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I I A L E X I S .A-mm- f:1 . ~ i . ~ I I O de TOCQU'EVILLE I N S T I T U T I 0 N i SCIENCE, ECONOMICS, AND ENVIRONMENTAL POLICY: / A CRITICAL EXAMINATION 1 ~ I ~  A research report conducted I r I I I I I by the Alexis de Tocqueville Institution August 11, 1994 I

A L E X I S NEWS RELEASE Contact: Cesar V. Conda August 11, 1994 (703) 351-4969 NEW STUDY FINDS INADEQUATE SCIENCE IN EPA'S RISK ASSESSMENTS I N S T 1 T U T 1 O N Washington, D.C: Today, the Alexis de Tocqueville Institution released a research report which found that the science behind the Environmental Protection Agency's (EPA) risk assessments In four current environmental policy questions is inadequate. "Science, Economics, and Environmental Policy: A Critical Examination" critiques the science and economics that form the basis of the EPA's risk assessments and cost-benefit tests for environmental tobacco smoke, radon, pesticides, and hazardous waste clean-up under the Superfund law. "America is now spending close to $150 billion annually to comply with environmental regulation. We need to make sure that this money is being spent to reduce the real risks - - not exaggerated risks," said Cesar V. Conda, executive director of the Institution. The report - conducted by the staff of the Institute and reviewed by an academic advisory board of 19 distinguished scientists and economists around the country - found that the EPA's assessment of potential risks to human health and the environment in these four cases was based on faulty scientific analysis and selective use of data. Further, in the instances where the EPA did conduct a cost-benefit analysis, the purported Nbenefits" were greatly overstated. The report found the following: o Environmental Tobacco Smoke (ETS): The EPA's finding that second-hand smoke is linked to lung cancer is based on a lower threshold of risk assessment than that normally applied by the agency for other substances and activities. In short, the EPA study relied on methodologies different from those which have been historically used in such analyses. In fact, the overwhelming majority of studies conducted on ETS and lung cancer have found no statistically significant Indications of carcinogenicity. o Radon: On the basis of the credible research to date, at extremely high exposure levels, it appears that radon can significantly increase the risk of lung cancer. Yet, like so many other potentially harmful substances, at the lower levels of exposure which are commonly encountered, researchers have a hard time finding any evidence of harm. The EPA carefully and consistently selects data that supports its a priori assumption: that any amount of radon can cause cancer. (more) ~:R

-2- o Pesticides and Agric,ultural Chemicals: In 1989, the EPA had examined the agricultural chemical known s Alar and determined that scientific evidence with regard to potential cancer risks was In onciusive, at best. But in response to public fears generated by slanted presentations pr vided by the Natural Resources Defense Council, the EPA banned Alar. The costs of t is event were enormous (total losses were estimated at $140 million), the benefits too sr~all to measure, if they existed at all. The EPA's public pronouncements on pestici es should inform the public that naturally-occurring and synthetic pesticides can be uall carcinogenic. Further, the alleged cancer risk from residual pesticides must be eighed against the well-documented anti-cancer benefits from consuming fruits and vegetables. o Superfund: The Superfund hazardous clean-up law exemplifies all that is wrong with American environmenta~ policy: an expensive assault on minor risks resulting In an enormous waste of scarce 4sources. Only by assuming that extremely unlikely - and sometimes physically impos i ible - events will occur in the future is EPA able to create the impression of risk where no actual harm will occur. For example, EPA consistently assumes that future site u~es will include children, who will live there for 70 years, ingesting slightly less than ~ teaspoon of local dirt every day, and relying exclusively on contaminated groundwater for bathing and drinking. Indeed, at least half of the $14 billion the nation has spent on Sup rfund cleanups was used to comply with similar "dirt-eating" rules. "Overall, this report highligh- s the need to upgrade the science used by the EPA in making risk assessments of potentia~l environmental problems," said Dr. S. Fred Singer, professor emeritus of environmental ciences at the University of Virginia and the head of the academic review board. In t is regard, Sen. J. Bennett Johnston (D-LA) and Rep. John L. Mica (R-FL) have sponsored~ legislation that would require EPA to conduct scientifically- vigorous risk/cost-benefit ar~alysis for all new environmental regulations. "The general public must be educated to he fact that they face a multitude of risks in their everyday lives - driving a car, riding bike, or poor diets - many of which far exceed the probable health risks posed by substa ces and activities that the EPA wants to regulate and restrict," added Singer. ### The Alexis de Tocqueviile In titution is a non-profit, non-partisan education and research organization dedicated to th promotion of capitalism and democracy, both in the United States and throughout the w rld. For further information on the Institution or to request a copy of "Science, Economi , and Environmental Policy: A Critical Examination," please contact Cesar V. Conda or achel Applegate at (703) 351-4969 or write to: The Alexis de Tocqueville Institution, 2000 15th Street North, S. 501, Arlington, Va. 22201.

I I I I I I ~ I A I I . I I I I I SCIENCE, ECONOMICS, AND ENVIRONMENTAL POLICY: A CRITICAL EXAMINATION A research report by the Alexis de Tocqueville Institution Academic Advisory Board Dr. Gary Anderson Professor of Economics California State University-Northridge Dr. Nancy Bord Visiting Scholar The Hoover Institution Stanford University Dr. Gordon L. Brady Associate Professor and Director Environmental Studies Sweet Briar College Dr. Michael Marlow Professor of Economics California State Polytechnic University-San Luis Obispo Dr. Thomas Gale Moore Senior Fellow The Hoover Institution Stanford University Dr. Malcolm Ross Research Mineralogist U.S. Geological Survey Dr. Jeffrey Clark Professor of Economics University of Tennessee-Chattanooga Dr. Michael Darby Professor of Economics and Director J.M. Olin Center for Policy University of California, Los Angeles Dr. Robert Ekelund Lowder Eminent Scholar Auburn University Dr. Michael Gough Project Director Congressional Office of Technology Assessment Dr. William Hazeltine Environmental Consultant Dr. Thomas Hopkins Gosnell Professor of Economics Rochester Institute of Technology Dr. Dwight R. Lee Ramsey Professor of Economics University of Georgia Dr. S. Fred Singer Professor Emeritus of Environmental Sciences University of Virginia and President Science and Environmental Policy Project Dr. Gerhard Stohrer Director of Chemical Risk Program Science and Environmental Policy Project and former Department Head Sloan-Kettering Institute for Cancer Research Dr. Mark Thorton Professor of Economics Auburn University Dr. Robert D. Tollison Duncan Black Professor of Economics and Director Center for the Study of Public Choice George Mason University Dr. Richard Vedder Professor of Economics University of Ohio Dr. Richard Wagner Professor of Economics and Chairman Department of Economics George Mason University Note: Affliations are for identification purposes only. Not all members of the academic advisory agreed with every finding and recommendation in this report.

Author Kent Jeffreys Principal Reviewer Dr. S. Fred Singer Senior Staff and Contributinix Associates Rachael Applegate Bruce Bartlett Merrick Carey Cesar Conda Gregory Fossedal Dave Juday Felix Rouse Aaron Stevens The Alexis de Tocqueville Institution 2000 15th Street North, Suite 501, Arlington, VA 22201 Tel. 703.351.4969 Fax 703.351.0090 I i I i I J I I I I I ~ I j

I I I I I I I I I I 1. ~ I I ABOUT THIS STUDY... "Science, Economics, and Environmental Policy: A Critical Examination," is an evaluation of the data, statistical analyses, and underlying scientific theories that underlie the Environmental Protection Agency's (EPA) policy decisions on environmental tobacco smoke, radon, pesticides and hazardous clean-up under the Superfund law. With the total costs of environmental regulations estimated to be $150 billion annually -- or $1,500 per U.S. household -- it is extremely important that environmental decisions be based on sound scientific analyses of potential risks to public health and the environment, and that the costs of environmental regulation be weighed against the benefits. But as Dr. John Graham of the Harvard Center on Risk Analysis notes, "While it may seem obvious that EPA should use good science, students of the Agency have documented that the Agency's leadership, when preoccupied with public fears and legal pressures, has sometimes allowed good science to be neglected." Perhaps Sen. Daniel P. Moynihan (D-NY) put it best, "Truth be told, I suspect that environmental decisions have been based more on feelings than on facts." This research report provides policy-makers, the press, and the general public with the facts about the science and economics that form the basis of the EPA's risk assessments and cost/benefit analyses in four of the most current -- and controversial -- environmental questions. The objective of this research is to promote more rational -- and perhaps less costly -- environmental decisions through the use of scientifically vigorous risk/cost-benefit analysis. In this regard, the Congress is debating several bipartisan initiatives to expand the use of risk assessments and cost-benefit analysis, including the "Environmental Risk Reduction Act" sponsored by Sen. Moynihan, Rep. Richard Zimmer (R-NJ), and Jim Slattery (D-KS) and the EPA risk/cost-benefit regulatory analysis amendment sponsored by Sen. J. Bennett Johnston (D-LA) and Rep. John L. Mica (R-FL). "Science, Economics, and Environmental Policy" was researched and prepared by the staff of the Alexis de Tocqueville Institution (AdTI) in Arlington, Virginia. AdTI is a non-profit, non- partisan educational foundation established to conduct, publish, and publicize research on the extension and perfection of capitalism, freedom and democracy in the United States and abroad. For further information, contact Cesar V. Conda, executive director of the Alexis de Tocqueville Institution, 2000 15th Street North, S. 501, Arlington, Va. 22201, Tel: (703) 351-4969, Fax: (703) 351- 0090. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Note: Nothing written here should be construed as necessarily reflecting the views of the Alexis de Tocqueville Institution or its co-chairmen and directors, or as an attempt to aid or hinder legislation before Congress. I

I I A I TABLE OF CONTENTS ~ CASE STUDY NO.1: ENVIRONMENTAL TOBACCO SMOKE .................................................................... 1 i I I I I I I I I I I CASE STUDY NO.2: RADON .................................................................................................... ............................ 15 CASE STUDY NO.3: PESTICIDES .................................................................................................... .................... 33 CASE STUDY NO.4: SUPERFUND .................................................................................................... .................. 45 tNZ I I

ENVIRONMENTAL TOBACCOSMOKE t I I I I a i I I I I I I I I I CASE STUDY NO. 1: ENVIRONMENTAL TOBACCO SMOKE Introduction The downward trend of cigarette smoking in America has been going on for many years. By the end of World War II, almost half of all adult Americans were smokers. Today, "fewer than three out of every ten American adults smoke, and this rate is continuing to decline."i (See Figure 1-1.) This downward trend is the result of a combination of factors: greater knowledge of the health risks associated with smoking, increased federal and state taxes, and a general reduction of tolerance for smoking on the part of nonsmokers, among other things. Ironically, as smoking has declined, the federal government has increased its campaign against srnoking. Undoubtedly, many view this effort as beneficial to society. However, it now appears that the federal government has gone beyond its traditional anti-smoking efforts, consisting mainly of education and health warnings, and is now moving toward a (de facto) ban on smoking. The vehicle by which this ban may take effect is an Environmental Protection Agency (EPA) study which links lung cancer in non-smokers to environmental tobacco smoke, or ETS, which is also called "second- hand smoke" and "passive smoking." If this were the case, it would be difficult to stop the government from banning smoking in the name of protecting innocent non-smokers. Unfortunately, in its zeal to abolish smoking, science has been sacrificed. The EPA's finding that second-hand smoke is harmful to human health is based on a lower threshold of risk assessment than the agency normally uses for other substances. In short, the EPA study relied on methodologies different from those which have been historically used in such analyses. Scientific standards were seriously violated in order to produce a report to ban smoking in public settings. The EPA's finding that second-hand smoke is harrnful to human health is based on a lower threshold of risk assessment than the agency normally uses for other substances. Before the government takes action to ban some substance on the basis of its danger to health, it is extremely important that we know the precise degree of danger based on generally accepted scientific principles. If science is debased in an effort to "do good," society ultimately may be left worse off. There are two reasons for this. First, if we debase the scientific method in pursuit of a political agenda, we are opening a Pandora's Box. Second, the ordinary dangers everyone encounters in everyday life are so numerous that if we do not carefully delineate the government's role in regulating such dangers there is essentially no limit to how much government can ultimately control our lives. The health risk from smoking is not the focus of this paper. Instead, this paper explores the EPA's analysis of ETS or second-hand smoke. By any name, it is a complex and highly variable mixture of substances which diffuse through the air. The Environmental Protection Agency has compiled several studies and reports which examine various aspects of the ETS issue. Two in particular are considered at length in this paper; one examined the respiratory health effects of ETSZ and the other examined the economic consequences of a proposed restric- tion on smoking.3 In briei; EPA makes certain assumptions about ETS which are then used to buttress EPA's scientific and economic conclusions. 1

SCIENCE, ECONOMICS & ENVIRONMENTAL POLICY Moreover, the science as presented is insuf- Crossing the Threshold ficient and the economic claims are similarly unsupportable. They will be dealt with in turn. First, we will examine EPA's use of the scientific research surrounding ETS. EPA and the Science of ETS There are certain things about smoking which sound science can demonstrate. For example, active smoking is detrimental to the health of millions of smokers. Nevertheless, EPA has no official role when it comes to regulating smoking. Yet, EPA lately has taken the leading role in publicizing the potential health risks from smoking. According to EPA Administrator Carol M. Browner, "Although EPA has no regulatory authority over tobacco products, it does have a responsibility to inform the public about dangers it finds in the environment.n4 In particular, EPA has gone far beyond its authority in making ETS an "environmental" issue within its regulatory jurisdiction. In the process, it has manipulated both the science and the regulatory process. EPA has gone far beyond its authority in making ETS an "environmental" issue within its regulatory jurisdiction. Admittedly, trying to prove that second- hand smoke carries a measurable risk of lung cancer and determining precisely what that risk is are difficult tasks. It is accepted that smoking is linked to several forms of cancer, particularly of the lungs, and also to heart disease. Similar conclusions about passive smoking, or ETS, should be based upon equally strong scientific evidence. To that end, the EPA has undertaken a review of the scientific literature to determine the effects of ETS on the lungs of nonsmokers. The EPA's major finding was that "ETS is a human lung carcinogen, responsible for approximately 3000 lung cancer deaths annually in U.S. nonsmokers n5 The question addressed by this section is whether or not that statement is justified. 2 It is well-established that "the dose makes the poison " That is, almost any chemical substance will harm a person's health if administered in sufficiently large quantities. Even substances which are necessary for life itself become deadly at high doses. Unfortunately, the EPA ignores this fact in most of its risk assessments by applying a'7inear no-threshold" theory of environmental harm. In essence, the linear no-threshold theory holds that high-dose effects can be extrapolated back to a zero dose without searching for a threshold below which no health effect will be elicited.b In other words, if it were found that exposure to a given level of some chemical substance caused one death per 100,000 population, then half the exposure would therefore cause one death per 200,000 population, one fourth the exposure would cause one death per 400,000 population, etc. This flawed assumption underpins almost all of the EPA's work on environmental exposures, from the Superfund program to radon in homes to ETS. The EPA claims to discern an "apparent non-threshold nature of the dose-response relationship observed between active smoking and lung cancer."' Even if this were true for active smoking (and, as questionable as that statement is, it is beyond the scope of this paper), it is not automatically valid to reject the possibility of a threshold effect for ETS. For environmental tobacco smoke is not just a lower dose of the substances inhaled by a smoker; important, if poorly researched, chemical changes occur as tobacco smoke is diluted and cooled in the open air. Researchers recognize three principal types of tobacco smoke. "Mainstream smoke" is produced when the smoker draws air through a cigarette, thereby "fanning" the temperature as high as 900 degrees centigrade. Most of the compounds in smoke change as they cool and as they react with the smoker's mouth, throat and lungs. "Exhaled smoke" is not the same as the smoke that was inhaled. "Sidestream smoke" is that which is produced by the smoldering cigarette between puffs. Because the temperature is significantly lower (perhaps 500 to 600 degrees centigrade), different chemical I ~ I I I 1 a ~ I J I I I I I 1 I

t I I I a k I I I I I I I I I compounds (or different amounts) are pro- duced. Together, mainstream smoke,exhaled smoke and sidestream smoke produce environ- mental tobacco smoke, with sidestream smoke accounting for 85 to 90 percent g The EPA notes that some potentially carcinogenic compounds are present at much higher levels in sidestream smoke than in mainstream smoke. This is a function of the respective temperatures at which various compounds form. Regardless of the composi- tion of sidestream smoke when it is produced, it rapidly undergoes changes, both chemical and in terms of concentration per liter of air. EPA's report recites several distinctions between ETS and mainstream, or even sidestream smoke. The most important distinction arises from the significant dilution of the ETS. In addition, the composition and concentration of ETS is dependent on the number of smokers, their smoking styles, and the number of cigarettes smoked in a given period of time. According to the EPA, for active smoking "A clear dose-response relationship exists between lung cancer and amount of exposure, without any evidence of a threshold level.n9 Of course, a strong dose-response relationship does not rule out the existence of some minimum dose below which there will be zero response. Yet the EPA almost never looks for a threshold for any potentially harmful substance. In fact, it is essentially an unofficial EPA policy to deny that thresholds exist for any potentially hazardous substance. As examples, consider EPA's stance on dioxins, radon gas, or pesticide residues in the food supply.'o What is more, the fact that tens of millions of smokers survive their habit without developing lung cancer seems to suggest that a threshold exists for each individual, regardless of EPA's assumptions concerning aggregate data. Thus, the statement that no evidence for a threshold exists could easily confuse members of the public. As mentioned earlier, essentially every substance to which humans are exposed is potentially harmful. Many ordinary substances -- common table salt, for instance -- are fatal if ingested in sufficiently large amounts. In addition, hundreds of foods in the human diet contain enormous quantities of "natural carcinogens."" Because the human species has evolved the ability to self-repair the damage caused by these naturally occurring substances, ENVIRONMENTAL TOBACCO SMOKE we are also able to repair the similar damage caused by small amounts of other carcinogens, including the ones found in ETS. In the face of this assertion by EPA that no safe threshold exists for active smoking, it becomes important to examine how closely EPA links ETS with mainstream smoke. The EPA's Guidelines for Carcinogen RiskAsw_ssment (U.S. EPA, 1986) sets out "three criteria that must be met before a causal association can be inferred between exposure and cancer in humans: 1. There is no identified bias that could explain the association. 2. The possibility of confounding has been considered and ruled out as explaining the association. 3. The association is unlikely to be due to chance.n12 Under these criteria, one could conclude that mainstream smoke (MS) easily qualifies as a lung carcinogen. However, the EPA asserts that because sidestream smoke is chemically similar to MS and because sidestream smoke is the major constituent of ETS, then by inference ETS is also a Group A carcinogen under the EPA test. However, EPA is well aware that ETS is not identical to mainstream smoke, either qualitatively (chemical makeup) or quantitatively (dose). Nevertheless, EPA seems to adopt the old cliche': "Close enough for government work." In fact, most U. S. studies conducted on ETS and lung cancer have found no statistically significant indications of carcinogenicity. It should be borne in mind that even if ETS is legitimately considered a "known human carcinogen," that does not prove that, at actual environmental exposures, it can or does cause lung cancer. In fact, most U.S. studies conducted on ETS and lung cancer have found no statistically significant indications of carcinogenicity. Many observers have ques- tioned whether EPA's conclusions are justified.13 If this were limited to the question of 3