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SCIENCE, ECONOMICS & ENVIRONMENTAL POLICY an internal EPA categorization, it would not be excessively controversial. However, much more is riding on this classification than mere bookkeeping entries. Declaring ETS to be a Group A carcinogen has set in motion a chain of policy events which must ultimately result in widespread federal bans on smoking. To quote the EPA's expressed reasoning in full: The conclusive evidenceof the dose-related lung carcinogenicity of MS [mainstream smoke] in active smokers, coupled with information on the chemical similaritiesof MS and ETS and evidence of ETS uptake in nonsmokers, is sufficient by itself to establishETS as a known human lung carci- nogen, or "Group A" carcinogen under U.S. EPA's carcinogen classification system.'a Similarly simplistic reasoning has allowed the EPA to publicly fret over almost every suggested cancer risk, from electro- magnetic radiation to artificial sweeteners.ls When its review discovered that existing U. S. studies of lung cancer and ETS did not support its position, the EPA arbitrarily reduced the traditional standard of proof, or "confidence intervaL " Despite the EPA's conclusion that ETS is a Group A carcinogen, it is at the very least arguable that ETS would flunk each separate step of the three-prong test. And it is the EPA's effort to cross the final hurdle that has produced the harshest criticism. When its review discovered that existing U.S. studies of lung cancer and ETS did not support its position, the EPA arbitrarily reduced the traditional standard of proo~ or "confidence interval " Only by this manipulation could the EPA claim that its analysis was statistically significant. Why is the concept of statistical significance so important to epidemiological studies? As valuable as these studies can be, there are well-recognized limitations. For instance, no matter how well designed, epidemiological studies can only show correlation, not causation. Only after many studies have found strong correlations covering large populations (as is the case with active smoking and lung cancer) are researchers on firmer ground in asserting direct causation. (Yet even then they may not know the precise mechanism.) Most individual studies, which are expensive and time-consuming, involve only a small number of individuals (or sample size). This reduces the confidence that researchers place in how well the sample population reflects the characteristics of the general population. Epidemiologic studies can test the specific hypothesis, for example, whether ETS is a risk factor for lung cancer. While even well designed studies cannot prove beyond any doubt that a particular substance is the cause of cancer, they can indicate that a particular substance is a potential risk factor. In this case, the EPA assumed -- before it even began its investigation -- that ETS is a risk factor for lung cancer; the very question supposedly being asked. However, the fact that most studies of ETS and lung cancer do not support this assumption is not entirely ignored by EPA, which may suggest that the EPA adopted unique manipulations of the data. Furthermore, the EPA does not utilize the appropriate "two-tailed" analysis of whether ETS causes lung cancer. In a two-tailed test, a specific assumption is made, for example, that ETS has an effect on human health. (The two "tails" refer to the fact that the hypothesized effect may be harmful or beneficial: the evidence may point in either direction.) In addition, if ETS were found to have no measurable effect either way, that would be called the "null hypothesis." In its examination of ETS, however, the EPA utilizes a "one-tailed" test. That is, the EPA makes the assumption that ETS cannot stimulate the human immune response and thereby produce lower rates of lung cancer than would exist in the absence of exposure. However, several American studies examined by the EPA leave open this very point. Indeed, of the 30 studies considered for inclusion in the EPA report, "six found a statistically significant (but small) effect, 24 found no statistically significant effect, and six of the 24 found a passive smoking effect opposite to the expected relationship.n16 Worse perhaps, the EPA goes further and rejects the possibility of any null hypothesis: 4 ~ ~ I I I I I I a r 1 I a I I I I I I

I ~ I I I I 9 I I I I I I t I I I that ETS has no effect on health. Thus, EPA refuses to accept any result which would refute its preexisting assumption: that ETS causes lung cancer in nonsmokers. Whatever one may think of this as a policy outcome, this is not valid science. Ordinarily, researchers utilize a standard mathematical procedure to determine the range of possibilities within which random error is extremely unlikely. By scientific convention, over decades of trial and error and careful review, studies must produce results which have no more than a 5 percent chance of being the result of the natural randomness of the studied population. This is normally referred to as a "95 percent confidence interval." In other words, a 95 percent confidence interval means that there is a 95 percent possibility that the result did not happen from chance, or a 5 percent possibility that it did. However, the EPA rejected this as the test for its survey of the literature on ETS and lung cancer. Because the purported relative risk for ETS was so close to perfectly random, the combined results of the studies examined by the EPA could not pass the 95 percent confidence interval test. In the scientific jargon, the results were not "statistically significant." It is at this point that EPA broke with the established procedure in such matters and declared that a 90 percent confidence interval would be used for this report's findings, thereby doubling the chance of being wrong. As a result, EPA could declare that its findings were "statistically significant" but only if one applies the less rigorous standard. Applying the standard test (a 95 percent confidence interval) would show that lung cancer rates for people exposed to ETS are indistinguishable from the lung cancer rates of unexposed populations. This is no mere academic debate, for there are numerous potential risk factors for lung cancer involving everything from diet to genetics to smoking tobacco. If the EPA's chosen procedures cannot distinguish among the possible risk factors, the report cannot provide useful or reliable guidance to policy makers. Perhaps the strongest criticism of this and other points in the EPA report has come from Gary L. Huber and his co-authors:l' EPA's risk assessment is built on the manipulation of data, ignores critical ENVIRONMENTAL TOBACCO SMOKE chemical analyses and key epidemiological data, violates time-honored statistical principles, fails to control adequately for important confounding influences (factors other than the one studied that may affect the result or a conclusion) that provide alternative explanationsfor its conclusions, and violates its own guidelines for assessing and establishingrisk to a potential environ- mental toxin.la One of the particular points of disagreement between Huber, et al., and the EPA report arises from a major study of ETS and lung cancer in U.S. female nonsmokers by researchers at the National Cancer Institute (see Figure 1-2).19 Although the EPA did not include this study's findings in its report's calculations, it did quote from the report in an effort to demonstrate general consistency. The exact quotation selected by the EPA is that "long-term exposure to [ETS] increases the risk of lung cancer in women who have never smoked.n20 Huber, et al., quote a different, yet equally revealing passage. Stockwell and his co-authors report that "we found no statistically significant increase in risk associated with exposure to environmental tobacco smoke at work or during social activities.n21 (emphasis added) This is an important point because EPA suggests that workplace regulations are legitimized by studies of the wives of smokers. In a recent report for Congress from the Congressional Research Service', another major study is cited which is not included in the EPA report' This study, which covered a larger population sample than the Stockwell study, "found no overall increased risk of lung cancer among nonsmoking spouses of smokers "24 Furthermore, ifstandard statistical procedures were applied to the Stockwell study, it too would fail to support EPA's final results. Bear in mind that Huber and his co- authors do not assert that ETS does not or cannot cause lung cancer in nonsmokers. They "ETS is a risk that is less than that associated with developing colon cancer by drinking chlorinated water, which is in most U.S. cities' water supplies." 5

SCIENCE, ECONOMICS & ENVIRONMENTAL POLICY simply point out that, under well-established scientific standards, the question of ETS and lung cancer has not been answered. They further call attention to the fact that even if one uncritically accepts EPA's conclusions, the resulting increase in risk from ETS is approximately the same as the lifetime risk of being killed on a bicycle.u Perhaps more compelling is this statement: "It is a risk that is less than that associated with developing colon cancer by drinking chlorinated water, which is in most U.S. cities' water supplies."' Chlorination of drinking water supplies has been one of the most important weapons in the battle against water-borne diseases, such as cholera. Were the EPA to apply a non- threshold standard to chlorination of drinking water, America might see an enormous increase in water borne diseases. Because the relative increase in the risk of contracting lung cancer found by the EPA is so slight (even after carefully tweaking the confidence interval), any number of non-ETS risk factors could be the actual cause. For example, EPA apparently failed to adjust its results for the age of the study participants 27 As people grow older, they become more likely to develop cancer, including lung cancers. Poor dietary habits can contribute to the development of cancer, and these traits may be shared by spouses to some degree. The EPA did adjust its results to reflect the likelihood that people who are counted as nonsmokers are misclassified because of the way the question was posed or simply because they lied on their questionnaire. However, the EPA did not accept the degree of smoker misclassification that has been suggested by some who have researched this particular question?' One further point: the EPA Report focuses on lung cancer and ETS in the home, since it relied upon studies of the nonsmoking spouses of smokers. Yet it is being used to draw conclusions about workplace exposure and lung cancer risks. But workplace studies of ETS do not support the EPA's conclusions. In the final analysis, therefore, the EPA report is an inadequate basis for a federal ban on workplace smoking.29 EPA and the Economics of ETS To its credit, the EPA admits to the appropriateness of "biological plausibility" in ETS risk analysis. That is, if no known chemical or biological reaction could explain the observed health problem, it will not be blamed automatically on ETS exposure. This is an appropriately cautious, if somewhat insufficient, filter for theories of harm from environmental exposures of all types. Unfortunately, the EPA is not similarly cautious with its economic analysis. In an analysis of the Smoke-Free Environment Act of 1993, EPA produced exaggerated estimates of potential economic benefits 30 The bill under consideration "would effectively ban or restrict smoking in most [nonresidential] indoor environments "31 EPA's analysis found that this, or similar, legislation "could achieve net benefits (i.e., benefits minus costs) ranging from $39 billion to $72 billion per year."32 These figures were widely reported in the press 33 The EPA's economic calculations are no more rigorous than its risk assessments. Indeed, the claimed economic benefits of smoking bans are perhaps the primary impetus for several current legislative proposals.' If this study is any indication, the EPA's economic calculations are no more rigorous than its risk assessments.35 How did EPA generate such impressive economic benefits? Most of the calculated costs and benefits were relatively minor, particularly when one considers how many establishments would be covered under the bill. However, $33 billion to $60 billion of the EPA's "net benefits" are derived from a single category: surveys of how much people would be willing to pay to avoid a premature death due to ETS exposure. This controversial technique is being used to a growing degree in many environmental fields. In this case, the EPA found that individuals were "willing to pay" an average of $4.8 million each to avoid a premature death from ETS exposure. It is economically impossible -- not just "difficult" or "unlikely" -- for many individuals to spend the $4.8 million, so it matters little how much they say they would be "willing" to spend. In addition, insurance is I 11 I I I f I 1 I J I ~ I I 6 I

I I I f I I I I I I available for both cancer and for other catastrophic illnesses, yet the premiums are but a fraction of the EPA's survey results. In addition, it estimated the net benefits of reduced illnesses by using another willingness-to-pay survey. The assumption this time was that individuals would be willing to pay $1.5 million per avoided illness. Therefore, the cumulative net health benefits to society of a smoking ban would range, according to EPA's figures, from $35 billion to $66 billion annually. EPA administrator Carol Browner has carried these highly questionable assertions to a higher level. In her testimony on the Smoke- Free Environment Act before a U.S. House of Representatives subcommittee she stated that "If one considered the economic value that people assign to reduced risk of death, our estimate would be on the order of $157 billion to $470 billion per year.' The EPA's use and publicizing of "willingness-to-pay" surveys in this instance violates any sound "economic plausibility" test. And it is only through the use of these flawed techniques that the EPA is able to assert tens of billions of dollars in theoretical economic benefits from a smoking ban. If the EPA were limited to more realistic economic measure- ments, the cost-benefit analysis of public smoking bans would produce much smaller figures, thereby reducing support for federal action. If the EPA were limited to more realistic economic measurements, the cost-benefit analysis of public smoking bans would produce much smaller figures, thereby reducing support for federal action. The EPA and its private sector contractors find willingness-to-pay surveys to be of great value. For example, the Exxon Valdez oil spill in Prince William Sound, Alaska encouraged economic researchers to survey the general public at the height of outrage over the accident. One estimate of the "value" of the waterway (in pristine condition) ranged from $5 to $10 billion.37 Yet if the same survey were conducted on each mile of U.S. coastline ENVIRONMENTAL TOBACCO SMOKE in turn, the "values" derived would reach astronomical figures. This is because of the simple fact that, if you aren't required to actually spend the money, there is no theoretical limit to your economic behavior.' The remainder of EPA's estimated "net benefits" are derived from calculated savings from reduced maintenance and cleanup costs minus the added costs of creating smoking lounges and enforcement. It seems almost petty to criticize these comparatively minor points, but even here EPA can be accused of exaggeration. For example, the EPA estimated potential total savings through reduced housekeeping and maintenance costs to range from $5 billion to $10 billion per year 39 One indoor air expert testified before Congress in March, 1994 and stated that "savings of this magnitude in housekeeping and maintenance costs are more figments of the imagination than hard data.n40 EPA's cost-benefit analysis is "funda- mentally flawed." Economist Robert Tollison, former director of the Bureau of Economics at the Federal Trade Commission, has analyzed the EPA's cost-benefit analysis and found it to be "fundamentally flawed."al According to Tollison, EPA's "cost-benefit analysis involves the kind of numbers game for which govern- ment agencies have been justly criticized.n42 In so doing, Tollison raises the specter that EPA has seemingly fitted economic analysis to the policy conclusions it desired. Tollison found telling weaknesses within the EPA cost-benefit analysis. For example, EPA assumes in its cost-benefit analysis that eliminating exposure to ETS in workplaces and in public places would significantly reduce the incidence of heart disease. Incredibly, savings attributable to the EPA's hypothesized decrease t~: in the incidence of heart disease among nonsmokers account for the overwhelming majority of all dollar benefits estimated by the EPA to be associated with national smoking restrictions, according to Tollison. Yet, the EPA's well-publicized risk assessment was 7

SCIENCE, ECONOMICS & ENVIRONMENTAL POLICY primarily concerned with alleged lung and respiratory complications from ETS - not heart disease. In fact, the EPA never developed a risk assessment between ETS and heart disease undoubtedly believing that the evidence for such risks were weak. Instead, it merely assumed that such causation exists even though the EPA nor any other government agency has concluded that ETS is a cause of heart disease. This paper does not take the stance that net economic benefits from a smoking ban are impossible, but simply that the EPA has exaggerated its economic estimates. The fact that it consistently does so, coupled with its careful manipulation of the science, reveals that the EPA is not providing the American public and policy makers with impartial data. Conclusions Exposure to ETS is not a uniform risk, if it is a risk at all. Even the EPA Report admits there is a strong dose-related health response for active smokers. It is logical that there would be a dose-related response for ETS, as there is with every other potential risk factor confronting humanity. In any event, indoor air problems are not limited to tobacco smoke. The best method for dealing with all potential indoor air problems simultaneously is to provide adequate ventilation. This would insure that exposure levels (to whatever substance from whatever source) were kept well below potentially harmful levels. Skeptics should consider that whenever a tobacco firm makes a statement in regard to smoking and health, it is generally discounted by its critics because of the "special interest" it holds in the issue. This is no less applicable to the "special interests" of the EPA. The bureaucracies of the federal government are strongly interested in justifying budget increases and increasing the scope and importance of their assigned responsibilities. Yet that does not excuse disregard for the scientific method or sound economic analysis. EPA personnel have a duty to conduct the best science possible and report the results fully and honestly. The EPA is attempting to prove that serious medical risks are created by even casual exposure to secondhand smoke. In its effort to do so, the EPA has manipulated selected portions of the existing literature until it produced the desired result. I I I I I I If the EPA were merely attempting to prove that secondhand smoke is an annoyance to many people, it would be on solid ground. However, the EPA is attempting to prove that serious medical risks are created by even casual exposure to secondhand smoke. In its effort to do so, the EPA has manipulated selected portions of the existing literature until it produced the desired result. However pure the motivations of EPA personnel in this matter, it is unacceptable to distort the science for the sake of a policy goal. While Congress may eventually decide to ban smoking in public buildings it cannot do so under the pretense of sound science or economics. ### ~ i.l~-t Csr i I I I I I J 1 ~ 8

I I I I I I I Figure 1-1 Percentage of Adult Cigarette Smokers 1949 I I I I I I Yeor 1970 1980 1990 Source: Gallup Poll, National Clearinghouse for Smoking and Health, National Health Interview Survey of Cancer Epidemiology and Control. 9 1

Ingun 1-2 j Odds Ratio for Lung Cancer (all types) in the 432 Non-Smoking Women from Missouri «0 0 ~ w v v 0 5.7 2.1 Year Source: The National Cancer Institute Beons and pe Z a I I I I 1 1 I 1 I I -4 I r 10

ENVIRONMENTAL TOBACCO SMOKE I I I r -1 I I J I I I I 1. W. Kip Viscusi, Smoking: Making The Risky Decision, (New York: Oxford University Press, 1992), p.1. 2. U.S. EPA, Office of Health and Environmental Assessment, Office of Research and Development "Respiratory Health Effects of Passive Smoking: Lung Cancer and Other Disorders" Washington, D.C., December 1992. Hereinafter cited as "U.S. EPA, Report." 3. U.S. EPA, Indoor Air Division 6607J, Office of Radiation and Indoor Air,'"The Costs and Benefits of Smoking Restrictions: An Assessment of the Smoke-Free Environment Act of 1993 (H.R. 3434), Washington, D.C., April 1994. Hereinafter cited as "U.S. EPA, Costs and Benefits." 4. Carol M. Browner, Letter to the Editor, Washington Post (May 6, 1994). 5. U.S. EPA, Report, at page 1-1. 6. See, for example, Elizabeth M. Whelan, Toxic Terror: The Truth Behind the Cancer Scares, Prometheus Books, Buffalo, NY, 1993. 7. U.S. EPA, Report, at page 5-1. 8. Gary L. Huber, Robert E. Brockie, and Vijay K. Mahajan, "Smoke and Mirrors: The EPA's Flawed Study of Environmental Tobacco Smoke and Lung Cancer" Regulation (No. 3, 1993), p. 46. 9. U.S. EPA, Report, at page 4-1. 10. See, for example, Michael Gough, "Reevaluating the Risks From Dioxin," Journal of Regulation and Social Costs, January, 1991, pages 5-23; Bruce N. Ames and Lois S. Gold, "Chemical Carcinogenesis: Too Many Rodent Carcinogens," Proceeding_s of the National Acade My of Science, 87: 7772-76, 1990. 11. Lois S. Gold, et al., "Rodent Carcinogens: Setting Priorities," 258 Science 261, October 9, 1992. 12. U.S. EPA, Report, at page 4-28. 13. See, for example, Michael Fumento, "Is EPA Blowing Its Own Smoke?" Investor's Business Daily, January 28, 1993, page A 1. 14. U.S. EPA, Report, at page 1-2, 1-3. 15. For a general discussion, see Michael Fumento, Science Under Siege, (William Morrow and Company, Inc., New York: 1993) 16. Jane G. Gravelle and Dennis Zimmerman, Congressional Research Service, Library of Congress, "Cigarette Taxes to Fund Health Care Reform: An Economic Analysis" March 8, 1994, at pages CRS-46, 47. Hereinafter cited as "Gravelle." 17. See, for example, Gary L. Huber, et al., "Smoke and Mirrors" supra, note 8. 18. Ibid., at page 45. 19. H.G. Stockwell, et al., "Environmental tobacco smoke and lung cancer risk in nonsmoking women" Journal of the National Cancer Institute, September 16, 1992, Vol. 84:1417-1422. 20. U.S. EPA Report, Addendum, at page ADD-1. 21. Huber, et al., "Smoke and Mirrors," at page 51. 11

SCIENCE, ECONOMICS & ENVIRONMENTAL POLICY 22. Gravelle, supra note 16. 23. Ross C. Brownson, et al., "Passive Smoking and Lung Cancer in Women," American Journal of Public Health, November 1992, vol. 82, pp. 1525-1529. 24. Gravelle, at page CRS-48. 25. Huber, et al., at page 53. 26. Ibid. 27. Ibid., at page 54. 28. U.S. EPA Report, at Appendix B. 29. A major component of the indictment against ETS is the impact -- real and potential -- on children. Yet children would be one of the least benefited classes under H.R. 3434 (legislation prohibiting smoking in most public places). Most childhood exposure to ETS occurs in the home, which remains unregulated. The scientific literature on ETS does provide some indication that ETS is a risk factor for certain respiratory problems in infants and children under 18 months of age. This is an important issue, but it is one that must be dealt with in the home and in daycare facilities. 30. U.S. EPA, "Costs and Benefits," supra, note 3. 31. Ibid., at page ES-l. 32. Ibid., at page ES-2. 33. See, for example, John Schwartz, "EPA Estimates Smoking Ban Could Save Up to $72 Billion" Washington Post, Apri122, 1994. 34. See, for example, Gravelle, supra, note 16. 35. And, it would appear, the EPA is not unique in this regard. The Centers for Disease Control recently announced, at a widely covered press conference, the results of a study estimating the societal costs of smoking. However, the actual report was not distributed, making it impossible to assess the accuracy of CDC's results. 36. Carol M. Browner, Administrator of the U.S. Environmental Protection Agency, in testimony before the subcommittee on Health and the Environment, Committee on Energy and Commerce, U.S. House of Representatives, February 7, 1994, at page 9. This quote is a reference to EPA's estimate of the benefits from a reduction in smoker mortality. The total estimated value from direct medical cost savings and reductions in lost wages is from $5 to $16 billion annually. 37. See: Roger Bate, "Pick A Number: A Critique of Contingent Valuation Methodology and Its Application in Public Policy," Competitive Enterprise Institute, Washington, DC, January, 1994. Also see: Robert K. Niewijk, "Misleading Quantification: The Contingent Valuation of Environmental Quality," Regulation, Number 1, 1994, pp. 60-71. 38. Ibid. 39. U.S. EPA, Costs and Benefits, at page 16. These figures are not corrected for the fact that many U.S. businesses already impose bans or restrictions on smoking. 12 I I I I y I . I I I I 1 I I I I I

ENVIRONMENTAL TOBACCO SMOKE I I I I I ~ I I 1 I 9 I I I I 40. Gray Robertson, President of Healthy Buildings International, Inc., in testimony before the Subcommittee on Health and the Environment, Committee on Energy and Commerce of the U.S. House of Representatives, March 17, 1994, at page 4. 41. Robert D. Tollison, Duncan Black Professor of Economics, George Mason University, in a statement submitted before the Subcommittee on Clean Air and Nuclear Regulation, Committee on Environment and Public Works, U.S. Senate, May 11, 1994. 42. Ibid. 13