainties in these areas, it's not possible.
9 What one wants to do is to organize the data in a
10 way that allows one to make the best use of it.
11 A second issue that often comes up is the distinc-
12 tion that is made between resource costs and what are some-
13 times referred to as economic impacts where the economic
14 impacts focus on issues like firm closures and the possibility
15 of some unemployment generated .-
16 Now, our defense is that while closures and unem-
17 ployment might be one aspect of various regulations one might
18 want to look at, that there ought to be some measure of the
19 resource costs as opposed to focusing on economic impacts.
20 So, for example, we don't think it is appropriate
21 to only regulate so far as to avoid any either plant closures
22 or unemployment as a result of any particular regulation,
23 although that factor ought to be included in the overall
24 analysis.
25 Another issue that comes up is the treatment of
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1 alternatives. Toby mentioned some possibility of using eco-
- nomic incentives as one major type of alternative, but there
3 are other alternatives that one would want to explore.
4 For example, looking at the regulation of benzene
5 from a particular source category, does one look at a variety
6 of levels of control and evaluate their cost benefits and make
7 the analysis as explicit as possible?
8 I guess, finally, my sense that in terms of improving
9 agency regulation, that there would be substantially more
10 agreement on appropriate regulations and appropriate regulatory
11 analysis than might be apparent when the issues are quite gen-
12 eral.
13 That is, is economic analysis at all useful? Does it
14 have underlying value judgments that are difficult to believe
15 in all cases?
16 If you actually get down to examples of regulatory
17 approaches, you might get much more agreement than disagree-
18 ment. Frankly, one of the things that we did in reviewing
19 EPA's air cancer policy, we asked the agency whether they could
20 give us an example of how the policy might be implemented in
21 practice; and they suggested - they encouraged us to look at
22 benzene as a possible case study, arid their procedures for
23 looking at various source categories for control and for regu-
24 lating one particular source category which happens to be ben-
25 zene from hydraulic plants.
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l And our sense for doing that review - after having
2 gone through some suggestions for how those regulations might
3 be structured - is that I suspect there is far less agreement
4 that one ought to look at the costs and benefits, comparing
5 the cost benefits of various source categories, for example.
6 Another thing that came up on this, there are, in
7 fact, eight nyla hydrid plants that would be subject to control
8 It turns out if one looks at the cost benefits of those various
9 eight plants, most of the benefits come from regulating one
10 particular plant which happens to be located in a relatively
11 densely populated area.
12 So that one issues comes up: Ought one to, in some
13 sense, concentrate more of the control effort on that parti-
14 cular plant and perhaps go to other source categories rather
15 than the other seven plants where the controls are rather small
16 and the costs are rather large?
17 I think there is some sense that one could do that
18 within the context of EPA's mandate for, by example, defining
19 different source categories to include plants located in dif-
20 ferent population exposure areas. And that is only one example,
21 I think, where one might have more agreement on the applica-
99 tion of these principles than if we tried to argue something
93 at some relatively abstract level.
24 I think those are some of the issues that have come
95 up in some of the RARG reviews, and some of the principles
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1 that we think would be usefully demonstrated in the various
2 regulatory analyses.
3 . DR. AvSHFORD: Could I just make a comment because I
4 think it's really instructive to show how one focuses onto
5 different parts of the problem and be persuasive, in either
6 case, if you hear either argument alone.
7 This benzene statement, the EPA posture - what David
8 said - has an immediate appeal. You can get more health for
9 the bucks by going after the few sources than the ones that are
10 really expensive.
11 Let me say that is a beautiful example of a static
12 field, of the way you approach the problem because any cost
13 effective criteria merely rubber stamps the present economic
14 arrangement between the firms in terms of their competitive
15 structure and between the users, the producers, the consumers,
16 and workers.
17 If you.impose the heavy costs on those sources that
18 are not efficient compilers, what will happen dynamically?
19 You will raise the cost of those products, for those producers
20 to be less competitive, eventually have them replaced by the
21 low cost compilers; and that is what it's all about.
22 if you excuse, in the basis of present economic abil
23 ity to comply, those high cost compilers, you will never have
24 a reintroduction of different technology. You will not shift
25 the prizes of industrial production to those firms that really
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1 deserve it. The people who anticipated problems and have low-
2 ered their expenditure costs, and now are leaders in terms of
3 technology ought to be the ones who are reaping benefits.
4 And by saying, you - the firm who has done, already,
5 so much on your own - it isn't going to cost you very much to
6 take your benzene down, but we are going to excuse the firm
7 who hasn't done a damn thing for ten years on the basis that
8 it costs a lot of money.
9 MR. MOONEY: Is that what Dr. Harrison just said?
10 DR. ASHFORD: No. I think the high cost sources of
11 controlling benzene ought not to be cut off on the basis that
12 it's cost ineffective. If you want to move those people out
13 of business or to give a clear signal.that next time around
14 it's not going to pay you to wait - and that's a dynamic view
15 of industrial - then you can't use this technique to make that
16 kind of division.
17 DR. HARRISON: Let me respond because I think that
18 raises what, in theory, would be a useful point and one would
19 want to do some analysis on that issue.
20 in fact, in this particular benzene case, it's
21 actually the opposite of the case I described in the sense that
22 the high cost and low benefit cases were those plants with
23 already-adopted controls, and the nature of the controls that
24 would be required by the regulations would essentially have
25 eliminated the advantages of those previous controls.
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l So, in fact, in this particular case - and I think
2 there is something to the general issue that he raises in this
3 particular case - the high cost, low benefit compilers were
4 those firms, those plants that had already controlled to
5 roughly 90 percent, and the controls that were being con-
6 sidered were 97 percent.
7 And the best guess was that this previous control
8 would not be of much value in getting to the 97 percent level.
9 So they would essentially have had to have gone to a completely
10 different kind of control mechanism essentially eliminated the
11 advantage to them.
12 So I think, in this particular case, it didn't work
13 out in terms of empirical questions.
14 I think that is the sense in which my overall judg-
15 ment in a lot of these, there might be agreement on the general
16 way in which are not to do some of these analyses, and a lot
17 of these cases are empirical questions.
18 And that is why we would like to see the analysis
19 explicit on some of the issues raised.
20 I don't think - this is my personal view - that
21 cost effectiveness is the only aspect that ought to be included
22 in a proper .regulatory analysis. It is, however, an important
23 aspect; and, where it is not taken into account, I think the
24 regulatory analysis could be improved.
25 CHAIRPERSON BENDIX: Mr. Mooney?
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1 MR. MOONEY: It was just on the last point.
2 Perhaps I don't understand your jargon, but it seems
3 to me what Dr. Harrison was saying was exactly you had in mind:
4 in fact, a reward for those companies who had moved out ahead
5 to do something without a regulatory club over the head. And
6 the company that had failed to do so was going to get zonked
7 with a very focused regulatory requirement for control.
8 DR. ASHFORD: I think, though, that would be the ex-
9 ception, really, to the general rule. David might even want to
10 comment on it.
11 In point of fact, if you look at the lead problem,
12 people who really have the high compliance costs facing them in
13 lead are people who have done very little in the past. This
14 may be true for benzene.
15 I won't argue the case. I'm just saying, unless you
16 look closer - and I don't think David will disagree - that you
17 have to look close at what the history has been, but it is not
18 just a matter of rewarding the goods guys.
19 It's a matter of encouraging industry to substitute
20 for each other and new entrants and all these other things.
21 There is a big question: Should we have saved
22 Chrysler?
23 I won't argue here, but there is a lot of emotion.
24 it is connected because the allegation is they couldn't comply
25 because of the pollution requirements, and those questions are
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1 troublesome.
2 The point I was trying to make is a simple one. If
3 you use cost effectiveness criteria in place of cutoff as to
4 where you will no longer require regulation, then you aid the
5 people who have not done things, very often.
6 And, secondly, you do not move the economy to sub-
7 stitute its. industrial plant when you reward those entre-
8 preneurs and new entrants.
9 DR. HARRISON: The only point is, you simply don't
10 want to only let intuition be the only thing that you use to .
11 make these sorts of issues explicit. I think all of us have
12 raised an issue, a complicated issue, of technological innova-
13 tion as to how one incorporates that in the regulatory struc-
14 ture.
15 That is not to say that that is not a relevant ques-
16 tion. I think what one would like to do is to make those
17 kinds of concerns explicit, and if you have good information,
18 what that will do is essentially lower the costs and maybe
19 even increase the benefits in some areas because of other sub-
20 stances that are controlled when you focus on a particular
21 substance. All the' better.
22 DR. ASHFORD: The problem really comes down to how
23 much data you expect the regulator to move on when he really
24 is striking on an article of faith. Say I'm the regulator,
25 I'm the head of EPA. I want to regulate arsenic and if I
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looked at the industry and I believed, by having this string-
2 ent regulation, new entrants will arise and we will be better
3 off in ten years; and then you ask me: How do we know that?
4 I don't know how I know that. The data is not there
5 Would I be predicting? Is it prediction or is it prophecy?
6 There is a line drawn between prediction and prophecy. It
comes down to your political views and religion, and it is not,
repeat, is not derivable from economic principles.
9 And I think we ought to call a spade and spade, and
10 that's the point of disagreement that I say you and I have,
here and elsewhere, is to how useful you can push the justifi-
12 cation for that decision.
13 Will you accept, where you're sitting, my judgment
14 that I think in ten years we're going to have a different kind
15 of smelter in Tacoma, Washington? I don't believe you'd
16 accept my judgment on that.
IV DR. HARRISON: I think we would have more agreement
18 on specifics rather than we would on which religion is appro-
19 priate.
20 CHAIRPERSON BENDIX: Dr, Radford and then Dr.
21 Eisenberg.
DR. RADFORD: May I have the microphone, please?
23 I would like to speak to the issue from the stand
24 point of an educator who has been involved in the environ-
25 mental movement for a long time and certainly in the early
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l days of the - well, cranking up of EPA in terms of its regula-
2 tory functions.
3 There was no great concern that we pick out the worst
4 problem and tackle it first, and the next worst problem and
5 tackle it second. We went ahead on all fronts and, in many
6 cases, probably in a misguided fashion as far as the air pollu
7 tion regulations were concerned; at least in my opinion.
8 I mentioned the educational issue because one of the
9 salutary side effects which Nick did not mention, about the
10 impact of regulation, is that the word is finally filtering
11 down into the educational community that they jolly well bet-
12 ter have chemical and electrical engineers and a whole bunch
13 of engineers who are designing a plant that know something
14 about the potential toxic effects of what they're doing be-
15 cause it may wipe the whole process out, even though economi-
16 cally it's beneficial.
17 If it turns out that there's going to be something
18 released that is extremely hazardous and then, for that reason,
19 the company doesn't go with it, they can waste billions of dol-
20 lars designing a plant.
21 That's a long-range thing. I would just like to
22 raise, I think, two questions to anyone and everyone.
23 The first is that it became an article of faith in
24 the environment movement that technology followed regulations
25 and not the other way around.
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In other words, the issue of whether it was technol-
ogically feasible to do this, that, or the other was a second-
ary issue from the start. Now, of course, that we're the en-
vironmental cost-benefit stuff, that has been somewhat turned
around.
But I would like to know if, in fact/ that aphorism
7 still holds. I was told, for example, when I was living in
8 Maryland, that when the regulations for air pollution control
9 in Maryland were about to go in effect, there were 15 vendors
10 of new equipment waiting on the border to pounce on all the
11 industries to sell them their product, and this was brand new
12 stuff that wasn't going to be factored into any economic bal-
13 ance that would have been done months before.
14 The second question gets a little bit more specific.
15 I have been told - and I would like to have it con-
16 firmed, if possible - that at the time that the one part per
17 million vinyl chloride occupational standard went into effect,
18 the industry immediately proceeded to hire Arthur D. Little or
19 any number of hot shot economists to do cost benefit analysis;
20 and these varied anywhere from one million dollars per whatever
21 unit to up to billions.
22 It was in at least that order of magnitude variation,
23 depending on who did the calculations.
24 There was an instance, I've been told, where, after
25 the fact, OSHA, for once, stuck to its guns and said, "Not,
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l it's going to be one part per million," and within eight months
2 all of the existing plants were in compliance, and somebody ha<
3 the bright idea to actually calculate how much the cost was.
4 And, as I understand it, it came out something like
5 ten percent of even the lowest estimate that had been done
6 before the fact.
7 All I'm saying there is, if the facts are correct as
8 I have stated them it shows how bad the cost, even the cost
9 side, is calculated by those who are supposedly doing it in an
10 expert fashion,
11 DR. ASHFORD: Maybe I can respond to the issue of
12 technology.
13 I think, Ted, it's a little bit the other way around
14 The early water and air pollution was based on present tech-
15 nology. It turns out that there wasn't very much technology
16 forcing.
17 That's why we got stack scrubbers. That's why we
18 got lead traps. And that's why we got no process redesign.
19 OSHA came along with a series of creative legal deci
20 sions and was recognized to have technology-forcing capabil-
21 ities, such as in the vinyl chloride case; and history does
22 show, in fact, that the polemerization process for PPC was
23 accelerated greatly, not the minute the regulation hit but
24 months before hand.
25 Regulations is not a single event. It's a series of
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1 dances and people who have a lot of time to get their act to-
2 gether: Consumer Products Safety Act, the Toxic Substances
3 Control Act, the OSHA Act, all that new kinds of legislation
4 that really has an ability to force technology.
5 The reason we've had bad luck in regulation in the
6 past is because it was not stringent enough, not because it
7 was too burdensome.
8 Look at the International Harvester case. Here was
9 Ford ready to go ahead with the requirements and it was ack-
10 nowledged in the court case to be the leader in the area, and
11 the court gave lip service to the fact that if they allowed
12 the one-year delay on lead and gasoline they would penalize
13 the leader.
14 Well, that's exactly what they did.
15 What kind of signals next time around does Ford
16 Motor Company have to benefit from its thing competitively?
1? I had, in the dimension of the environment, environment in
18 reality.
19 When you take the emotional reason, it is no more
20 than an additional competitive element.
21 I would like to requote, they see tremendous oppor-
22 tunities in grabbing a greater part of the market if they can
23 comply faster than their daily competitors.
24 I think we have to recognize that.
25 MR. BARAM: We quoted Monty Thodow, also, yesterday.
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1 We've quoted him a lot yesterday and today.
2 CHAIRPERSON BEMDIX: Dr. Eisenberg?
3 DR. HARRISON: Could I just say something and empha-
4 size one point that I think you made that is a useful one?
5 j That is that the kind of cost data that one has are
6 obviously highly uncertain, but that there are other sources
7 typically that regulate industry.
8 And you mentioned in the beginning that there are
9 some industries that are ready to provide the kind of controls
10 that might be required by regulations; and what happens, parti-
11 cularly, is that they are to the extent that they have incen-
12 tives to' look at cost differently,
13 Shall we say that their incentive is to underesti-
14 mate what the cost would be by using some cases? And I think
15 that's extremely useful because what it means is that the
16 agency has some other source of information about compliance
17 costs than simply the industry that is being regulated.
18 As Toby mentioned, that has some obvious incentives
19 and so you have a possibility of getting some more cost data.
20 TO the extent that it has biases, it has the opposite sort of
21 bias.
22 DR. ASHFORD: This is a misleading statement,
23 The pollution control industry selling stack scrubberjs
24 and devices isn't necessarily the kind of technology you want;
25 and, yet, those independent cost estimates go to retrofit.
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I will emphatically insist that the agencies do not
have the kind of expertise to do the engineering process re-
design technology estimates which need to be done, which is
the real way to solve these problems, the quick fix.
And the merchants on the street, that way, are not
going to do much better in the pollution area internally and
with products than they did in air and water pollution.
I think it is time to go in a little bit deeper in
terms of process redesign and those kinds of technological
exposures.
DR. RADFORD: What about vinyl chloride?
DR. ASHFORD: I did a study. The prediction was 250
thousand workers out of work. It turned out to be less than
a hundred. The total price rise in vinyl chloride products
cannot be more than three percent at a time when the feed stock
costs force an eight percent increase.
DR. HARRISON: I might point out, this is completely
consistent with the kind of analysis that one would like to
see done. That is, we would like to have some retrospective
analysis to ask the question: How, in similar cases, have the
costs of similar kinds of technology been developed?
And that's the kind of things that, in a regulatory
analysis - if there is some previous information on what the
costs are likely to be - that's the kind of thing I would like
in regulatory analysis; and I would encourage that.
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DR. REDFORD: Can I add one point? I don't want to
usurp your time. I'm sorry.
3 As I understand it, one of the things that tipped the
4 scale markedly in favor or, at least, reduces the unit cost
5 of regulation was the recovery of monimer. They just recovered
6 a higher percentage.
7 MR. MOONEY: Was there not also considerable debate
8 about zero exposure levels? I'm just trying to clarify whe-
9 ther the economic perspectives are based on a presumption of
10 no permissible or acceptable exposure as opposed to one part
11 per million.
12 DR. ASHFORD: They were based on no possible expo-
13 sure, which is not different from what you are saying.
14 Using the technology which was already being de-
15 veloped and which was, in fact, accelerated, there is not a
16 difference between the cost estimates. In fact, the technol-
17 ogical assumptions made in cost estimates for no permissible
18 exposure and the cost estimates there are for one part per mil
19 lion —
20 This whole business of focusing on one versus two-
21 tenths versus five-tenths is fatuous because you can't measure
22 that.
23 You never design, if you had to comply with one part
24 per million, to one part per million. You design to below.
25 So let's not pretend that one part per million is really much
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1 better than two parts per million because it's not.
2 DR. EISENBERG: .David, in you analysis of that
3 maleic anhydride situation, are- you suggesting perhaps that
4 regulators should look at these things or regulation should
5 be written in such a way that they're flexible enough, that
6 they're not geared industry-wide or they aren't geared to be
7 handled equitable in a situation but rather on a case by case
8 basis?
9 And then, on the other hand, my question would then
10 go to the EPA representative, how he would see implementing
11 such a regulation?
12 DR. HARRISON: This is my own personal view.
13 I think that it is useful to avoid blanket regula-
14 tions where, in some cases, the benefits are very, very small
15 and the costs might be substantial. But I do recognize that
16 there might be or there are likely to be more administrative
17 costs as well as, perhaps, other influences that cut on the
18 other side.
19 So I guess my argument would be to look at the parti-
20 cular cases and ask whether there is some administratively
21 feasible way of avoiding high cost, low benefit controls.
22 DR. CLARK: You've asked the question that I would
23 have commented on.
24 RARG will make some suggestions like that and come
25 back to EPA, and EPA will then interpret the suggestions in
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terms of the statute they're trying to implement.
And, aside from the administrative costs that David
3 referred, Congress has preferred, it seems, to have national
4 standards in order to eliminate the environmental programs
5 affecting competition among plants.
6 Most of our programs are national and don't allow -.-
7 DR. ASHFORD: Bob Crandall, the former Acting Direc-
8 tor of - challenged the vinyl chloride case as being the single
9 exception to the rule.
10 You see, you're never going to be able to satisfy
11 criticisms, and I'm not saying David's criticisms - cricitisms
12 that the agencies are not accountable when you say this is an
13 exception and that is an exception, and key people are defen-
14 sively doing these anlyses.
15 If the regulatory impact bill passes in the Congress
16 which requires full consideration to honest alternatives,
17 you're talking about the Beltway Bandits in Boston - an enor-
18 mous amount of money to do these analyses when they know what
19 the answers are beforehand.
20 You're talking about half a million to six hundred
21 thousand dollars, 750 thousand dollars an analysis to satisfy
22 RARG requirements.
23 As a person concerned with technology, I would like
24 to say, for 750 thousand dollars, I think the government could
25 encourage development of new technology, could stimulate new
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l entrepreneurs, could stimulate --
2 However, I might have misguessed on benzene at one
per million versus five, there's going to be a lot more payoff
if we can stimulate new technology than to conduct these ana-
lyses which, in the last analysis, aren't believed by anybody
anyv/ay.
I question the cost effectiveness of cost effective-
ness research.
9 [Laughter.]
10 DR. HARRISON: I guess I would simply say, in my
11 sense, that is an empirical question.
12 MR. BARAM: Selina, I would like to ask a question to
13 TSCA.
14 You started out discussing the asbestos case from
15 your remarking remarks on asbestos, which is a proven carcino-
16 gen. You implied that a decision to regulate asbestos, the
17 very decision to work on the asbestos problem was going to be
18 based on the results of some economic cost-benefit analysis
19 or balancing health versus economic effects.
20 David has, then, talked about the RARG economic pol-
21 icy analysis as well as some of the others that may be going
22 on in terms of cost effectiveness, but it seems at this junc-
23 ture here you are talking about, Toby, whether or not to regu-
24 late asbestos based on economics whereas David implies that
25 once a decision is made to regulate asbestos it bubbles up to
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1 RARG and then RARG, and then RARG just tries to help you de-
2 termine the most cost-effective way to do it.
3 I think that's a critical distinction because we're
4 worried that OTS will never produce any regulations at all.
5 DR. CLARK: I think it's fairly clear that we have
6 decided to take on asbestos.
7 The question of how we take on asbestos, to what ex-
8 tent we try to control its use, how we try to control its use,
9 and where we try to control its use requires some balances.
10 Our economic analyses will be a part of that.
11 MR. BARAM: Do you h ave any guidance in terms of a
12 set of health criteria in selecting OTS regulatory targets?
13 For example, items which have attributes like the greatest
14 severity, the greatest irreversibility, or the greatest magni-
15 tude of health effect?
16 Is there any attempt to develop an health impact
17 analysis as a basis for selecting targets so that David and
18 his group can work on a cost-effective way in attacking those
19 targets?
20 DR. CLARK: We, at this point, do not have any for-
21 mal criteria, but the way in which things enter the queue, so
22 to speak, is basically health-based analysis - relative prior-
23 ity in terms of the number of people exposed.
24 MR. BARAM: Is that explicitly spelled out anywhere,
25 a guidance document we could take a look at?
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1 DR. CLARK: As I say, there are no formal criteria.
2 Well, if you look at that report I just handed you this morn-
3 ing, it's fairly explicit in there, yes.
4 . CHAIRPERSON BENDIX: Dr. Button?
5 DR. SUTTON: Good things have a way of being abused,
6 but it seems to me that what we are really discussing is some
7 process in which we collectively decide how to far to go on
8 the regulation, not only what to go after but how far to go and
9 in which way.
10 And to complete ignore any aspect of cost, for
11 example, and benefit seems to be unwise.
12 You seem to say that you can't do it at all so let's
13 not --
14 DR. ASHFORD: No, I didn't say that.
15 DR. SUTTON: — whereas RARG seems to say, let's do
16 some and see if it sharpens our analysis of the situation to
17 allow us to make a better decision.
!8 I tend to identify with that posture a little more,
19 probably biased by religion and experience and so forth.
20 My question is: How much effort are we actually
21 putting in on this process right now? I don't have a feel for
22 that in EPA and I would like your two estimates of what per-
23 centage of that effort has any useful impact at all on the
24 decision-making process.
25 DR. CLARK: How much effort are we putting into TSCA
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1 or into all of EPA?
2 DR. SUTTON: Quantify it in some way: numbers of
3 people, percentage of dollars spent, something like that.
4 DR. CLARK: Our budget to support our work in per-
5 forming economic and some benefit analysis is roughly 2.7
6 million dollars for this past fiscal year.
7 DR. SLESIN: How much of that is —
8 DR. SUTTON: That's total contract.
9 ' DR. CLARK: That is for the regulations we issued
10 this past year or are issuing. So I don't know what you would
11 come up with in cost per regulation.
12 There are substantial resources being spent on this
!3 regulatory analysis.
14 MR. BARAM: Well, there are also other attributes
15 to this whole process, such as delay on presenting any regula-
16 tion at all.
17 As Alfred Kahn was quoted in the New York Times, the
18 whole purpose of this process is to, "... grind down on
19 health safety and environment regulation." That was the quote
20 in the Times. That is the exact quote.
21 MR. MOONEY: Probably a misquote.
22 MR. BARAM: I don't know. It was pretty honest.
23 DR. CLARK: He says some outlandish things.
24 MR. BARAM: Even though David's group only does four
25 analyses, there are other agencies that do other analyses. So
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1 your total effectiveness goes far beyond the few regulations
i
2 that are assessed.
3 It does have a chilling effect on a lot of health
4 safety initiatives, and that's what we're concerned about, too.
5 DR, CLARK: Don't let us mislead you. Every analysis
6 or every regulation that comes out of EPA has some analysis
7 done on them so it's not just those that RARG selects. Every
8 one has additional analysis.
9 DR. SUTTON: Can I continue, finish my question, and
10 give you two a chance to give a personal opinion about the im-
11 pact of that 2.7 million dollar effort that is going on?
12 DR. ASHFORD: I don't know that most of the money
13 that has been spent to date has brought forth any analysis
14 that is worth having an influence. I think it is too early.
15 The office is relatively new in this game so I can't
16 answer the question with regard to the EPA, I think I can
17 answer the question with regard to OSHA who has been doing
18 this for a longer period of time and which is contracted out.
19 There has been a tremendous amount of money spent on
20 economic analysis by OSHA. Most of it was pretty terrible
21 analysis done by contractors who worked both sides of the
22 street, quite frankly. It has ended up embarrassing the
23 agency rather than helping it because it was so inadequate.
24 Where the very few pieces of analysis were done well
25 and correctly, it cause the agency to adopt more stringent
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1 regulations that it would otherwise have done.
2 In other words, the back-of-envelope calculations
3 to regulating OSHA's standards has generally been more appre-
4 ciative of the economic effects than our rigorous analysis has
5 ended up showing.
6 So it's amusing that if you really do the analysis
7 right it turns out that OSHA doesn't go far enough, and I want
8 to quote Nordhouse from the Council of Economic Advisors, and
9 he said, "If anything, this standard should have been more
10 stringent."
11 Of course, he didn't say that in public. He never
12 once complimented OSHA on having done good work in that area;
13 and I'm going to press motivation, and not David's motivation,
14 but I'm going to press motivation from the large thrust of
15 support given for these analyses.
16 I think we ought to call a spade a spade. I think
17 it is a diversionary technique.
18 I think that the back-of-envelope calculations - and
19 I'm not saying no analysis, honestly - I think the kind of
20 analysis that deserves to be done is not particularly sophis-
21 ticated and does not cost, particular, a lot of money.
22 It puts a great deal of discretion where it belongs,
23 on the heads of the agencies who take the heat. And I think
24 we can't forget,.this is an administrative law process. If
25 the agency starts going after minnows, it will be corrected
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1 mid-course; you can rest assured of that.
2 DR. ASHFORD: We are under-regulated, on the whole.
3 Taking regulations' portfolio approach as a stock investment
4 in health, we are not doing nearly enough. So I want to ques-
5 tion: Why are we continuing to divert resources where I would
6 like to have that 2.7 million dollars spent in assisting small
7 firms to comply by giving them technologically information, by
8 viving a little bit more technological expertise and knowing
9 what is possible to drive the regulation, not what the economic
10 impact is which ignores the leveraging effect, which is the
11 real payoff of this regulation?
12 DR. SUTTON: Are we in a learning curve in the eco-
13 nomic analysis business? Are they getting better and getting
14 more useful?
15 DR. HARRISON: Well, I think in terms of the regula-
16 tory analyses that are done, I am assured that they are.
17 We actually have not done any reviews of the TSCA
18 regulatory analyses, so I don't know. I really can't comment
l9 on how useful they are.
20 I guess my defense, though, is that, in a lot of
21 these areas, some sort of economic analysis is useful and I
22 guess Nick would agree.
23 My sense is, the kind of analysis that is required
24 under the Executive Order, under the presidential order, is
25 reasonable and is likely to improve the overall nature of
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l regulations; and while it is costly - the overall compliance
2 costs and the overall benefits are quite large in magnitude -
3 I think one way of looking at these regulatory analyses is as
4 investments in better decision-making and that, sometimes, the
5 RARG process is part of that.
6 DR. CLARK: Can I add one thing, too?
7 I think that, with respect to TSCA, it will be bal-
8 ancing act regardless of what the President said we had to do.
9 We would have to do these analyses or something like them in
10 order to determine unreasonable risk.
11 CHAIRPERSON BENDIX: Becky Moon?
12 MS. MOON: I went back to my notes that I took as a
13 result of your discussion, Dr. Clark.
14 First of all, you said it was a balancing act, risk
15 versus cost control. Then I have a big long paragraph of how
16 you do your cost of controls.
17 Ever since I came on this committee, three years ago,
18 I've just been dying to know how you analyze the other and I
19 can't get anyone to tell me what you do.
20 Then someone else said, we do a cost analysis and
21 then we do "some benefit analysis". Now, I don't know what
22 "some benefit analysis" is, but I'm really curious what this
23 "benefit analysis" is.
24 i see all the evidence here. What's on the other
25 side?
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DR. CLARK: What is on the other side?
The point I was trying to make, it's not done by
3 economists.
4 MS. MOON: Who does it and how does it come in?
5 DR. CLARK: It is done in the Office of Testing,
Warren Muir's office, and the risk assessment group. They
take the evidence that a substance is toxic. This is animal
tests, some epidemiological studies,
9 They try to estimate expression in the workplace by
10 consumers, et cetera. And they try to, then, estimate the risk
to risk assessment, both qualitative and quantitative. EPA,
12 you know, tends to be more quantitative than other agencies.
13 The risk associated with not regulating that sub-
14 stance - and that is the benefit side, that's the benefit of
15 the regulation.
MS. MOON: Who does the balancing once you put in
the economics and Muir brings in the other side, which we've
18 yet to define?
19 DR. CLARK: The Assistant Administrator.
MS. MOON: Is that between stage two and stage
21 three or our little thing on significant regulations, or is
that after three, after proposed?
23 DR. CLARK: I don't know about your stages on signi-
24 ficant regulations, but when the Assistant Administration de-
25 cides to propose in regulation or ask the Administrator to
99
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l propose a regulation, he has essentially done that balancing
2 and said, this is the regulation we want because it's going to
3 eliminate substantial risk and we don't think the costs are
4 unreasonable.
5 MR. BARAM: Toby, who is that so we can talk to him?
6 Who is that, Bill Dreighton?
7 DR. CLARK: Steve Dillon, He is the person that
8 proposes the rule. All the other officers in EPA have an oppor
9 tunity to comment on that and discuss it, and the Administra-
10 tor finally makes a judgment.
11 It's a proposal from Steve and a decision by the
12 Administrator.
13 DR. EISENBERG: Toby, you were saying that you don't
14 have the economists involved in this, primarily, the scientist
15 Do you ever factor in the cost of raising a retarded
16 child? Do you factor in the cost of hospitalization for a cer
17 tain illness?
18 Those are costs.
19 DR. CLARK: Those are definitely costs associated
20 with the risk, yes.
21 Those costs are not usually computed explicitly.
22 DR. EISENBERG: Why not?
23 DR. CLARK: Because they don't add a lot of informa-
24 tion.
25 If we went to this, we say, "Okay, ten people a year
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l would get cancer from this," and this involves, everybody knows
2 hospitalization. It involves the pain and suffering in the
3 family. It can involve a lot of other things.
4 And we will compare that against costs. The Assis-
5 tant Administrator is taking those types of costs you are re-
6 ferring to into account when he's doing this balancing.
7 We don't think that making explicit cost estimates
8 of them would add to his information. We have those. They
9 would be easy enough to do. But you couldn't add them onto
10 the risk. That would be double counting.
11 _ That's part of the risk. That's part of that side.
1
12 Those costs are taken into account, but we don't try to put
13 monetary numbers on them because we don't think that adds to
14 information.
15 CHAIRPERSON BENDIX: I would like to make a comment
16 on that; and that is, I think in terms of public understanding
17 of the justification for the regulation that it is a mistake
18 not to publicize these kinds of costs because many of these
19 costs - raising crippled children and so on, training doctors,
20 building hospitals to care for them - are borne by society at
21 large.
22 And one of the ways of getting general public sup-
23 port for a regulatory activity of the agency is to have the
24 public understand that they are paying the costs for not regu-
25 lating.
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1 MR. MOONEY: It would be interesting to see an eco-
2 nomic cost analysis on the tobacco industry.
3 CHAIRPERSON BENDIX: Dr. Slesin?
4 DR. SLESIN: I would like to pick on two points.
5 We've been discussing vinyl chloride and learning
6 curves. Did your group ever go back and look at how good your
7 estimates were in an economic analysis? Do you do a retro-
8 spective study as to the economic real costs?
9 DR. HARRISON: I guess I wasn't clear enough.
1° The RARG does not do any economic analysis. What it
11 does is review the agency's economic analysis, but we don't
12 go out and make independent estimates on what the costs are.
13 DR. SLESIN: Do you act solely as economists? Do yoi:
14 satisfy the rules of a good cost-benefit analysis?
15 DR. HARRISON: What we might suggest - and I also
16 mentioned it, and let me just reiterate it - is that most of
17 the emphasis is on methodology so that one --
!8 The way I interpret your question is, ought one to
19 recommend to the agency, when it comes up with a regulation D,
20 that it looks at what happened in regulations A, B, and C and
21 whether that experience sheds any light on how to interpret
22 costs or what the likely benefits might be?
23 MR. BARAM: You said earlier that RARG files its own
24 economic analysis.
25 DR. HARRISON: No.
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1 MR. BARAM: You do do independent economic analyses
2 in RARG?
3 DR. HARRISON: Let me clarify what the economic
4 analysis is.
5 I have tried to point out that we don't go out, and
6 it is not a substitute for the agency's regulatory analysis.
7 What is submitted for the record is not, ."Here is the regula-
8 tory analysis you ought to have done." It's not that at all.
9 What it is is a comment on strengths and weaknesses
!0 of the agency's regulatory analysis and some suggestions for
11 modifying the framework, the methodology, suggesting what data
12 issues might be clarified because there seems to be a consid-
13 erable amount of disagreement.
14 We should be very clear. These are not substitutes
15 for the agency's regulatory analyses. That is not the purpose.
16 MR. BARAM: I will try to clarify my understanding.
17 These are more than just responses to what the agency
18 has done. For example, you go to OSTP and ask for technical
19 information, reviewing what the agency has done technically,
20 and he will suggest a number of alternatives for regulating or
21 not regulating that the agency has not considered.
22 For example, in ozone standard. I saw your response,
23 which was loaded with criticism of agency assumptions on whethejr
24 ozone should be controlled or not because it wasn't cardino-
25 genie and there was some melange of technical and economic
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1 response which was more than just a response to what the
2 agency had done.
3 It was a whole new thrust of philosophies and scien-
4 tific and economic findings.
5 DR. HARRISON: There is something. I think that the
6 ozone RARG review was done before I was there, but I am fam-
7 iliar with it and the kinds of recommendations that are made -
3 and, remember, they are recommendations for what the agency
9 ought to consider and they are filed in the public comment.
10 So that the expectation is that these comments would
11 be one among the various comments that the agency is going to
12 address as it produces its final regulations.
13 And, frankly, my sense is that while we do occasion-
14 ally ask for the Office of Science, Technology and Policy to
15 give us some insights on what technology is involved and what
16 other kinds of evidence might be available, that, is not the
17 focus. That is relatively unusual.
18 MR. BARAM: You have reflected in an improvement in
19 the sensitivity or RARG to lots of procedural and other abuses
20 in the past, and I think things are changing.
21 DR. SLESIN: You will not comment on actual numbers,
22 and you won't comment on — It's purely a methodological view.
23 I find this very hard to believe.
24 DR. HARRISON: Let me say, I say, focus on method-
25 ology. For example, how could this group, a very small group,
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1 the senior staff of the Council of Economic advisors is ten,
2 and that staff has the responsibility to assist three members
3 the Chairman and two members - in providing advice to the
4 President on economic matters, if which regulation is one
5 aspect.
6 So you can imagine there are one or two of us who
7 get involved in regulations.
8 As I mentioned, the COUPS staff is larger, but it
9 wouldn't be possible for us to be familiar with all the science
10 and technology or to go back. It's not productive.
11 So that what might happen in some cases is to point
12 out that the cost range is quite large and it will be useful
13 for the agency to try to narrow that range to further evaluate,
14 as they go forward in promulgating final regulations.
15 I understand why the range is so large and why it
16 should be clarified, but I don't think it could be by a review
17 of all of the cost data, effectiveness control.
18 MR. BARAM: Could you send us a couple of copies of
19 different analyses, such as the ozone, and also something more
20 recent?
21 DR. HARRISON: I am most familiar with the two most
22 recent ones.
23 CHAIRPERSON BENDIX: We need to take a break, now,
24 for the benefit of our Reporter.
25 After the break, if Dr. Seisin wants to complete the
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l thought there - and then the order would be Dr. Radford and
2 Tom Mooney, and Becky Moon.
3 [A short recess was taken,]
4 r CHAIRPERSON BENDIX: If people could start moving
5 back to the table, please, so that we can reconvene.
6 All right. Lou Slesin doesn't seem to be back yet
7 so we will go to Dr. Radford.
8 DR. RADFORD: I would just like to follow up on a
9 point that Becky Moon made.
10 I think it's the concern of a lot of us: How does
11 the scientific evidence get factored into the decision-making
12 process?
13 And the impression that a lot of people have, and
14 maybe a lot of people in this room, is that the scientific
15 community produces nice clean evidence which is easily inter-
16 preted and, therefore, because it is much more quantitatively
17 precise than the evidence that is obtained in the economic
18 realm, that we have a disproportionate degree of uncertainty.
19 I would simply like to point out that the scientific
20 evidence is anything but clean. It is subject to exactly the
21 same kind of religious, philosophic, and other pressures that
22 motivate, perhaps, some of the difficulties in the economic
23 field.
24 And I think the example of the scientific uncer-
25 tainty or, at least, scientific disarray, if I may put it that
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1 way, of the whole question of the effects of low levels of
2 radiation is a classic example of a way in which the scientific
3 community can be swayed, I believe, on either side by their
4 emotions and so forth.
5 So one step we are taking to help maybe correct this
6 situation a little bit is to hold a symposium in Pittsburgh,
7 and this is a sales pitch and 'I have brochures for all members
8 of the committee and I've handed out several already; and I
9 think I will have enough for some members of the audience.
10 It's going to be on April 28th to the 30th, and just
11 to give you the title of the symposium, it's "Epidemiologic
12 Studies as a Scientific Basis for Environmental Policy-Making"
13 And, of course, I think everybody in the room recognizes the
14 hot potato that is.
15 On that note, I would simply like to point out that
16 we need to get our scientific house in order, just as we need
17 to get our economic house in order.
18 CHAIRPERSON BENDIX: Does anyone on the panel want
19 to respond to Ed's comments?
20 DR. CLARK: There is certainly disagreement. The
21 scientific information is certainly as uncertain as the eco-
OO «
-- nomic.
-3 DR. ASHFORD: I maintain it's much more uncertain.
24 Science is reductionist as a discipline. It tries to control
25 experiments, to isolate one causative factor, do a neat re la-
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tionship on one dimension.
And when you do an animal experiment and isolate your
3 test substance, life isn't that way. When you try to extra-
4 polate to real life situations, previous histories of exposure,
distress,'.it' s not that it's always v/orse. It's that there
6 is a good probability that it may be worse.
7 And how risk adverse you are, really, has to be fac-
tored into how you look at that data. Scientists tend to want
9 to simplify life. That is the thrust of scientific inquiry.
10 And, by the way, the real work that is to be done -
it's difficult on the benefit side of the equation, which is
12 to construct a risk profile, a probability of harm for a real
13 population. It couples the techniques of toxicology, epi- •
14 demiology, and econometrics.
15 It almost"takes a superhuman person who understands
16 how to deal with cohorts, mobility, different age groups. Cal-
17 culation is very difficult.
18 You begin with a dose response curve for an organ-
19 ism, but that is the simplest part of the job because that
20 dose response curve has to be superimposed on people with
21 varying characteristics and multiplied through; and it is a
22 very difficult task.
23 I have done it. Other people have done it. It's
24 immensely difficult to do correctly, and terribly easy to do
25 incorrectly.
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1 We don't yet have a science. It's not risk assess-
2 ment in the sense of dose response. It's risk assessment in
3 terms of target populations. And we have not yet sophisticated
4 our techniques to be able to do that; and the number of scarce
5 resources in terms of people that are able to do that work is
6 very small.
7 CHAIRPERSON BENDIX: Lou, there were some points you
8 wanted to clear up?
9 DR. SLESIN: Yes. I'm not sure who to address this
10 to, but before you said that the agency had decided to go after
11 a specialist,, before the break.
12 I applaud that decision. I was wondering, given
13 the performance of OTS on the schools, asbestos and schools,
14 and the decision originally that they should go with a volun-
15 tary program over a mandatory program, who in the government
16 thinks about a decision like that in the context of how much
17 money is being spent in other parts of the government, like
18 NCI and NIH, in general, on cancer research?
19 The numbers we're talking about are billions of dol-
20 lars a year in research on cancer, of course. That is a pres-
21 sure group that builds up with that kind of money being pumped
22 into it.
23 Whereas, perhaps, there is not a similar pressure
24 group to look after the schools and the children in them.
25 But how do you work with prevention there in terms of
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1 getting the asbestos out so we don't have to, perhaps, worry
2 as much about finding a cure? How does one look at those two
3. budgets at the same time and reach one decision on schools
4 and another decision on the cancer budget; if there is some
5 clearing house in the government to worry about those kinds of
6 decisions?
DR. CLARK: Well, there is, I guess one could say.
There would be a clearing house which would probably be OMB.
9 I don't know if Henry Beal told you yesterday or not, but there
10 is a suggestion that we start a formal analysis at that time,
another one of these on top of all the other analyses we are
12 doing.
13 I get sort of defensive when you make suggestions
14 like that, but, yes, thre is going to be an analysis to deter-
15 mine the impact of our regulations on other governmental units.
16 It will be very hard, I think, to relate anything we
17 do on asbestos in schools with a budget of NCI. I think NCI
18 is going to be doing research on carcinogens, and there are
19 many more than just the asbestos in schools.
20 There might be a small reduction, there, because
21 they are doing some work that is related, but that budget
22 tradeoff is not going to justify the regulation. It's going
to be relatively small.
24 So far, I guess, I have to admit it's not formally
25 taken into account and I think, unfortunately, it may be in
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the future.
CHAIRPERSON BENDIX: Ted, you had a comment on this
3 point?
4 DR. RADFORD: On this particular point, yes
I would just like to say that I quite agree with
Toby: nothing is going to happen of that nature.
We made an attempt, when I was working the CEQ back
3 in the days when Toby and Steve Jellinek were in it trying to
9 bring some rationality into the whole cancer area in relation
10 to environmental influences and to try to stimulate research
11 which would define what the hazards were in the real world.
12 And it was a complete failure; and I learned the hard
13 way that these agencies have enormously effective ways around
14 any efforts to look into their practices, do anything about
15 them, change priorities or anything else.
16 Of course, the NCI and NIH have been essentially
17 diagnostic and therapeutic medicine, not preventive medicine
18 at all. You can look at the budget allocations within NCI to
19 see that.
20 But one little glimpse that I recommend to anyone
21 interested in this question is to look at this co-called Labosy
22 Report last year, which was an inter-agency group to evaluate
23 the federal radiation research program in detection of low
24 level effects of radiation.
There the numbers were spelled out and they made ver\
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1 interesting reading, very large chunks of money going to the
2 government laboratories for, quote, basic research, unquote.
3 There appeared very little, relatively little money
4 going into the study of effects on human populations and almost
5 none, at that time, going to universities as distinct from
6 Department of Energy or, let's say, NRG functions or other
7 federal agencies that were using the research, in house, or
8 directly contracting with non-university sources.
9 So that we don't get a very good glimpse anywhere in
10 the federal establishment as to where the money actually goes
11 and that tells you where the real priorities are in very loud,
12 stentorian terms better than any statements made by any admin-
13 istrator; and you look where the money goes, and it's not goinc
14 into preventive strategies. That's for sure.
15 . CHAIRPERSON BENDIX: Did you want to comment on that?
16 MR. MOONEY: A couple of comments. I want to go back
17 very quickly, to the reference that was made to remarks appar-
18 ently offered by Monty Thodow.
19 I didn't hear them and I won't presume to interpret
20 what Monty meant in a statement which I didn't hear, but I
21 don't think there are many of us - whether we work for com-
OO
panies or agencies or institutions - that have budget and
23 people and more things to do than we have time who don't, in
24 some way, engage in a process of sorting out what we're going
25 to do with our time and where we're going to spend our dollars
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1 Perhaps he said something to the effect he didn't
2 use a benefit-risk approach, but everybody uses something that
3 I think involves those elements in figuring out where to put
4 their priorities. I happen to think the right process is a
5 very constructive and positive.process, and I really am
6 puzzled that people take issue with it or find it an intrusion.
7 We seem to be a government system that's built on
8 checks and balances; and, to me, it is just another cross-
9 check that is saying, "Hey, have you thought about this," or
10 "Have you thought about something else?"
11 I do think if we press it to the limited extreme of
12 trying to put precise numbers on everything, things would fall
13 apart because I don't really believe you can do that, but there
14 is the middle ground that I believe Bill Sutton was getting at:
15 that that shouldn't make it less than legitimate to at least
16 talk about the economic impacts, even if those can't be quan-
17 tified right down to the last penny.
18 So I think it's a constructive process and I'm happy
19 to see it going on, and I'm sorry frankly when I hear there
20 are voices outside of the industrial community, within the
21 government, that contend that the bureaucracy is a system that
99
is out of control.
23 When I hear statements like that being made by people
24 in the Congress and people in the White House, I get a little
25 nervous.
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I suppose it's all right for agencies to be doing
their thing as long as that happens to be something with which
you're in agreement, but it does scare me a little bit if
there isn't a check and balance; and I think it's reasonable
for an agency to address,
6 With regard to a remark that was made by Dr. Ashford
7 I am thrilled with the hypothesis that more regulation is go-
8 ing to deal with the problems of stimulating innovation and
9 technology development in industry.
10 I don't happen to subscribe to that and I can agree
11 with the fact that certain regulatory actions have led to the
12 development of some new technologies to deal with particular
13 problems.
14 In that context, I think there is something to be
15 said for it, but I'm not sure I would, therefore, extend it to
16 saying that we're going to revise the whole business system by
17 more regulation.
18 We are dealing with crystal balls, I suppose, and
19 what happens over the next ten years if we did take a broad
20 stroke regulatory approach where somehow the process was sim-
21 plified and the agency didn't have to concern itself with cost
22 And suppose it could take tremendous actions along the lines
23 that are on the books in that list of, what was it, 180 or so
24 regulations in process under EPA's authorities that was men-
25 tioned yesterday?
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I wonder if there is anything, Nick, to address your
2 thesis, in the Food and Drug amendments of '62 which added an
3 interesting new dimension which I don't think I take issue
4 with, but one might postulate: If your thesis is correct, the
5 Kefaiiver amendment should have, perhaps, stimulated drug tech-
6 nology and weeded out some of the lesser firms and the things
7 you associate with increased regulation.
8 DR. ASHFORD: It's funny you should ask that question
Let me address a couple of things, and I apologize for being
verbose.
11 One is that I don't think that we ought to be under
12 taking regulation for the purpose of stipulating technical
13 innovation. There are better ways to get the business commun
14 ity going.
15 All I'm saying is, it may not look so bad as the
16 omenous predictions of the demise of U. S. industry.
17 . There is considerable evidence for the stimulating
18 effects of, particularly, product- and process-oriented regu-
lation. Some of the evidence is in and some is not.
It will have to be an article of faith for a while,
21 and I can give you evidence that exists and you can judge it
22 for yourself.
23 I am honestly cautiously optimistic about what I'm
24 saying, but let me answer your specific question about FDA be
25 cause I am in the process now, under National Science
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1 Foundation sponsorship, having just completed a report of the
2 effects of the Kefauver amendments on changing the nature of
3 innovation in the pharmaceutical industry.
4 MR. MOONEY: I feel like a set up.
5 DR. ASHFORD: I said, funny you should ask that ques-
6 tion.
7 The final report was delivered last Friday and the
8 results are the following. These are rough, but they're sta-
9 tistically significant:
10 That the nature of the drug development process has
11 radically changed since the Kefauver amendments and it has
12 moved from a serendipitous lottery approach to a much more
13 systematic look at the drug opportunities in product develop-
14 ment - just exactly what you'd expect.
15 Let me just say that the Peltzman Study that merely
16 counts the number of new additives has changed. Unless you
17 therapeutically wait for importance of new products, you can't
18 merely count the number of new products and ask what they do.
19 But the evidence is beginning to mount significantly that the
^ process of innovation has really changed.
21 Now, whether it was worth it, whether the costs are
22 worth the benefits depends upon how you view increased safety
23 and more efficacy versus cost to the consumer. There's no cor-
24 rect answer to that.
25 But my thesis has been - and it seems to be borne
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1 out - that the process has actually changed.
2 I once thought, but I did not suggest, that we re-
3 quire technological innovation impact statements. I quickly
4 withdrew that recommendation.
5 MR. MOONEY: I think it's worth pursuing.
6 DR. ASHFORD: Let me address your earlier comments
7 which I think are important.
8 On the surface, if I look at the RARG requirements,
9 I can hardly be opposed to them. I think a rational process
10 is required for agency decision-making.
11 Where I might depart is that I think it exists to a
12 large extent already. I think it has existed; and where I
13 -object to the demand of a rigorous analysis - demand, even if
14 the analysis is not rigorous, a rigorous demand for analysis -
15 is that, in practice, if you look at the history of the way
16 the Council of Wage and Price Stability has interfered, undemo-
17 cratically, with the administrative process, I think you have
to come to a different conclusion about whether the intellec-
19 tual exercise is worth, it.
20 I'll be specific.
21 On the cotton dust standard, we have countable agency
22 heads who were taken to task in public oversight hearings and
23 the hearings on the standard. Everyone had their chance to
24 argue about the economic impact: whether the costs were worth
25 the benefits.
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The hearings closed. The Secretary of Labor is ob-
ligated to make decisions on substantial evidence on the re-
cord as a whole.
4 The fact that pressure was put on Secretary Marshall
5 and he was denied access to the President while he was lobbied
6 by the economists in the White House leaves me cold.
7 I don't care whether cotton dust is 50 parts per
million or 25 parts per million. I don't think the kinds of
9 hairs we begin to split matter that much in the whole picture,
10 as much as that the decision be arrived at in a democratic pro
11 cess.
12 I'm deeply concerned that ex parte communication
13 after the regular hearing is closed, which is being imposed
14 upon the environmental agency, really deprives us of the pur-
15 pose of the administrative process. I don't think that should
16 be allowed.
That is, in fact, what happened. That is, in fact,
18 what has continually happened with regulation.
19 Yes, Sir Douglas appoints, Douglas Marshall, but he
20 has delegated the power to administer by the Congress, and it
21 is an interference, I will maintain, of the separation of
22 powers to deal with post-hearing back room maneuvering.
23 I don't have any problem with informal communication.
24 That's, how we avoid the conflicts. But I'm deeply concerned,
25 as a democrat, small "d", with the process.
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I want to tell you one example and this is on the re-
cord of how the interference occurs in the hearing process. We
have heard about the magic benefit to cost ratio, cost effec-
tiveness.
5 Let me give you a simple example of how an evalua-
6 tion by the Council on Wage and Price Stability or like bodies
7 can distort the analysis, and that is in the case of noise.
8 There are two basic ways to go with noise: require
9 engineering controls; or stick hearing protectors on workers.
10 Now, you are hoping to get benefits of hearing loss
11 reduction under both measures of control. It is obvious to
12 everyone that hearing protectors are a lot cheaper than retro
13 fitting.
14 The matter of the fact is that hearing protectors
15 are 75 percent effective. That's what NIOSH says.
16 Let's give the upper limit and say that, 75 percent
of the time, they will do the job an engineering- job- will do
18 at one-tenth the cost.
19 If you construct a benefit to cost ratio for those
20 two different approaches - one, a given hearing benefit for a
21 certain price and, the second, 75 percent of the benefit at
22 one-tenth the cost - it's very clear that the: most cost effec-
23 tive approach is to stick hearing protectors on the workers.
24 That, Calp said, had to be the way OSHA went because
25 that was cost effective. Cost effective for whom?
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l What about the 25 percent of the workers who weren't
2 protected?
3 It's an equity consideration. It's a statement that
4 has to be looking at within the context, in this case, of the
5 OSHA Act; and ask if the Act was meant to protect 75 percent
6 of the workers or as many workers as possible?
7 Congress spoke to the latter. The fact that it is
8 not cost effective is really irrelevant, interesting but irre-
9 levant. Cost effective for whom?
10 You can make things cost effective so that a very
11 small percentage or not the intended population is to be pro-
12 tected: not the asthmatics, not the pregnant women, not the
13 hypersusceptibles, not the people who suffer enzyme deficiencies,
14 The question is: Where does the legislation go? At
15 whom is it targetted? And is the Council on Wage and Price
16 Stability demanding these analyses, really, trying to reorient
17 the legislative mandates to their own liking without account-
18 ability through this mechanism of cost effectiveness demand?
19 It is a very clear thing as to what's happening.
20 My opposition to the process is based on democratic
21 principles: that is, I don't like post-hearing maneuvering; I
22 don't like techniques being thrown up which artificially make
23 an agency look bad by saying, "You can do the thing," 75 per-
24 cent of the heart protection, "at one-tenth of the cost.
25 Aren't you financially irresponsible?"
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l That's what annoys me in the process, not the Intel-
2 lectual exercise.
3 MR. MOONEY: You, therefore, support the conventional
4 oversight means or dealing with regulatory mismanagement?
5 DR. ASHFORD: I support the hearing process, the
6 checking by the way of the courts. The courts have continually
7 stepped in and argued whether this is concrete to the position.
8 if you look at the legal decisions, the courts have
9 done a remarkable job of having tremendous insight as to where
10 the Congress struck the balance. You want to amend the OSHA
11 Act? Damn it, amend the OSHA Act.
12 But let's not try to divert resources to continually
13 fight the legislative battle all over again.
14 MR. MOONEY: The benzene division will undoubtedly be
15 very important to the issue or what the intent of Congress was.
16 Unfortunately, that intent is a little obscure at times, which
17 is why I guess we have the court debates we do.
18 The only follow-up comment I will make on your drug
19 report: I'm glad I asked a timely question. I will suggest
20 that the process - at least in my sense of what constitutes
21 innovation from a business perspective - the process is less
22 important that what comes out the end of the pipe.
23 if you fiddle with the process, you can fiddle with
24 reorganization in EPA, which we'll probably talk about a little
25 later, but it's what comes out at the end of the pipe that
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generates the business that translates into the jobs and, hope-
fully, some cost and benefit to society that constitutes mean-
3 ingful innovation.
4 So I think, at least on my query regarding this, the
jury may still be out.
6 DR. ASHFORD: When you change the nature of drug
7 development, how do you evaluate, as I indicate, whether it
8 was worth it?
MR. MOONEY: It's a different issue and lots of
10 books have been written about the subject, but I thought you
11 might have something to teach us on your thought about what I
12 think was a substantially increased mention of regulation over
13 a whole business area.
14 DR. ASHFORD: By the way, it's interesting that they
15 went to efficacy and not safety. It's the only industry in
16 the world that didn't have to say its product, could do some-
17 thing in order to sell it.
18 You wouldn't bay a car if it didn't work. You don't
19 know that with a drug.
20 DR. CLARK: Can I make a comment on Nick's point?
21 I think I will have to say that I have a lot less
99 confidence in the admission of the court than apparently Dr,
23 Ashford has.
24 MR. MOONEY: I was going to ask him if he preferred
25 the fifth circuit to the first.
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1 DR. ASHFORD: I will take the whole lot. I will
2 throw the whole fate of the environmental movement to the
3 courts, in general, because if you look at it they have sub-
4 stantially improved the level of debate.
5 If you look at the Leventhal decisions as scientific
6 reasoning documents, they're marvelously impressive. Even the
7 economic analysis of the D. C. Circuit is impressive.
8 I think we're growing up. We're moving into a transi
9 tion period.
10 I will throw my lot with the courts, even if the
11 fifth circuit reversal is sustained by the Supreme Court, which
12 I don't see as possible by the way.
13 MR. MOONEY: Let me make a note of that.
14 DR. ASHFORD: It doesn't cost me anything to predict.
15 DR. CLARK: Have you read The Brethren?
16 DR. HARRISON: Let me just clarify that I was talk-
17 ing about the RARG reports and we mentioned the Calp filings.
18 I don't know about the specifics of the noise, Calp's
19 filing, but two points I think are in order. One, those fil-
20 ings in the RARG review are on the public record and are filed
21 in the public commentary. So in terms of their influence on
22 the decision or any delay, they really don't cause any delay.
23 What they do is add to the number of comments that
24 are filed in our public record in the public comment as de-
25 cided by the. agency.
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I think in terms of this noise case, what might have
been said in a review, if the facts are as Nick suggests, is
that you might be able to structure a decision on how much
noise control to require, what.kinds of noise standards to set,
by saying both:
You can go part way by using personal protection de-
vices; and, if you want to go farther, the costs are going--to
be greater relative to the benefits.
I don't think, typically - and, as I say, I'm not
familiar with the details of this particular COUPS filing, but
typically they say you ought to s:top at 75 percent control.
>..
It simply points out the characteristics that, in the deci-
sion you have in front of you, you can get a certain, amount of
the benefits at relatively low cost.
Then if you go beyond that you're likely to have
higher costs relative to any increase in benefits.
So that is another way of saying it.
DR. ASHFORD: I wish it were so, David.
Unfortunately, you're my friend, and your boss,
George Eads, is the one who wrote in print the benefits of this
regulation do not exceed the cost.
I don't know how you can compare them anyway because
it's hearing loss with dollars; and, secondly, I am afraid your
sensible approach to the issue does not characterize what the
analysis has been in the past.
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That doesn't mean that we should say it can't be done
correctly. COUPS is still involved in this business.
DR. HARRISON: COUPS does fine on the public record,
too.
DR. ASHFORD: At the President's Council on Wage
and Price Stability, there is tremendous leverage when you have
this kind of a body making commentary not only on economic but
8 scientific issues to which is has no expertise.
9 They couldn't evaluate an epidemiological study if
10 they knew what one looked like. So you're talking about, ben-
11 efits do not exceed the cost. They have no way of interdepend
12. ently evaluating. They are not equipped to do that job.
13 MR. BARAM: The chief offender has been the CEQ.
14 They feel not constrained in any v/ay by the regular or the
15 open notice in common proceeding, but also RARG and COUPS' have
16 done a lot of work on the record, whether it's airborne lead,
17 whether it's ozone or cotton dust, there are many cases.
18 Whether they changed their policy in the last few
19 weeks, David, that's another matter.
20 DR. HARRISON: I want to clarify that RARG, itself,
21 does not go beyond filing of comments. RARG is the group that
22 includes the regulatory agencies as well as --
23 MR. BARAM: Nick made the point earlier about the
24 separation of powers doctrine. Don't you feel RARG is meddling
25 in a lot of the internal conceptualization of what the agency
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1 is doing, not in terms only of cost effectiveness but also whe-
2 ther it's worth going after certain targets.
3 There is a principle here that is very important for
4 us to remember: that Congress provides the statutory agency,
5 the funds to the agencies, funds the agencies. They're the
6 sole source of authority.
7 And yet we have, today, in essence a whole new doc-
8 trinaire approach.
9 The important decisions, the major and significant
10 ones which cost more than a hundred million dollars or what-
11 ever the measure is, are the ones that are precisely being
12 routed through this process.
13 DR. HARRISON: I have to clear up again.
14 MR. MOONEY: It is, indeed, a political process.
15 DR. HARRISON: I understand there are different opin-
16 ions among legal scholars and lawyers as to what the appro-
17 priate role of presidential advisors is in the setting of re-
18 gulations. I think that is the issue you're talking about.
19 RARG is a group that is composed of regulatory
20 agencies and files in the public comment and ceases to exist
21 in terms of a particular regulation after the public comment
22 period is closed.
23 DR. RADFORD: Selina, if I could make a couple of
24 brief comments because I'm going to have to leave for a while
25 and come back this afternoon.
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1 First, I will leave a number of these notices at the
2 back of the room.
3 With regard to the noise issue, I would just like to
4 back up to what Nick said. The first point is that personal
5 protection is no way to go in protecting the worker from
6 hazard. That applies to respirators, noise control and so on;
7 and I have seen some of the technology that is available in
8 .noise control.
9 I'm convinced, despite the capital costs, they are
10 cost effective, anyway, across the board. They will improve
11 worker efficiency because when you work in a noisy environment,
12 you can't have voice communication and so on.
13 So I will drop the noise issue from the medical point
14 of view right there.
15 I would just like to say, backing away from this
16 whole regulatory process and getting to the question of the way
17 in which the regulations potentially may influence the indus-
18 tries, I do a small amount of consulting with a company which
19 I will not name but which is a moderately big company and one
20 of the things they have me do is to look over their operations
21 and see if I see any problem areas.
22 And I come up with a few, as I think most anyone who
23 is knowledgeable in the field could do if they were around and
24 were given pre-access to all operations.
25 I have been very impressed with the fact if I flag
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1 an agent as a potential problem, they are usually able - and,
2 in most cases so far, the really hot ones - to eliminate that
3 from their process; and, in at least one case I know of, they
4 made a bundle on it,
5 The conversion to a different process system ended
6 up that they were economically far better off by a substantial
7 amount.
8 Now, the point of that is, we can come up with anti-
9 dote pill stuff like that all over the place, but the point is
10 one of attitude: that people do things because they've always
11 done them that way, and we've got an enormous amount of inertia
12 built into the system because of that.
13 And all of this talk about cost benefit is basically
14 because we've got this inertia in there. That's one of the
15 big elements there.
16 In this particular case where they make a lot of
17 money by converting the process, they had always done it that
18 way and.they had never thought, by doing it a different way -
19 which eliminated the hazardous material, which was both an
20 occupational an environmental hazard - that they could save
21 money.
22 in the first place, they didn't have to buy the pro-
23 duct which was expensive. So,, anyway, I am just saying - and
24 I find this in labor - the inertia in labor is enormous.
25 We don't want to wear hardhats because "I'm a tough
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1 guy" routine, or we don't want to adhere to safer practices
2 because, "My daddy never did it that way."
3 There's a lot of inertia in government and there's
4 certainly a lot of inertia in academia.
5 So we can go on very extensively about that, but
6 oftentimes it just takes a little bit of cerebration on it
7 and, my God, you can solve these problems if the message of
8 the representatives of labor and industry can be gotten across
9 in this whole area as, let's look at a new way of doing things
10 And, on that note, I will heave. But I'll be back.
11 Thank you.
12 CHAIRPERSON BENDIX: Thank you.
13 Becky?
14 MS, MOON: I pass. I've forgotten what it was.
15 CHAIRPERSON BENDIX: Ted, I don't think you've had
16 any comments this morning.
17 DR. CAIRNS: This is all pretty well far out of my
18 field. I'm interested in religion, but I don't argue about a
19 person's own religion or the basis for it.
20 CHAIRPERSON BENDIX: Is there anyone on the panel
21 who would like to make a final summing up commentary?
22 DR. CLARK: I don't see the possibility of doing
23 that.
24 CHAIRPERSON BENDIX: I will, then, 'make a comment
25 about what I see as a commonality in one respect between the
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1 discussions we had yesterday and the discussion this morning;
2 and that is that yesterday we had spent a considerable amount
3 of time considering the question of how much documentation is
4 enough to justify the promulgation of a regulation and if,
5 perhaps, one of the reasons that it takes so long to get a
6 regulation out is that too much documentation is being put
7 together to explain why the regulation is needed.
8 I think we are seeing today what looks like another
9 facet of the same problem: that something which is reason-
10 able, done in moderation, may become unreasonable if it is
11 overdone; and are we bogging everything down in overanalysis
12 from many different standpoints - too much paper?
13 And do we need to look at ways of establishing cri-
14 teria for how much is enough?
15 Perhaps we ought to take a look at the motto that
16 CEQ has in saying a ten-thousand page environmental impact
17 statement is ridiculous and let's turn it down to 150 pages
18 and write something short enough that people will read and
19 find something out about it.
20 MR. BARAM: And the court will find it inadequate.
21 CHAIRPERSON BENDIX: I'm not sure that the court will
22 find it inadequate if it's done properly.
23 Thank you very much, to all of the panel members,
24 for a very interesting and productive session. We appreciate
25 your contribution.
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I believe that Marsha may have some administrative
matters that she would like to bring up.
MS. MOON: I think this has been one of the most in-
formative and interesting sessions we've had in a long time.
MR. MOONEY: At least we've gotten some divergent
6 views from the three of you.
7 MS. RAMSEY: First of all, I have travel vouchers
8 Does anyone need one? You have to fill them out with receipts
9 and all of those things.
10 CHAIRPERSON BENDIX: You also have forms for filling
11 out expenses.
12 MS. RAMSEY: No.
13 Who needs the other forms?
14 MS. MOON: I need the travel voucher.
15 CHAIRPERSON BENDIX: In view of these issues that
16 have been coming out about the adequacy of documentation, I'm
17 interested in knowing whether the members of the committee
18 would have any interest in passing a resolution urging OPTS1
19 staff to examine opportunities for limiting documentation as a
20 means of expediting the rulemaking process.
21 Is there any sense of the members at this point?
22 DR. EISENBERG: Maybe that's something we can talk
23 about with Steve when he comes in this afternoon.
24 CHAIRPERSON BENDIX: All right. We can defer the
25 matter.
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1 MS. MOON: Would you have a specific area that this
2 recommendation could go to? I remember looking at our files
3 pile and we sort of went, "Oh." I have a very strong feeling
4 that there was a lot of concern about this big pile, be it •
5 from the industrial standpoint or any other standpoint, that
6 we felt they had done an overkill on this.
7 MS. RAMSEY: There are a lot of different chemicals
8 that they were addressing, and it wasn't just for one.
9 MS. MOON: I'm just referring back. That was the
10 conversation and the presentation we were all groaning about.
11 CHAIRPERSON BENDIX: My understanding is that 500-
12 page package was condensed from a 1000-page earlier version,
13 and my question would be: If that 500-page document was fur-
14 ther condensed down to 200 pages, would we have something that
15 might be even more effective and more clearly point up what
16 the clear issues are?
17 MS. RAMSEY: Can we talk briefly about our agenda
18 recommendations?
19 MR. BARAM: I don't think you have enough committee
20 membership here to pass a recommendation. And, also, I don't
21 knoxv if these papers are slowing everything down. That's a
22 different issue.
23 CHAIRPERSON BENDIX: That's true.
24 MS. MOON: I think you're going to have to wait for
25 Dr. Radford to get back. You have to get Lou up here.
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l CHAIRPERSON BENDIX: Informally, does anybody have
2 any suggestions for an agenda for the next meeting?
3 In particular, I would like to know if anybody has
4 any ideas for other issues which might be suitable for the
5 kind of format we had this morning, which I think was very
6 helpful.
7 MR. MOONEY: That was very helpful, and I think, in
8 tying back to it, we had a document in our package. It didn't
9 end the discussion, but it's the EPA contract or, at least,
10 the communication from —
11 MS. RAMSEY: That was the strategy that was the re-
12 suit of the retreat.
13 MR. MOONEY: No, not the strategy document, but Judy
14 Nelson's document to Joseph L. Kirk of ICB, Incorporated which
15 authorizes this economic study relative to TSCA. It fits on a
16 track that is going to apparently lead to all tasks completed
17 by August 30, 1980.
18 And I wonder if this is something we might want to
19 at least track in our meetings with periodic updates from Judy,
20 MS. RAMSEY: Judy was not able to come today.
21 MR. MOONEY: It's a document called -- Well, it is
22 a letter.
23 MS. RAMSEY: Where was that?
24 MR. MOONEY: I've got so many papers in here.
25 CHAIRPERSON BENDIX: I think it was in the package
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you sent out to us yesterday.
MS. RAMSEY: That was in the PMN package.
3 MR. MOONEY: Oh, it's in Blake's package.
4 In any event, it's a communication of November 10
from Judy Nelson to Joseph L. Kirk of ICF, Incorporated in
6 regard to TSCA Order Number 3, Contract 68-01, et cetera, but
7 it's basically dealing with an economic analysis, a number of
8 important aspects of TSCA implementation, and it is generally,
9 it would seem to me, to be appropriate to the subject we were
10 talking to today; but more specifically focused on TSCA.
11 MS. RAMSEY: Would you see a discussion like that
12 being a part of a subgroup on testing and PMNs, or do you see
13 that as being something broader that the committee should
14 address?
15 CHAIRPERSON BENDIX: What is the nature of this
16 contract? Is it covering just a PMN or more generally?
17 MS. RAMSEY: New chemicals isn't it.
MR. MOONEY: It's develop a work plan covering all
19 substantively gathered data, gather data by literature searches
20 et cetera, to conduct analysis of the PMN requirements, assess
21 the feasibility of developing a methodology for doing formal
22 economic impact analysis, conduct the economic impact analysis,
23 and analyze it.
24 i think the net of it is the PMN focused economic
25 study.
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l CHAIRPERSON BENDIX: It sounds to me like something
2 that might be worth having a progress report to a subgroup and
3 have the subgroup evaluate whether it was something that ought
4 to be brought to the committee as a whole.
5 [Discussion off the record.]
6 WHEREUPON, at 1:00 p.m., luncheon recess was taken,
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AFTERNOON SESSION
2:00 p.m.
CHAIRPERSON BENDIX: I would like to ask the commit-
tee members if the committee members could return to their
5 places.
6 I know Mr. Jellinek has a very busy schedule.
Welcome, and we're looking forward to hearing the
8 latest about the hearings you've just come from.
9 MR. JELLINEK: First of all, let me apologize and
10 extend Costle's apology for not being able to be here. He
11 is, this week, I think having to testify five different times
12 in hearing or appearing for hearings all week.
13 He has to make sure that we work something out for
14 the next session, of this next meeting of the group so he can
15 attend.
16 When is the next meeting?
MS. RAMSEY: The 19th and 20th. You are going to be
18 in Paris.
19 MR. MOONEY: Of course, we could meet you in Paris.
20 CHAIRPERSON BENDIX: If you want to take us with you,
21 we'll reluctantly consent.
22 MR. JELLINEK: We will get together with Doug as
23 early as possible.
24 ASSESSMENT OF TSCA IMPLEMENTATION AND DIRECTIONS
25 MR. JELLINEK: The hearings today were before the
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1 Senate Appropriations Committee as chaired by Senator Proxmire
2 and we were extremely uneventful as far as the Toxic Substances
3 Control Act goes.
4 I didn't get one question because they go through the
5 budget document by program as the programs are displayed in the
6 document, and Toxics is toward the end of the document. So
7 they'll be to us tomorrow.
8 But Senator Proxmire is probing - in his questions,
9 he's concerned about waste and the efficient, effective use of
10 the taxpayers' dollars, but he also has been historically a
11 very strong supporter of EPA and EPA's objectives.
12 Two weeks ago, we appeared before the House Appro-
13 priations Subcommittee and it is always hard to predict how
14 these things go, but I came away feeling fairly good about it.
15 They were concerned about our ability to hire up to
16 our projections, and we have not been able to do that the last
17 couple of years and they have been somewhat concerned about us
18 being overly optimistic.
19 This time, we gave them a very detailed assessment
20 of what we thought we could do on our hiring and our spending,
21 and we think we can fill all of the positions that were auth-
22 orized, but we don't think we can spend all of the salary
23 money that goes with those positions, although we think we
24 have the numbers looking, very good to justify that we think
25 we'll get around to about 95 percent of the salary money; or,
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1 the way it's expressed in the budget, full time equivalents.
2 We'll get about 95 percent for that.
3 Today, as of Friday, we had 423 on board and we are
4 authorized something close to 500. So we still have 80 or so
5 vacancies, 75 vacancies or so. But we have a lot of commit-
6 ments out. So we think we can get a lot closer this year to
7 making our projections for our budget and hiring than we did
8 in previous years.
9 DR. RADFORD: Steve, is this a general problem?
10 MR. JELLINEK: It's a problem with the agency, yes.
11 It's a worse problem with new programs that have a
12 lot to do and it's been aggravated by a couple of freezes and
13 by our lousy space conditions which some candidates look at
14 and decide they would rather work for National Cancer Insti-
15 tute or for private industry or for academia.
16 I don't have anything in the way of a report, but I'n
17 prepared to answer a broad range of questions in detail,
18 CHAIRPERSON BENDIX: I would like to start by asking
19 a question which may be premature. You may not know the answer
20 yet.
21 But do you have any sense of what the affect on EPA
22 and, in particular, on OPTS will be with the new presidential
23 directives at budget cutting?
24 MR. JELLINEK: The bulk of the FY fiscal year 1981
25 reduction in budget outlays will be taken out of our major
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1 construction grant program so that the operating programs of
2 the agency will suffer only minor cutbacks, comparatively
3 minor cuts. Everyone will suffer some cut.
4 The details have not yet been worked out, but frankly
5 compared to what other agencies are experiencing, EPA has I
6 think been very effective at persuading the Office of Manage-
7 ment and Budget that the agency generally - the agency's oper-
8 ating budget is generally a very tight budget and there is not
9 a lot of fat; that the-agency, over the past two or three years
10 has done a tremendous amount of reprogramming within its base
11 to cover major increases in new programs.
12 Most of the increase in the toxics programs has been
13 taken out of the hides of other programs in the agency, and
14 many of the shifts and increases in other priority programs
15 have been taken from base programs.
16 They are not non-important programs, but just pro-
17 grams which just represent the fact that we could not go to
18 Congress every year with a huge marginal increase. There is
19 just no way we can get it, either from Congress or the Presi-
20 dent.
21 So we have made changes and shift in our own base.
22 DR. EISENBERG: Just as an aside, that construction
23 grants program - are the funds just being impounded, or are
24 they being cut substantially?
25 MR, JELLINEK: What is happening is, it is a fairly
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1 complicated formula which I am sure will be explained in de-
2 tail to the states, if not already within days, but it in-
3 volves, primarily, deferring obligations in 1980 in order to
4 cut outlays in '81.
5 There are a couple of complicated accounting prac-
6 tices involved which I can't explain with any precision, but
7 the means of carrying out this cut in '81 outlays will pri-
8 marily involve deferrals of funding for construction grants.
9 MR. BARAM: I read recently about the National Toxi-
10 cology Program over in HEW.
11 Is there any attempt anywhere in government to weave
12 all of this together somehow so that it is the most efficient
13 support for this program?
14 MR. JELLINEK: I think the National Toxicology Pro-
15 gram represents a very clear attempt at the weaving. I mean,
16 it's a major part of the fabric.
17 EPA is a member of.the executive committee of that
18 program and I represent EPA on the executive committee as an
19 alternate to Doug. Doug is the official representative and
20 attends most of the sessions.
21 We participate in not only setting the policy for
22 the committee, but the staff participates in selecting chemi-
23 cals for priority testing and we try to balance those that
k
24 ought to be tested using government funds versus those that
25 should be tested using private funds.
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We try to balance our ability to act on the testing
and the timeliness of our actions versus the timeliness of
their actions.
4 So I think the program was set up to meet regulatory
5 -agencies' needs.
6 One of the major needs we have beyond the testing of
7 chemicals is the development of new test methods and the val-
8 idation of emerging, sometimes even existing test methods. We
9 have been working to make that a major function of the toxi-
10 cology program because we just see the need for developing
11 it for promulgating under Section 4 good, effective, hopefully
12 cost-effective methods for testing chemicals when we ask in-
13 dustry to test under the test rules.
14 The research community and the government and aca-
15 demia should be mobilized to help us by developing and valid-
16 ating those.
17 MR. MOONEY: Steve, from the standpoint of dis-
ciplines in your hiring process, are there any obvious places
where we're having difficulty or it is across the board in
20 terms of your staffing?
21 MR. JELLINEK: I think we're having the most —
22 Pathblogists are just about out of the question. So we have
23 decided, over a year ago, to get most of our pathology done
24 through consultants who contract.
25 We are having pretty good luck with toxicologists and
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l other biological scientists and .chemists. I would say the big
2 gest problem - there are three big problem areas: economists;
3 industrial chemists, that is people with real industry know-
4 ledge; arid chemical engineers, also, people that can under-
5 stand the hardware side.
6 So we have been doing better at that lately than we
7 had in the past, in the earlier part of our program. But I
8 would say, at this point, it's not the toxicologists or the
9 biochemists or the biologists who are the problem. It's
10 getting experienced chemical engineers, industrial guys, and
11 good economists.
12 Economists are a dime a dozen. Good economists are
13 a different story.
14 CHAIRPERSON BEMDIX: That is what I was going to
15 ask.
16 Is it your problem that the average economist doesn't
17 know anything about the chemical industry and the kinds of
18 problems you have to deal with?
19 MR. JELLINEK: I can't go into detail on that aspect
20 of the problem, but we are trying not to compromise quality or
21 standards. We have been trying to attract very well-qualified
22 economists and operations research staff, also, that ilk.
23 DR. SLESIN: Would you like to talk about the re-
24 organization package? I have some questions.
25 Maybe you would tell us, first, what you were
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1 thinking about when you decided to embark on this and get
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2 into specifics.
3 MR. JELLINEK: Well, there are two major reasons for
4 the reorganization.
5 One was that it just had become very obvious to me
6 that a trifurcated situation was essentially inefficient and
7 adding time to the production of decisions. It was engender-
8 ing a certain level of attention that might not otherwise be
9 there, and it was overforcing too many decisions backward to
10 me that really should have been made by officials at lower
11 levels.
12 The DAAs each had a right of thinking of themself
13 as doing a very important job in most other agents. DAA has a
14 total hegemony over major law or .a major section of a gigantic
15 law and can organize and direct and manage and make basic pol-
16 icy on his or her own, getting general policy guidance and
17 directions from the Assistant Administrator.
18 In the case of the toxics program, because the Act
19 is an organic act and because you can't separate one section
20 from another and expect it to carry out the objectives of the
21 Act effectively, the three-headed DAA-ship has lead to more
22 problems that it was worth.
23 And I just decided, after a lot of agony, thinking
24 that even though reorganizations are disruptive, that this one
25 would be an intermediate one and certainly the long run. I
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1 hope the intermediate run and maybe even the short run are
2 major positive moves in terms of getting things done more
3 efficiently and more quickly under TSCA.
4 The second reason why, frankly, to elevate the level
5 and the importance of the integration function, particularly
6 and especially as it relates to the integration across various
7 agency programs of chemical issues and problems.
8 And, for that reason, that function is proposed to
9 be located in my office with a significant staff support.
10 So those are the two major reasons.
11 Once we made those changes, then we made a number of
12 other changes that we thought made sense; but, for the most
13 part, most people in the program will be working on the same
14 things that they were working on before the reorganization and
15 will be working for the same immediate supervisor that they
16 were working with before the reorganization.
17 Just to summarize, to make it more efficient, to make
18 administration of TSCA more efficient, and to give more sta-
19 ture emphasis to the integration function.
20 DR. SLESIN: As you know, some of our concerns re-
21 volve around the ITC list and meeting those deadlines, and now
22 we see that Warren will have a great deal more responsibility
23 following up all of the other rulemaking activities under the
24 various sections of the Act.
25 Are you going to take some load off Warren to
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facilitate test rule development?
2 MR. JELLINEK: Let me answer that question this way.
3 I don't think that the problem that we've been having
4 with Section 4 is a management problem. I think it is either
5 a legal problem or there's a problem of going down one basic
6 policy approach towards Section 4 as opposed to what might be
7 alternative policy approaches that might result in being able
8 to test chemicals more quickly.
9 I frankly think that, without the reorganization, if
10 we kept doing test rules the way we've done the first test
11 rule, it would take too long. It was just unacceptable.
12 We are going to have to figure out ways to get AMRPN
13 or notices out more quickly with less work for ITC or we're
H going to have to figure how to approach testing chemicals in a
15 completely different way.
16 DR. SLESIN: I heard you speak in New York about no
17 decision being a decision, and I must say I like to hear that
18 and applaud that.
19 But what you're saying is you're going to have to
20 find new ways of thinking through these problems and a new
21 policy direction for the program, which I also agree with.
22 But new direction and policy means new thinking, and
23 I'm sure that means time. And if Warren is directing that,
24 surely does that make a difference if he has to make decisions
25 on 14 other ruling procedures?
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l If you are starting down a new road, is the ball
2 game still in Warren's court?
3 MR. JELLINEK: You know, as a DAA, Warren is going
4 to have to play and will be playing a major role in developing
5 new policy. He will be spending proportionately less of his
6 time on Section 4. There is no question about that. But the
7 kind of time he spends on Section 4 will not be the kind of
8 time he has been spending on Section 4 up until now.
9 He's been spending a major portion of his time and
10 been in the trenches on various issues.
11 He is going to have to distill his time and focus it
12 on the policy direction because he's not going to have any
13 other choice. He's going to have to do other things.
14 He's going to have to upgrade the quality of his
15 attention, the percentage of his attention that he gives to -
16 Section 4. It's going to have to be high quality attention,
17 and Joe Mirinda and Al Hertz are going to have to do more of
18 the implementation of the policy.
19 DR. RADFORD: Steve, I know that you did not men-
20 tion, you had difficulty in recruiting epidemiologists. And
2i I wonder if you would say a word about the role of humanist
22 studies in TSCA and implementation, and whether you see that
23 as significant.
24 MR. JELLINEK: Well, we have that trouble recruiting
25 epidemiologists, particularly senior epidemiologists to meet
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the mission of the branch on epidemiology.
I can't respond in detail as to the role of human
3 studies. They are extremely important and, as you know, they
4 are the best studies we can get when we can get them and if
we can get them.
6 But I don't see them as having any less important
7 role than other major aspects of science. It is extremely im-
portant and the more we can get out of epidemiology, the bet-
9 ter cases we can make and the more certain will be out ability
10 to act.
11 Epidemiology is playing a major role in our asbestos
12 proceeding.
13 DR. RADFORD: That is one where the epidemiology was
14 already in place. I am concerned about what I perceive may be
15 overstating the case, but I see numerous golden opportunities
16 for evaluating human effects, effects on human populations on
17 a .variety of agents that we don't have an epidemiological base
18 on, and I see the Act as providing a wedge for the acquisition
19 of this data, which has not even existed under OSHA.
20 MR. JELLINEK: Could you be more specific?
21 DR. RADFORD: I think —
99 MR. JELLINEK: The acquisition of data that already
23 exists, or the imposition of studies?
24 DR. RADFORD: The acquisition of the data, primarily,
25 or making records available in order to sustain the claim that
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no harm exists or whatever.
MR. JELLINEK: I think there are both opportunities
3 in general and it is an area that we want to do more in and
4 will do more in as we begin to attract --
We essentially have one or two epidemiologists on
6 board, but I could be slight out of touch and I might be a
7 month or two off, and the one that we have on board in the
8 TSCA program is also working in a third to half of his time
9 helping the pesticide program, in particular helping us on
10 2,4,5-T. So we are thin.
It is a well-deserved criticism if there's a criti-
12 cism, but I know it's a constructive one.
13 DR. RADFORD: It's not really intended to be.
14 DR. CAIRNS: Steve, I don't have any clear picture of
15 what happens after- you impose a testing requirement.
16 Let us say there are nine manufacturers and two hund-
red processes, arid you decide that thing has to be tested for
18 carcinogenecity. What do you do now and what do they do?
19 MR. JELLINEK: I can't answer that in detail.
20 DR. CAIRNS: But you can tell me what you will do.
21 You notify all nine plus three hundred processors.
22 MR. JELLINEK: I frankly have not been involved, at
23 this point, in the details of the reimbursement and exemption
24 procedures.
25 DR. CAIRNS: We have some stuff and I read it, and
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1 it's sort of a policy of mine.
2 MR. JELLINEK: That's part of it, but we've got to
3 come out with a regulation on reimbursement and I think those
4 DR. CAIRNS: Who decides who tests? Not all three
5 hundred are going to have to run tests.
6 MR. JELLINEK: No.
7 I can't answer that question.
8 DR. CAIRNS: What you're saying is, I think, that the
9 issue will be forced when you face it, so to speak. You will
10 have to decide what to do when you actually put out a test
11 case.
12 MR. JELLINEK: That issue will be dealt with through
13 the reimbursement proceeding because that is the regulation by
14 which we decide to test, deciding who pays for the test.
15 DR. CAIRNS: Suppose somebody decides not to test?
16 MR. JELLINEK: They've got to test.
17 DR. CAIRNS: Well, the way I understood it, somebody
18 has to test but somebody has to decide who that is.
19 MR. MOONEY: Ted, I might mention, there has been a
20 major filing with the agency by CMA addressing some of those
21 compensation issues, and there are a lot of open questions, I
22 guess, that will have to come down to specific rules in the
23 final analysis.
24 MR. JELLINEK: In the final analysis, everybody's
25 going to have to test unless they can figure out to have
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somebody test. It's going to be in the best interest so that
everybody doesn't test.
I have read some of those comments that CMA sent in
to our AMRPN on reimbursement. There was an awful lot in there
that was encouraging in terms of the industry's apparent recog
nition that they're going to have to get together and figure
out how to efficiently use the testing facilities and resource
available.
MR. MOONEY: It's really kind of enlightened self-
interest. The burden is on the industry group to get its act
together and figure out how to do it.
The alternative in the final analysis, then, is the
agency telling industry how to do it.
I think it will sort out that industry has done many,
many testing programs on a cooperative basis. I am optimistic.
MR. BARAM: Steve, this morning Toby Clark, Nick
Ashford and Dave Harrison put on a very good discussion with
us. In fact, the two-day meeting has just been superb thanks
to Marsha and you and the resources.
MR. JELLINEK: Mostly thanks to Marsha.
MR. BARAM: Toby mentioned that, in the new regime
for regulation or regulatory decision-making in the agency,
Toby's responsibility in OTS is to deal with the cost side and
that the benefit side comes from Warren Muir, who is evaluating
risks, more or less; and that ultimately the tradeoff or
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i decision is made by you.
2 I don't know whether that actually happened or whe-
3 ther that is hypothetical for the future.
4 But, in any case, can you tell us how you're going
5 to play God on these kinds of decisions?
6 MR. JELLINEK: Well, Costle is going to play God.
7 I'm not going to play God, yet.
8 We are trying to get some things delegated to me, but
9 until those delegations, Doug is God, and certainly on the big
10 decisions, he will.
11 But I don't recognize the construct that you're tell-
12 ing me.
13 MR. BARAM: That's what Toby said this morning.
14 MR. JELLINEK: The responsibility for developing both
15 the benefits of regulation, in terms of the risk reduced, and
16 the cost of regulation, in terms of the economic impacts and
17 other social impacts associated with that risk reduction, and
18 the development of in essence the data that leads to a recom-
19 mendation of unreasonable risk or not is all within, I assume,
20 the Office of Toxic Substances under Warren.
21 It is an integral process that will be contributed
22 to by the various functions, the functions under Warren. The
23 final decision, the weighing of the various options and ana-
24 lyses, will be done by Costle and myself.
25 The mechanism for doing that will be fairly formal
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decision processes that will eventually end up in very formal
things called regulations.
But that process involves an analysis of an assess-
ment of risk and of benefit, and a kind of simultaneous weigh-
ing of them using both objective and subjective means.
MR. BARAM: Yes, that came through also in discussion
the need to deal with both objective and subjective kinds of
information.
I guess what is of interest would be what consti-
tutes a proper distribution of cost and benefits. Distribu-
tion of the issue seems to be a nagging question and must also
be troubling to everybody involved.
MR. JELLINEK: The distribution process is one of
the toughest in this whole thing.
MR. BARAM: Where the impacts are going two-fold one
way and the benefits are on the other side. '
Are there any guidelines? Do your formal decision
guidelines have any guidance?
MR. JELLINEK: I don't know. It doesn't yet. It
may. There are some very thoughtful people that are working
with us and trying to help us define unreasonable -risk, if not
develop approaches to unreasonable risk that could involve
decision rules of one kind of another.
It may not be, and I will be.surprised if they would
be totally objective decision rules. They may be decision
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1 rules that involve ways of approaching data or ways of looking
2 at different values as opposed to equations.
3 So we are struggling with that issue and are asking
4 some very bright and thoughtful people how this thing, it grew.
But until we come up with some formal way of defining or
6 approaching unreasonable risk, we are going to have to do the
7 best we can to tote up risks and benefits through a series of
8 mental interactions and decide what xve think is the right
action on a particular chemical.
MR. JELLINEK: We do that regularly in the pesticides
11 program and I think the toxics program will have many similar-
12 ities, and already does, in the new chemicals area.
We are making decisions on new chemicals almost every
14 day, certainly with respect to whether there is enough infor-
15 mation or not and what to do about it. And we will be making
decisions under Section 6 in TSCA in the same manner.
CHAIRPERSON BENDIX: Dr. Eisenberg?
18 DR. EISENBERG: Steve, I have two question, but the
19 second one would probably lead out of the answer to the first.
In the PMNs, one underlying limit seems to be that
you don't seem to be getting enough information for you to be
22 making any kinds of valid judgments, and your people then take
the course that since the information isn't provided to a large
24 extent, it is not up to us to look at homalogs, to look at ana-
25 logous compounds, search the literature ourselves, and normally
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your time runs out.
All you spend your time on is a certain number of
ends and the others run out.
Have you considered perhaps hitting a company with
your first 5(e) action and then perhaps, after that point in
time, you might be getting the information you need in the
first place?
MR. JELLINEK: Well, first of all, we have received
9 as of yesterday 83 PMNs and something like - I'm not sure
10 about this figure, it could be one or two higher - something
11 like 17 or 18 have finished the review process, totally fin-
12 ished the review process.
13 We don't think that any one of those that has com-
14 pleted the review process poses an unreasonable risk to the
15 health and environment, hazard risk, as it is proposed to be
16 used.
17 We are not getting as much information on these
18 notices as we thought we would get and as we think we should
19 get, and we intend to do a number of things about that. We
20 are going to be taking 5(e) action, but will take 5(e) action
21 only in a situation where we believe we can sustain that
22 action.
23 In many of the cases that have already passed through
24 the system, even if a chemical had little or no data with it,
25 either the nature of the chemical itself or the use of the
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chemical was such that it would be very difficult to sustain a
finding that that chemical was going to cause the problem.
DR. EISENBERG: The point is, Steve, where you put
the burden of proof. If you leave the burden of proof with the
agency, that the agency has to make that determination, or you
put burden of proof on the industry whereby they have to make
a determination to tell you, "We feel this is sufficient infor-
mation because of - - - "
9 MR. JELLINEK: If I had my druthers, I would love to
10 have the burden of proof on industry throughout TSCA, but we
11 don't have that luxury.
12 I agree with you that I think the 5(e) action will
13 generate some response on the part of other submitters, and I
14 agree with you, it would have been nice to get more information
15 on most of these chemicals that we have not been given much
16 information on.
17 I don't agree with you that we ought to tilt it at
18 chemical windmills on 5(e). I think we should win the first
19 5(e) case because we know it's going to be challenged and,
20 frankly, as long as I can justify to myself that even though
21 it takes some staff work, that the ones that are passing
22 through the system don't pose unreasonable risk, then I think
23 it's worthwile, as a strategic matter, waiting for a 5(e) that
24 we think we have a good chance of winning.
25 If.we don't win the first one, the downside risk of
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that is very significant and would be tremendously significant
to the implementation of the Act.
The fact is that in almost every instance in the bur-
den in TSCA is, in one way or the other, on the agency and not
on the industry. Outside of 8(e), in most cases the agency
has had to make findings and had to support those findings.
There findings are more or less rigorous in differ-
ent portions of the Act, but the Congress did a fairly good
job of giving the agency some fairly significant burdens in
carrying out its mandate.
The other thing we're doing is we are going to be
coming out later on this year with guidelines: "Here is what
we think you should be doing, in general, as a mimimum." I
think that will help, too.
DR. EISENBERG: My second question - and as we pro-
ceed on these meetings, Steve, I'm going to be taking up at
least the state's role in many of these areas. I'll, perhaps,
just address the PMN side now and that is, is there any way
that notice of these PMNs can go to the affected states so
that they would be in a position to start preparing themselves
for a number of reasons?
Number one, even some of .the questions that are
addressed in the PMNs refer to things such as disposal method.
I've looked through some of these things and it says, "Dis-
posal method. Bury it." "Disposal method. Incineration."
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l There is no way that you, here at headquarters, are
2 in any position to judge whether, in fact, there are any
3 acceptable sites in the area that this firm is located in to
4 either incinerate or landfill, or whether where they intend to
5 take it is an acceptable site in the first place. There's no
6 way you can judge that.
7 From what I've seen, the only judgment is made, is
8 there is something filled out in that space.
9 Also, from a state standpoint, the states will wind
10 up permitting the process. Many will wind up with the missions
11 The state will be involved in any enforcement action that is
12 taken through one of the other EPA Acts.
13 For example, certainly from the monitoring standpoint
14 the environment as well as the occupational exposures.
15 What I'm really after: Is there any mechanism by
16 which the state can get involved, just whether it's from a
17 review or from an early warning standpoint?
18 MR. JELLINEK: That's a very reasonable point.
19 My understanding of the processes is that we would
20 do more than take a look at the box on disposal when we're
21 considering the risks of the substances.
22 As a matter of fact, when we go back we go to feed-
93 stocks all the way through disposal and degradation products
94 and byproducts, and things like that.
25 But what I would be glad to do - and I don't know if
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1 you have raised this with anyone else you've talked to this
2 week, but what I would be glad to do is see what kinds of
3 opportunities there are for us to notify the states.
4 DR. EISENBERG: Where I'm coming from, Steve, is
5 presently, some of the states, what they are doing - in fact,
6 the legislatures in some of the states are requiring this -
7 whereby, before new industry comes.in or before a new process
8 within an existing industry starts up, if there are any by-
9 products formed by the process which need disposing of, unless
10 we know what method of disposal, unless we know the method is
11 an acceptable one, the process doesn't start in the first place
12 MR; JELLINEK: I think that's something we ought to
13 look into and perhaps have someone work, or at least work with
14 you on.
15 One of the problems we'll have to overcome is the
16 confidentiality problem. We .don't have authorization to share
17 confidential information with states as the Act is written
18 unless you become our contractors, but that's something we have
19 to work out.
20 DR. SLESIN: Do you feel somewhat uncomfortable
21 sitting up there telling us that none of these pose unreason-
22 able risk given that the exposure data that is provided is
23 very preliminary in the sense that it's just starting up of a
24 chemical in the first couple of years of production; given
25 that, according to the statistics, you've given us 50 percent
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1 of the toxicological data and 75 percent of the mutogenicity?
2 We'll, look at an Ames test and we'll say, "We'll
3 definitely do that. We can definitely do that." And I know
4 the triple-A asked you, saying they were very disappointed
5 about the statistics.
6 But don't you feel a little queasy about it?
7 MR. JELLINEK: I would feel better if I had more
8 testing data, but the fact is that some significant portion of
9 those first 17 or 18 that we been through are high molecular
10 weight polymers; and, as a general rule, they are not a pro-
11 blem and we would be hardpressed to stop that chemical and
12 then to tell a judge how that thing is a problem.
13 It would be very difficult for us to tell a judge
14 how that is a problem, to demonstrate it. That is the kind
15 of situation that we have found so far.
16 Now, there may be others in that first group that
17 are not a high molecular weight polymer. There are other
18 things that, in one way or another, we rigorously evaluated
19 and decided that either it was almost certainly not a problem
20 or the factual situation was a little too soft for us to make
2i this case.
22 DR. SLESIN: From us looking in, it's very hard.
23 I must say, your generic usagy that you've given us
24 doesn't have polymers in it. A good 30, actually over 40 per-
95 cent of these don't even - we're not even told what the usage
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l is. It's either confidential and intermediate or no generic
2 use.
3 I know your preliminary rules say you won't require
4 a generic use, but obviously this is not in compliance with
5 that voluntary. So it's hard to look in from the outside and
6 say, "Yes, these are not a problem," because we don't even
7 know that.
8 MR. JELLINEK: I don't blame you for being skeptical.
9 I'm not entirely comfortable, by any means, but I was answer-
10 ing the implicit point in Max's question, that we may have beer
11 letting through some things that are real problems.
12 I don't think we have. I could turn out to be wrong,
13 but I don't think we have.
14 One of those chemicals that came through with no
15 data, which does not appear to be a problem in its present use,
16 we are going to SNUR to make sure that if it is every used in
17 another application we have another shot at it.
18 DR. CAIRNS: Steve, of these 40-odd that had no
19 toxicological data, can you recall how many should have had
20 some and how many honestly didn't need them?
21 MR. JELLINEK: I don't believe we've made that kind
22 of a breakdown. We don't have those kinds of well-defined
23 criteria.
24 If we thought there really should have been data,
25 that we could defend the case that there really should have
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had data, we would have.
It would have been nice to have data, though, be-
cause I frankly don't think that the Act contemplates us doing
industry's job for it. In other words, we're doing the risk
assessment. There's no evidence, in many of these cases, that
many of these companies are doing any risk assessment at all.
They are not trying to figure out what the impact of
the chemicals are. We are having to do that. We're doing more
work in some of these situations, particularly the ones we
think are potential problems, than the industry is in many of
these cases; and we've had relatively few example of chemicals
that have come in where it's clear the industry has taken —
I've heard some people in industry call it a products
approach where they've tried to figure out of it's a chemical
problem or isn't it. Should we test it more, or shouldn't we?
Should we know more about this and that?
Those have been the real minority of cases.
MR. MOONEY: Two questions, Steve, unrelated, one
back on the organization chart.
What is the status of this, at this point? Is this
organization operable at this point?
MR. JELLINEK: Did Henry Beal explain to you the
agency process?
MR. MOONEY: We talked regulations.
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1 MR. JELLINEK: Well, there's a similar process for
2 organizational change,
3 MR. MOONEY: Don't misread my question. I'm not
4 asking you for too much, no charts or anything.
5 MR. JELLINEK: No, I don't want to give you any
6 charts.
7 Major organization changes Have to go through the
8 process, and let me describe it to you.
9 We have done a lot of homework on this reorganiza-
10 tion-and have set out a schedule that we think will lead to
11 approval of the reorganization in record time and, unless there
12 are some problems that arise that I don't know about, it ought
13 to become effective within another five to eight weeks.
14 MR. MOONEY: Okay.
15 My other question relates to your comments regarding
16 reactivating your guideline 10 under Section 5. Can you say
17 anything about the process by which that will happen? Will
18 there again be something akin to the issues, the statement
19 that appeared in the Register back.in March when you went
20 through that and when you received comment, and then it went
21 onto the back burner and nothing has been heard of it since?
22 Or will we, at this point, suddenly see a guide-
23 lines position emerge?
24 MR. JELLINEK: Full-blown out of WarrenJs forehead
25 or something. .
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1 Well, first of all, the March thing has not been on
2 the back burner. It's been on the middle burner. And we have
3 been working on what might be good guidelines.
4 If you are saying, will they come out in some kind of
5 a proposed form where people will have a chance to comment on
6 them?, the answer is yes.
7 MR. MOONEY: That is really my question.
8 MR. JELLINEK: That's the answer, but they're not
9 regulations. We are not going to say, "This is it," when they
10 are final because we think it would be useful to put something
11 out in proposals to have people think them.
12 MR. BARAM:. Steve, what interactions do you see be-
13 tween TSCA and the Clear Air Act on the airborne carcinogen
14 issue? Are there any important regulatory implications of
15 sorting out authority that has to be worked out?
16 MR. JELLINEK: We have worked closely with the air
17 program in developing their policy in terms of, particularly,
18 the carcinogen assessment parts of it.
19 MR. BARAM: Will the regs come out under the author-
20 ity of the Clean Air Act?
21 MR. JELLINEK: It's not going to be under SIP auth-
22 ority. It's going to be under the NESHP.
23 MR. BARAM: But there will be a state program under
24 the NESHP.
25 MR. JELLINEK: The National Emission Standards
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1 for Hazardous Pollutants, NESHP. But they will be controlled
2 under the authority of that.
3 DR. SLESIN: Warren spoke to us yesterday and you've
4 mentioned the possibility of referring some testing to either
5 a national toxicological lab or somewhere else.
6 Now, as you yourself said, the burden of testing
7 should be on the industry rather than on the government or the
8 new program.
9 Are you going to try to farm that cost back to the
10 affected industry? There's an efficiency argument, which I
11 recognize, if you can do it without going through red border,
12 you might get a test result a little quicker and I'm certainly
13 sympathetic to efficiency.
14 But, also, we wouldn't want to get the whole NTP
15 process doing industry's job at that cost.
16 MR. JELLINEK: I happen to agree with you on that,
17 Lou, and that's one of the things that disturbs me the most
!8 about the effort and time it has taken to get out a test.
!9 In fairness to the red border process and the rest
20 of the agency, our own people and our own scientists in the
2i toxics program were the ones who decided that, on a profes-
22 sional and legal basis, the law appears to require us to do a
23 certain significant amount of work to make those findings.
24 I: find that being greatly disturbing. I can't be-
25 lieve that that is what Congress really had in mind on testing,
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1 and we've either got to come up with some other way to do it
2 or Section 4 isn't going to work the way it's supposed to work.
3 Now, in terms of getting money back from industry, if
4 we test either ourselves or through NTP - we don't have the
5 authority to do that, but that might not be a bad idea.
6 The most efficient thing to do would be, is there
7 some efficient way for us to decide what has to be tested and
8 either get the authority to have it tested ourselves or in our
9 own contract labs, and then getting industry to reimburse the
10 government for that. That would be the most efficient way to
11 get testing done.
12 You would have all the problems of reimbursement to
13 deal with, but you wouldn't have the hassle of just going
14 through the adversary process to get it done.
15 DR. SLESIN: But you said at the outset there - I
16 though mistakenly - there was a major rethinking. You did not
17 have to satisfy the same kind of data requirements that had
18 been sought for the first couple of test rules.
19 MR. JELLINEK: There will be a major rethinking on
20 that.
21 DR. SLESIN: Reduction?
22 MR. JELLINEK: That's our objective. We're approach-
23 ing it in two ways. One is to take a look at the process we're
24 going through now and see if there's any way to cut that down,
25 drastically cut it down, because cutting it down marginally
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1 isn't going to make much difference.
2 And the other is to try to come up with totally and
3 different new ways of getting technical studies.
4 DR. SUTTON: Would you like to discuss some of the
5 alternatives you're considering?
6 MR. JELLINEK: We're at the early stages.
7 One alternative is to take the ITC report and say,
8 that's good enough a proposal, and get a proposed rule out
9 within weeks. Then see what industry has to say. That would,
10 in essence, be shifting the burden.
11 We've got to analyze whether we can get away with
12 that.
13 CHAIRPERSON BENDIX: Would you like to comment on
14 that?
15 MR. MOONEY: I find this an interesting, but not
16 surprising discussion between Lou and Steve on what the Act is
17 all about; and I'll just simply say, for the record, that Sec-
18 tion 5 remains at the best, to my knowledge, a notification prc
19 cess.
20 MR. JELLINEK: We're talking Section 4, but I would
21 really like to get Tom under oath some time and ask —
22 MR. MOONEY: What did I do?
23 MR. JELLINEK: If they really think that Congress
24 contemplated — If we're doing it, quote, right - and we're
25 going to look into that, but if we're doing it, quote/unquote,
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1 right, if Congress really•contemplated that EPA should spend a
2 year's worth of effort, several hundred thousand dollars per
3 chemical, and dozens and dozens of person-weeks per chemical in
4 order to decide to propose that a chemical should be tested,
5 maybe, that just doesn'.t seem —
6 CHAIRPERSON BENDIX: It seems highly unlikely.
7 MR. MOONEY: I will respond to that.
8 My earlier remark - the discussion sounded like it '
9 and I taped it down and it did involve Section 5.
10 As far as Section 4 is concerned, I guess that there1
11 as much going on in court with regard to what the Congress did
12 or did not intend, and I'm not very expert in that area. I
13 think that's one area this committee has contemplated where it
14 might do something constructive in taking a look at that pro-
15 cess.
16 We probably all agree on a general observation, that
17 there is a right amount of homework to be done before a Section
18 4 rule.
19 In more any area - literature searching, test proto-
20 col, any of the above - we will probably have differing opin-
21 ions on where you would draw the line in any one of those areas
22 but I think it is a constructive area to take a look at on
23 Section 4 rulemaking just to make a presumption that the Con-
24 gress knows what rulemaking is all about and wrote a pretty
25 complicated Section 4.
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1 You can't get rid of it just by arguing that, "Well,
2 it sure is difficult." They put it down on paper, and that's
3 what you're going to have to find ways to deal with.
4 Conceivably, we could come up with some constructive
5 thoughts on whether the process has gone too far, taken too
6 much time in some areas that could be modified.
7 DR. EISENBERG: I tend to think that there is a tend-
8 ency among the staff - yours or mine - when it comes to regula-
9 tions to try to do as much as possible and try to have as good
10 a case as possible before you go to rulemaking.
11 I think it behooves us, at times, to kind of cut it
12 off a little bit and rely to some extent on the hearing record,
13 and rely to some extent on the interested parties, whether they
14 be industry or the environmental groups, to come forth with
15 some documentation at that point rather than try to have our
16 case thoroughly built before you go to proposed rulemaking.
17 MR. JELLINEK: I think that's a good point, Max, and
18 that's the kind of thing we're going to look at.
19 But, as far as I'm concerned, I want to get chemi-
20 .cals tested that should be tested and I don't want to just
2i shift all the time and effort from the preproposal process to
22 the prepromulgation process or to a reproposal process.
23 One of the things lawyers are fond of reminding me oi
24 is that if we were to go to a very thin proposal, then, you
25 know, six months later you're looking at a reproposal and the
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total time lapse between when you decide to start, the process
and when a chemical actually gets listed is not much differ-
3 ent. So you're going to have to deal with all of those.
4 Politically, at this stage of the game, I wish we
had taken this en route because, at least, we would have a pro-
6 posal on the street and we could argue later.
7 MR. MOONEY: There's a difference between a thin
8 proposal and an air proposal.
9 If you want to look at where the air went, you can
10 look at a number of places where the agency has, I guess, been
11 thorough, but which would perhaps understate what the agency
12 has tried to do in working its way through.
13 in some cases, it's reached beyond a fix noted by
14 ITC that was of concern. The calls for data have not been,
15 for example, narrowed to data pertinent to those effects that
16 have been cited. There have been calls for all data and some
of those dimensions are extensions that I think are just
18 exactly the kind of thing that people legitimately take a look
19 at and seriously question, and then things get all tied up.
20 Whereas, perhaps a narrower' cut on some few chemi-
21 cals with a tighter inspection of the data, tighter calls for
22 data that exist — I don't know how the process might work,
23 but these are just some things that strike me that might have
24 gotten you from here to there faster.
25 MR. JELLINEK: Those are good points which we're
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1 going to look into and the question is: Would they have done
2 this faster?
3 DR. SUTTON: I have a question to go back.
4 MR. JELLINEK: Excuse me.
5 One of the problems is that the chemicals that ITC
6 gave us, many of them have had a lot of testing done on them in
7 one way or another, and the more testing they have on them the
8 more analysis we have had to do or thought we've had to do in
9 order to decide whether or not that testing has been adequate.
10 MR, MOONEY: It sounds like we're on the wrong side
11 of the issue if we have too little data, and we're on the
12 wrong side if we have too much.
13 DR. SUTTON: I want to go back to this question of
14 cost-benefit analysis.
15 We had a very stimulating discussion this morning,
16 Steve, and there were points of view all over the place, as yov;
17 might gather.
18 But one strongly and eloquently presented point of
19 view was that the cost-benefit analysis is a diversionary
20 tactic to slow down the process of regulation, at the worst?
21 and, at the best, that it is misplaced and misguided.
22 MR. JELLINEK: I can't imagine who took that posi-
23 tion.
24 [Laughter. ]
25 DR. EISENBERG: It's sort of a simple-minded
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1 question, but it would be useful, at least to me, to hear your
2 viewpoint on whether or not, one, that process has slowed down
3 the regulatory process in the case of toxins so far.
4 And, second, whether or not any of the judgments that
5 have been made in the process thus far have been usefully in-
6 fluenced by the data available to you as a result of that pro-
7 cess.
8 MR. JELLINEK: There is a difference, in my mind at
9 least, between cost- and risk-analysis,
10 Cost-benefit analysis to an economist means a lot of
11 things about trying to measure equivalents, using equivalent
12 terms, using dollars as a measure of both cost and benefit, and
13 get into all kinds of hairy questions of discounting and what-
14 ever.
15 To me, risk-benefit analysis, which is what TSCA
16 calls for, means taking both the risks and the benefits into
17 account in making a final decision on a chemical without neces
18 sarily going through some formal cost-benefit analysis as it
19 has been developed in the profession that makes capital in-
20 vestments, such as major public works projects. That is where
21 that really came out of.
22 I think, in a statute like TSCA or like FIFFRA where
23 you're dealing with products that have adverse effects but that
24 also have social utility, you have got to take a risk-benefit
25 approach.
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Now, the question is, how are you employing those
factors in your decision-making? So far, we think we have
avoided rigid formuli and tried to make the best subjective
decisions we can using the best objective data at our dis-
posal.
DR. SLESIN: Steve, if you come back from Paris with
a mandate from OCED for some kind of testing, what are you goin
going to do?
MR. JELLINEK: Well, if we come back from Paris for
10 some testing, we'll have to do something about it.
11 MR. SLESIN: Are you going to strain the authority
12 of TSCA or are you going to go back to Congress to get an
13 amendment through? Have you thought about that?
14 MR. JELLINEK: I think we will initially try to work
15 something through the wall because it's just unrealistic, at
16 this point, to go back before Congress for this year. That
17 may be something we want to consider next year, but I think if
18 we came back with something like that we would have to try to
19 figure out how to implement it through existing legislation.
20 DR. SLESIN: You think it is a possibility, in fact,
21 if the lawyer allows you to do that in some way or another?
22 MR. JELLINEK: With the emphasis on "in some wav or
23 another."
24 One way would be to make the parting of the testing
25 guidelines which --
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1 Another way would be to somehow make it into a Sec-
2 tion 4 for new chemicals, but cut out some new chemicals so
3 that the rule would not apply to all new chemicals.
4 MR. MOONEY: If you do bring it back, Steve, be sure
5 to bring the one ton exemption with you.
6 MR. JELLINEK: If you were to totally drag the mini-
7 mum premanufactured data set that has been discussed at OECD,
8 it would include one ton exemption on intermediates and other
9 things.
10 If we brought it back in that way, then one way of
11 implementing it would be to look toward a Section 4 rule that
12 would apply to such chemicals that met those criteria.
13 CHAIRPERSON BENDIX: Max, did you have-another ques-
14 tion?
15 DR. EISENBERG: Yes.
16 Again, Steve, I have noticed - Marsha just passed
17 out something, the Federal Register of the 16th of this month
18 and that was, I think, the reporting guidelines.
19 Wasn't that it, Marsha?
20 CHAIRPERSON BENDIX: "Statement of Interpretation and
21 Enforcement Policy. Notification of the Potential Risk."
22 DR. EISENBERG: I notice you have an emergency noti-
23 fication and an emergency report, some of them based upon the
24 severity of 24 hours and some of them are 15 days, whatever.
25 I would hope that since you have raised the — You
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don't have to look at it.
MR. JELLINEK: I want to see if I find it.
3 DR. EISENBERG: I'm referring to this in conjunc-
4 tion with your proposed reorganization where you are emphasiz-
5 ing, at the same time, raising the program integration section.
6 I would hope that they make it part of their effort,
too, especially when you talk about the notification of spills
or anything else - notification be made to the states that are
involved.
10 MR. JELLINEK: One of the major roles that the pro-
11 gram integration function is going to have is to work to inte-
12 grate the toxics programs in the regions and to work with the
13 regions, through the regions with the states.
14 DR. EISENBERG: I point that out only because what '
15 I'm trying to do is just raise the awareness.
16 MR. JELLINEK: That's a good point, and we have been
17 working to figure out ways to get 8 (e) information out of var-
18 ious types to people who should know about it, including
19 workers.
20 CHAIRPERSON BENDIX: Does anyone else have a ques-
21 tion?
22 One is brewing here, but let me ask a quicky.
23 MR. MOONEY: I thought I raised the question yester-
24 day, but yet maybe I didn't.
25 Any contemplated revision - this looks like a
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l guidance. Is that right?
2 MS. RAMSEY: I brought that out. The wrong piece of
3 paper was put into your 8(d) paper;, That is a replacement.
4 MR. MOONEY: My Lord, this is the old one.
5 DR. EISENBERG: I didn't mean to imply it disappeared
6 It just appeared on the desk.
7 CHAIRPERSON BENDIX: I have a quick question and then
8 a more substantive one.
9 First, you mentioned that you are contemplating
10 SNURing one of the compounds that has come in on TMN.
11 Do you have any estimate of how long it's going to
12 take to get that SNUR out?
13 MR. JELLINEK: It's already taken two months. It may
14 be another month or so.
15 Would somebody tell whoever is working on that?
16 CHAIRPERSON BENDIX: Should we or shouldn't we ask
IV at the next meeting, when next we meet?
18 MR. JELLINEK: You ought to ask one of the journal-
19 ists from the trade press. I'm sure they'll know more than I.
20 They get better information, better contacts.
21 CHAIRPERSON BENDIX: I think the appropriate point to
22 end this discussion would be a request on behalf of the com-
23 mittee that you let us know where you feel currently we can be
24 of greatest help to you, what kinds of policy issues are being
25 discussed - that don't have to be decided in the next few days,
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but that you obviously don't have time to interact with us.
What do you want us to be thinking about in the next
3 couple of months and how can we be of the greatest help?
4 MR. JELLINEK: Do I have to answer that one?
CHAIRPERSON BENDIX: Yes.
You can answer later, also, but what first comes to
mind?
8 MR. JELLINEK: Over the next couple of months?
9 That's a tough one for me to answer. I really
10 haven't thought about that.
11 CHAIRPERSON BENDIX: Would it be easier if I said,
12 over the next couple of weeks, and we can write you letters?
13 MR. JELLINEK: Let me think about it over the next
14 week or so and get back to you.
15 CHAIRPERSON BENDIX: Let me say that this is part of
16 a general feeling on the part of the committee that we want to
17 be responsive to your needs in terms of our mandate to give
18 some input on policy decisions, and we need to get some guid-
19 ance from you as to where you need the input at any given time.
20 MR. JELLINEK: Okay. Will do.
21 DR, SLESIN: Let me ask a last question.
22 When do you see the final PMN regs getting into the
23 Register?
24 MR. JELLINEK: I have a good idea on that. It will
25 be late this year.
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1 DR. SLESIN: It will be 1980?
2 MR. JELLINEK: We hope. We are waiting for the com-
3 pletion of economic analysis. If we didn't have to wait for
4 that, we could get it out a lot sooner.
5 DR. SUTTON: That's a partial answer to one of my
6 questions.
7 CHAIRPERSON BENDIX: If there are no more questions
8 from the members of the committee, thank you very much, Mr.
9 Jellinek. We appreciate your joining us.
10 We will have a break now, and then it will be time
H for public comments.
12 MS. RAMSEY: Why don't you ask for public comment
13 now?
14 CHAIRPERSON BENDIX: Is there anyone who wishes to
15 address the committee?
16 [No response.]
17 ' CHAIRPERSON BENDIX: Barring that, is there, anybody
18 of the remaining committee members who wishes to bring up any
19 item for committee action?
20 [No response.]
21 CHAIRPERSON BENDIX: In that case, I think that I
22 will hold the meeting adjourned.
03 WHERUEPON, at 3:20 p.m., the meeting was adjourned.
24
25
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2
3 REPORTER'S CERTIFICATE
DOCKET NUMBER:
CASE TITLE: Administrator's Toxic Substances Advisory Committ
HEARING DATE: March 20, 1980
LOCATION: Washington, D.C.
9
10 I hereby certify tha,t the proceedings and evidence
herein are contained fully and accurately in the notes
!2 taken by me at the hearing in the above case before the
Environmental Protection Agency, Office of Pesticide Programs
14 and that this is a true and correct transcript of the same.
15
16
17
18 Date: 3/31/80
19
20
21
25
22 Official /Reporter
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93 1411 K Street, N.W.
Washington, D.C. 20005
24
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