Barg Coffin Lewis & Trapp, LLP Articles

These remarks were delivered to the Pacific Industrial and Business Association at a conference entitled "Emerging Topics - VOC Subsurface Vapor Intrusion and Perchlorates" in Santa Clara, California on September 30, 2004.

Legal Aspects of Emerging Contaminants and Moving Targets: Responsible Party Perspective

By Brian S. Haughton

Good afternoon. I am honored to have been invited here today to share a few thoughts from a legal perspective on emerging contamination issues. Let’s start by looking at a few examples to find out what they have in common.

By now, most people have seen or heard media coverage of famous athletes contaminating their bodies with tetrahydrogestrinone (THG) to improve performance. Apparently, this is a substance that didn’t even exist until recently, when it was synthesized by modifying an anabolic steroid. The FDA says that while little is known about the safety of THG, its structure and relationship to anabolic steroids suggest that its use may have serious long-term human health consequences.

Asbestos is another example. Its fibers are incredibly strong and heat resistant, making it a good acoustic and thermal insulator and fire-proofing material. One might say asbestos “emerged” as a contaminant after we learned that human inhalation of its fibers can cause asbestosis and mesothelioma.

Lead is similar. It is an excellent hiding agent in paint, but it “emerged” as a contaminant when we learned about the effects on children who ingest it.

MTBE in gasoline seemed like a good way to clean up air emissions from cars until we learned what it did when it leaked from underground storage tanks.

Which leads us to solvent stabilizers like 1,4-dioxane. Again, it’s useful stuff, lengthening the life of solvents, but it has recently “emerged” as a contaminant because advances in detection technology have enhanced our ability to “see” it.

And then there’s TCE. It’s a great solvent, but it “emerged” as a contaminant when we learned – or should I say “thought we learned” – about its toxicology and mobility. Now, TCE is emerging again, this time as the result of two developments. First, a 2001 draft risk assessment issued by USEPA, indicated TCE’s potency as a carcinogen may be 65 times higher than previously believed. As I don’t have to tell those assembled in this room, this tentative conclusion is the subject of considerable controversy. Second, indoor air sampling revealed higher levels of TCE than had been predicted by an EPA-approved computer model.

Finally, we have perchlorates, one of the main uses of which is as a key ingredient in solid propellant for rockets. Perchlorates are oxidizers, and they provide the oxygen that drives the reactions that make rockets fly. In olden days – starting in 1830 or so – the same role was filled by chlorates. In the 20^th century, perchlorates replaced chlorates for two very good reasons. First, perchlorates are more stable – meaning they are less likely to go off accidentally – and, second, they are more oxygen-rich.

However, the same quality that makes perchlorates more stable – that is, a very high activation temperature – can also make them persist in the environment for decades. And it turns out perchlorates are also highly soluble and therefore can be very mobile in the environment. As with many other chemicals, recent improvements in detection technology have enabled us to “see” lower levels of perchlorates. Not surprisingly, this has led to an increased number of detections in groundwater, which, in turn, has led to a new round of toxicological studies of the potential effects of these previously undetectable concentrations.

What do all of these emerging contaminants have in common? In each case, the contaminant emerged when we learned something new suggesting there may be a human health risk that was previously unknown. The “something new” could be a new chemical, new toxicology, new understandings about transport properties or new detection technology.

Emerging contaminants present us with the question: how should we respond to the new information about risk? If we think of legal rules regulating contaminants as “targets,” the question becomes: should we move existing targets or – where there are no existing targets – create new ones? And if so, what should the new targets be?

The range of answers might be said to represent a tension between two aphorisms. One side of the spectrum might be called the “better safe than sorry” side, while the other might be called the “measure twice, cut once” side.

An example at the “better safe than sorry” end of the continuum would be to say that as soon as there is any news suggesting that a chemical may cause any risk, the following rules should be enacted:

All use of the chemical should be banned.
All media everywhere should immediately be tested for the presence of the chemical at the expense of the property owner or other responsible party.
Wherever the chemical is found, it should be cleaned up until its presence can no longer be detected.
Waste products from the cleanup should be chemically altered so none of the offending chemical remains, and the resulting product is broken down into naturally-occurring materials and reintroduced into naturally-occurring deposits of the materials in such a way as to eliminate any evidence of human involvement.

Conversely, an example at the “measure twice, cut once” end of the continuum would be to say no action should be taken until there is unanimity in the scientific community that it is certain that the chemical causes cancer in humans at some specified dose. Then – and only then – the rules should be as follows:

Use of the chemical should not be banned.
No testing for the chemical should be required unless and until someone proves beyond a reasonable doubt that a dose received from a site caused a particular individual to develop cancer.
Where testing is required, and the chemical is found, it should be cleaned up to the specified dose level, using exposure assumptions from the person who developed cancer.
Waste products from the cleanup should be dumped down the sewer.

Now, assuming the best answer lies somewhere between these two extremes, the question becomes: where?

Before we start looking at how we might answer that question, let’s stop for a moment to consider why we should care. To some extent, it depends on your perspective: are you a regulator, a receptor or a responsible party? Perspective makes a difference. We’re all human, and it’s as if each of us is hip-deep in an alligator-filled swamp. Each of us tends to respond to the alligator that’s closest to biting a part out of our anatomy.

I am reminded of the story of a very capable regulator who didn’t require a responsible party to include a dioxin analysis in laboratory runs for samples from a site. This made sense at the time because considerable evidence about the site history indicated there was no reason to believe dioxins were present, and, as we all know, dioxin analyses aren’t free. Years later, after the site had been closed, an unexpected sequence of events led to the discovery of dioxins at the site. The regulator almost lost his job. Now, he requires dioxin sampling at all of his sites, regardless of whether the historical evidence suggests dioxins might be present.

So yes, we’re human, and perspective does make a difference. As a result, it’s easy to think of a conversation about emerging contaminants and moving targets as a battleground where the opposing sides have nothing in common.

It’s easy to fall into the trap of seeing the responsible party as having a single-minded desire to reduce costs at the expense of the environment and the regulator and receptor as having a single-minded desire to enhance the environment regardless of the cost. After all, no regulator was ever promoted for saving responsible parties money, and no responsible party employee was ever promoted for spending an extra $10 million to clean up from a 10^-6 excess cancer level to 10^-7.

But I’d like to offer an alternative way of looking at the situation. To stretch the swamp metaphor, you might say we all need to recognize our common interest in reducing the overall alligator population. When we’re considering emerging contaminants and moving targets, we all have a common interest in paying attention to the unintended consequences of our actions.

Unintended consequences can cause problems directly and indirectly. Examples of direct negative unintended consequences are easy to imagine.

· I already mentioned one in the case of MTBE. It was undisputed that adding MTBE to gasoline would reduce air pollution from cars. No one thought to look at the unintended consequence of MTBE leaking out of underground fuel tanks and into groundwater.

· Another example comes from the Proposition 65 arena. Warnings about hazardous substances sounded like a good idea at the time, but warnings on nicotine gum – a product designed to help people stop smoking – can cause pregnant mothers to keep smoking, increasing the risk of reproductive harm.

· If we require babies on airplanes to have their own seats and seat belts, will the extra cost cause some parents to drive instead of flying, thereby exposing their babies to substantially more risk than the airplane’s seat belt would have avoided?

· If we urge people to eat organic fruits and vegetables to decrease cancer risk from pesticides, might the increased cost decrease their fruit-and-vegetable intake, leading to a net increase in cancer risk from all sources?

· Leaving cost aside, there are studies indicating organic peanut butter is actually more dangerous than its non-organic processed counterpart because the processing removes aflatoxins.

· Let’s say we require fire retardant to be added to kids’ pajamas, and the retardant turns out to be potentially carcinogenic. Should we eliminate the cancer risk even if doing so yields a net increase in number of deaths?

· How much air pollution was caused by actively remediating gas station sites that the Lawrence Livermore Report later told us would naturally biodegrade in time to prevent any significant risk? Apparently there was some because EPA on October 8, 2003 issued a site remediation NESHAP designed to reduce air pollution from cleanups including gas station cleanups.

These kinds of direct negative unintended consequences are relatively easy to understand, if challenging to avoid. Indirect negative unintended consequences, as the name suggests, involve a longer cause-and-effect chain, but they may also be much more significant. Indirect negative unintended consequences flow from the observation that resources are limited.

Uncontroversial though this observation may be, we tend to be blinded to its implications because of our natural moral aversion to putting price tags on human life or environmental values. But the truth is that by our actions and inactions we put price tags on such things every day.

Those of us who drove here today voluntarily incurred a measurable risk of death in exchange for a measurable time savings. There was a 6.0 earthquake on Tuesday. Now, this looks like a very solid building, but I’ll bet it was engineered to a specified design earthquake, and there’s a non-zero chance that a more severe earthquake will occur. So all of us are accepting some risk simply by sitting in this room. Guess it must be the cookies. Similar calculations could be made for flying on airplanes, smoking, walking, eating french fries, exercising, not exercising, meditating, not meditating, and so on. We are literally constantly making death-risk-reward trade-offs.

The same is true for government, whether it’s the legislative branch budgeting for pre-natal care, the executive branch setting seat belt regulations or the judicial branch awarding damages in a wrongful death case. The Golden Gate Bridge District periodically debates whether to add suicide barriers and a center divider. Both would save lives; neither has been installed.

Business, too, must make these decisions. You cannot build a toaster or a widget without doing so.

And we all make similar decisions pricing harm to the environment. Again, most of us drove here, and I doubt many of us did so in zero-emission vehicles. Should the berm around a treatment pond be designed to a 100-year-storm standard? If so, we know a 1,000-year storm will cause a problem. In the same vein, how about the landfill liner that is designed to a 1,000-year earthquake? And when a pump-and-treat system reaches asymptotic levels, some mass removal is still going on, but is it worth the resources being devoted to it?

So, yes, we do put price tags on human life and environmental values. The issue is whether we want to admit it.

Which brings us back to the self-evident observation that resources are limited. What are the implications of this truism?

The budget crisis that precipitated the 2003 recall election made California’s environmental regulators painfully aware of resource constraints. If, in response to emerging contaminants, we aren’t careful about where we place moving regulatory targets, regulator resources can be wasted, both in terms of staff time spent on un-needed oversight and in terms of scarce governmental cleanup dollars misspent. To return to the example of the Lawrence Livermore Report, how much mercury could we have kept out of San Francisco Bay if staff resources devoted to needless gas station cleanups had instead been devoted to developing the mercury TMDL sooner?

Needless to say, responsible parties have budgets, too. Emerging contaminants can lead to moving targets that have dramatic effects on, for example, cleanup levels and NPDES permit limits. Not only does a bad limit create the risk that the treatment technology will do more harm than good, but it also can divert money away from projects that have environmental and other human health benefits.

In the best case, a bad target will cause a responsible party to incur needless costs that get passed along to customers in the form of higher prices. In the worst case, a bad target can be the straw that breaks a responsible party’s back, resulting in lost jobs for many people, possibly including some whose budgets are already squeezed by higher prices caused by the same bad target.

To which some might respond, “that’s unfortunate, but it’s not my problem.” But to the extent we’re all stewards of the health of our employees and customers (if not the public, generally), we all own this problem. Why? Because there is a negative correlation between income and mortality. In other words, people with higher income tend to be healthier and live longer. Conversely, people with lower income tend to be sicker more often and die sooner.

Does this mean we should stop spending money on environmental regulation? No. But can we ignore cost-benefit analysis and claim we are serving the public good? The answer again is no.

So we’ve seen why we should care about where moving targets are placed on the continuum from the extreme “better safe than sorry” position – which might be called the “chicken little” answer – to the extreme “measure twice, cut once” position – which might be called the “analysis paralysis” answer.

Now let’s turn to some of the legal rules that are designed to guide us to an answer that lies somewhere between these two extremes.

First, there is California Water Code section 13000, which articulates the legislative finding that,

“activities and factors which may affect the quality of the waters of the state shall be regulated to attain the highest water quality which is reasonable, considering all demands being made and to be made on those waters and the total values involved, beneficial and detrimental, economic and social, tangible and intangible.”

That’s a start. The legislature commands us to consider the “total values” involved, thus generally urging us to look at all the costs and all the benefits before fixing the location of a moving target.

Are emerging contaminants being regulated in a way that takes into account the “total values” involved? Let’s consider TCE and perchlorates.

Preliminarily, how are they regulated? As a result of the 2001 EPA draft risk assessment for TCE, Region 9 adopted a new, more stringent, air screening level for residential use, reducing the standard from 0.96 micrograms to 17 nanograms (0.017 micrograms) per cubic meter, a 56-fold decrease. A chorus of scientists – including many whose work EPA cited in the assessment – have cited serious deficiencies in the assessment suggesting that the final screening number will be significantly higher. Meanwhile, however, the draft number is having real world effects, causing responsible parties to incur real world costs at the Mountain View sites just down the road from here.

For perchlorates, California’s Office of Environmental Health Hazard Assessment (or OEHHA) issued a Public Health Goal (or PHG) of 6 parts per billion (or ppb) on March 12 of this year, and the Department of Health Services (or DHS) immediately followed suit by setting the drinking water action level at 6 ppb. I apologize for all the acronyms. The 6 ppb number for perchlorates – like the TCE number – is the subject of controversy. There are studies showing perchlorate concentrations below 200 ppb have no measurable effect on humans. On the other hand, EPA has issued a “draft” Reference Dose of 1 ppb, based mainly on animal studies that have been the subject of significant criticism. EPA’s number is slated for review by a special panel of the National Academy of Sciences (or NAS), and OEHHA has expressed its intention to revisit its 6 ppb number when the NAS review is done.

So we are looking at a pretty wide spread for both TCE and perchlorates. And that spread can trigger numerous legal implications. For example,

· For cleanup sites that are required to comply with the National Contingency Plan (or NCP), regulators are likely to consider the action level in setting remedial standards and choosing cleanup alternatives pursuant to the NCP’s directives to consider ARARs (that is, “applicable or relevant and appropriate requirements”) and TBCs (that is, “other pertinent advisories, criteria, or guidance” To Be Considered).

· In fact, at both NCP and non-NCP sites, regulators in California are using these new numbers as a basis for setting remedial action levels. I mentioned the Mountain View sites a moment ago with respect to TCE, and there are numerous perchlorate sites where new numbers are being applied while the scientific controversy about those numbers is still brewing.

· Other regulatory requirements also come into play, giving the new numbers a life of their own. For example, California Health & Safety Code §116455 requires water purveyors to notify the local City Council and/or County Board of Supervisors when a contaminant in drinking water exceeds its action level.

· DHS recommends that, when a contaminant exceeds its action level, the purveyor should inform its customers and explain the potential for adverse health effects at high levels of exposure.

· DHS also recommends that the purveyor take the source out of service if a contaminant is present at more than 10 times any action level based on non-cancer risk or 100 times the action level, if the action level is based on a 10^-6 cancer risk.

· Finally, whenever any governmental standard is set, the toxic tort plaintiffs bar is rarely far behind.

These real world effects bring us to a second legal standard that affects how we determine where on the chicken-little-analysis-paralysis spectrum moving targets should be set.

The regulated community will argue that these real-world effects mean that, even though regulators characterize the new numbers as merely “advisory,” they look like rules, walk like rules and quack like rules. Therefore, they should be treated as rules, and, as such, should be subject to notice-and-comment rulemaking, as required by the federal and state Administrative Procedure Acts (or APAs). This has not occurred in the case of TCE, and although there was a rule-making proceeding for the perchlorate PHG, it ended in ambiguity that will not be resolved at least until the NAS panel has completed its review.

It has been said that when you have a hammer in your hand, every problem starts to look like a nail. The lawyer’s hammer is process. They’re trained to think that good process yields better substantive answers. That’s the theory behind the APA. Notice-and-comment rulemaking gives all those affected by a rule a chance to weigh in, offer alternative scientific approaches, point out negative unintended consequences and explain costs. These things tend not to happen in the absence of such a process, and the outcome is likely to suffer as a consequence. Maybe there are good reasons to go with 17 nanograms instead of 0.96 micrograms per cubic meter for TCE, but if there are, they should be subjected to full APA review.

Another law that has similar import is Governor Schwarzenegger’s second Executive Order (EO) S-2-03. (His first was to repeal the car tax.) That Order required California regulatory agencies to:

· First, identify all enforcement efforts or standards of general application that have not been subjected to APA review,

· Second, report these instances to the Office of Administrative Law (or OAL), and

· Third, cease pursuing such enforcement efforts and applying such standards until OAL makes its determination as to whether an APA violation has occurred.

Thus, the Order is designed to ferret out and eviscerate what are called underground regulations, that is, de facto rules that were put in place without following the notice-and-comment rule-making procedures required by the APA.

Three other aspects of this Order are relevant here. It (1) imposes a moratorium on new regulations, (2) requires a cost-benefit analysis before any further regulations can be enacted and (3) requires a cost-benefit analysis of all regulations adopted since January 6, 1999.

There are similar legal constraints that operate on the federal level, including Executive Order 12866, requiring cost-benefit analysis of certain federal regulations. Federal law also has something California law doesn’t: the Data Quality Act (or DQA), passed into law in December 2001. Without getting into detail, the DQA is designed to impose procedural requirements that ensure and maximize the quality, objectivity, utility, and integrity of information disseminated by federal agencies. Critics of EPA’s draft TCE risk assessment have based some of their legal arguments on this statute.

These legal tools are not perfect. The best way to improve them is through the advocacy of all interested parties – regulators, responsible parties and members of the public – working together. And I do encourage us all to work together on this. None of us is benefited by either the chicken-little outcome or the analysis-paralysis outcome. We all have a stake in improving the process.

These materials are provided for information purposes only and are not intended as and cannot be considered legal advice. Before taking action based upon this information, you should consult your legal counsel.

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