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Pareto Policy Solutions, LLC is a policy analysis and advocacy firm committed to advancing sustainability through “smart” regulation: regulation that rewards, and does not penalize, superior performance.  Often, such actions leverage advances in science and technology and make the regulatory program itself more effective as well as more efficient.

TSCA Reform: The Lautenberg Bill

Is Congress poised to re-write a major environmental law for the first time since 1996?  It is looking that way.  Reform of the Toxic Substances Control Act, which gives EPA authority to regulate chemicals in commerce that pose an unreasonable risk, received a big boost when Senators Udall and Vitter introduced The Frank R. Lautenberg Chemical Safety for the 21st Century Act on March 10th.  With strong Republican support and ten Democrats as co-sponsors, the Lautenberg bill would exceed the 60-vote threshold necessary to move legislation through the Senate.  It is widely thought that the President will sign the bill should it arrive on his desk.

So how good is the Lautenberg bill?  In my view, the positives outweigh the negatives. Here’s why:

Existing chemicals will be evaluated against a performance standard (unreasonable risk of harm) and action will be taken against those that fail.  Current TSCA focuses EPA’s attention on each and every new chemical before it enters commerce.  But TSCA does not require EPA to review any of the tens of thousands of existing chemicals in commerce when Congress enacted it in 1976, and Congress made it exceedingly difficult for EPA to take action on them.  The Lautenberg bill rightly breaks the legal shackles that have kept the Agency from evaluating and controlling existing chemicals that pose an unreasonable risk. 

Another positive is the bill’s respect for science.  Chemical risk assessment is complex, uncertain, and evolving.  Wisely, the bill authors have not prescribed any particular methodology, leaving it to EPA to use the “best available science” when assessing risk.  Congress seldom exercises such restraint when writing legislation to reduce risk.  The bill also creates incentives to advance the science, which is necessary because the pace of the program depends crucially on EPA’s ability to assess risk more quickly and easily than it can today (e.g., through greater use of in vitro testing using human cells). 

Despite these positive changes, the Lautenberg bill contains some pitfalls that will make the resulting regulatory program less efficient and effective than it could be.

For one thing, it fails to fully leverage market forces, leaving EPA with the daunting task of conducting safety assessments and then safety determinations for hundreds of thousands of unique chemical-use combinations.  EPA cannot evaluate every existing chemical in a reasonable timeframe (e.g., a decade) unless market forces are leveraged.  Congress ought to encourage companies to conduct safety assessments and perhaps safety determinations using transparent criteria and to pay a significant user fee in return for expedited (e.g., a 90-day) Agency review.  The easiest way to do this would be to marry two separate parts of the bill:  one allowing anyone to submit to the Agency a draft safety assessment in accordance with EPA guidelines, and the other allowing a manufacturer or processor to request that a chemical be placed in the high priority queue in return for a user fee covering all of EPA’s administrative cost.

Another problem is that the cost-effectiveness of the new program is higher than it could be.  This stems from the fact that the vast majority of chemicals in commerce pose very small risks (less than one in one million) at relevant exposure levels, and the safety standard itself is set relatively low.  Small risks are inherently difficult to determine, and even more difficult to regulate cost-effectively.  

The bill requires EPA to determine that every high-priority existing chemical either meets/does not meet the safety standard, and that every low-priority existing chemical is likely to meet the safety standard.  This is akin to a statistical problem in which a researcher seeks to avoid Type I (false positive) and Type II (false negative) errors.  Trying to minimize Type I errors leads to more Type II errors, and vice versa.  The Lautenberg bill doesn’t choose between the two types of error—both are to be minimized.  And that means more testing, more analysis, and more resources.

One improvement would be to focus on minimizing false positives (i.e., falsely declaring a substance does not meet the safety standard), and eliminate the mandate to determine that a low-priority chemical is likely to meet the safety standard.  Other provisions in the bill (allowing industry to request a change in priority, allowing EPA to change priority based on new science) provide ample tools to minimize false negatives (falsely declaring a substance meets the safety standard) for low-priority substances.

Ironically, the bill requires a cost-benefit analysis of any regulations to control a chemical, yet the Agency is not required to choose the least costly, most cost-effective, or most net-beneficial control—only to explain how it took the cost-benefit analysis into account.  The bill does include exemptions from some or all of a regulatory restriction, and these would alleviate, but not eliminate, the problem.   The simplest solution would be to add a provision stating that regulation is not warranted whenever EPA determines that the costs exceed the benefits (or that the benefits do not justify the costs).

To be clear, these are not the only concerns with the bill.  For example, at a recent hearing, witnesses complained that the bill would preempt state action to control a chemical while EPA commences a safety assessment and determination and long before the Agency issues a regulation. 

Yes, the Lautenberg bill faces a long, tough road through Congress to get to the President.  But it is off to a great start, and there are solid policy reasons to be optimistic.

 

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