Pareto Policy Solutions, LLC

advancing innovation through smart regulation

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.

Leveraging Market Forces for Chemical Safety

On April 14th, the House Energy and Commerce Committee held a hearing on a draft TSCA reform bill.  Called the TSCA Modernization Act of 2015, the draft bill, at just 30 pages, stands in stark contrast to the 175-page TSCA reform bill introduced in the Senate. The two bills have many similarities--and at least one major difference--worth noting.

Like the Senate bill, the House draft would provide EPA with more tools to gather information on chemicals in commerce and remove long-standing statutory impediments that make it difficult for the Agency to issue regulations.  Both bills would also change the current safety standard to be solely risk-based.

The House draft leverages market forces toward chemical safety to a much greater extent than does the Senate bill.  This is a critical difference and a very positive one. 

Specifically, the House draft would not compel EPA to make a safety determination for every chemical in commerce, an impossible task given the tens of thousands of chemicals in play and the years it often takes the Agency to evaluate a single substance.

Instead, the House draft allows EPA to focus safety evaluation on chemicals that it believes may pose an unacceptable risk, and it allows a manufacturer to request a safety evaluation on an expedited basis for any chemical.  The draft would not prevent industry from submitting a safety evaluation to facilitate EPA’s expedited review.

This private-sector option is a critically important complement to EPA’s own efforts.  If consumer concerns arise over the safety of a chemical that EPA is not planning to evaluate in any reasonable period of time, a manufacturer can request that EPA do so as long as it pays a user fee to cover EPA’s administrative cost.

Such a provision provides exactly the right incentives to ensure that societal resources (the combination of taxpayer, consumer, and industry dollars) are focused on just those chemicals that matter the most.

The Senate bill, although it allows industry to submit a request to EPA for an assessment, is not well designed.  It would limit the number of chemicals that industry could request at any one time, and it does not require EPA to grant the request nor, even if it does, expedite the evaluation. 

Some environmental organizations are critical of any provision allowing industry to request that EPA evaluate a chemical, let alone provide EPA with an industry-conducted safety evaluation.  This criticism is unfounded because the alternative—wait for EPA to get around to making a safety evaluation, which could easily take decades—is clearly bad for consumers and the environment.  Ironically, environmental groups have complained for decades that TSCA does not require chemical manufacturers to prove the safety of its products.  These groups now envision a “worst-case” scenario in which industry is willing to pay EPA to quickly review industry-conducted safety evaluations for thousands of chemicals in commerce. 

If this is a problem, it is a great problem to have.

With TSCA, Congress has an opportunity to avoid pitfalls that foster bad regulation.  One of the biggest pitfalls is reliance on the federal government to do more than it is capable of doing instead of targeting regulators’ attention where it can do the most good.  This is why leveraging market forces is so critical when Congress writes (or re-writes) a federal regulatory program.

When it comes to TSCA reform, the Senate ought to follow the House’s lead and leverage market forces to better protect consumers, the environment, and taxpayer dollars.

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