News Feature
Chemical firms wary over toxic substances law Industry's biggest concern is how Environmental Protection Agency will administer the law, but there are also fears of high compliance costs and of negative impact on innovative products Chris Murray C&EN, Washington Now that Congress has given birth to the Toxic Substances Control Act, after gestating for more than five years, chemical companies both large and small find themselves in varying states of readiness to comply with the law's requirements. Some, in fact, claim to be vexed about just what they will have to do to satisfy the legislation's provisions. The biggest question now in the minds of many industry executives is how the Environmental Protection Agency will administer the law. In interviews with chemical industry executives, C&EN has found a wide range of opinion about what the new law will mean in terms of cost to companies, adverse effects on new product development and innovation, and the way chemical makers go about the business of their business. Not that anyone was caught flat-footed when President Ford signed the measure into law last Oct. 12. A toxic substances control measure has been kicked around
Union Carbide's Don Nachreiner studies safety of workroom atmospheres via inhalation experiment with rats
the halls of Congress for half a decade in one form or another, and the final legislation contains concessions by both industry and government on specifics. Industry, which really never wanted the law in the first place, despite public professions to the contrary, labored mightily in the vineyards of the nation's capital to blunt some of the more odious (to industry) provisions of earlier attempts at toxic chemical controls. Says Du Pont senior vice president Richard E. Heckert, head of the Manufacturing Chemists Association's lobbying efforts for the toxic substances legislation, "Nobody's bragging about this law. It's complicated. It's onerous in some respects. But it's the best the system could produce, at least the best we were able to help it produce." This law that the chemical industry clearly isn't bragging about is indeed a complex piece of legislation. But in several important respects it is unlike other environmental measures passed in this decade, such as the Clean Air Act and the Water Pollution Control Act, which originally put environmental issues ahead of some economic realities. Significantly, EPA, the federal agency charged with enforcing the law, is limited to taking action only against those chemicals that present "unreasonable risks." The act was not designed to screen all chemicals that are articles of commerce. "In other words," says Ectyl H. Blair, Dow Chemical's director of health and environmental research, "Congress intends that EPA will not be the guardian of absolute safety." Adds Heckert, "The bill has a great deal of protection built into it for industry—lots of due process— the agency [EPA] is directed to balance benefit and risk." That's true, but others in the industry can't help but worry which way the scales might tip when EPA finally works up regulations to implement the act. Much of industry's concern, or in some cases its misgivings, about the act centers on just what EPA will consider "hazardous." Will, for example, too stringent safety standards be put into play for chemical products? At the same time, what kind of tests will chemical makers have to conduct to demonstrate the safety of their products?
Heckert: nobody's bragging about law
Says Union Carbide's director of environmental affairs, Jackson B. Browning, "Until we can agree on test results and what it is that is necessary to trigger the regulatory procedures to ban or keep chemicals off the market, we're in for quite a tough time." Some firms, in fact, are even less certain about what the toxic substances law will mean to their business. A Rohm & Haas spokesman concedes, "We don't know what we will have to do to comply, because we don't know what we will have to comply with." Just what is it about the toxic substances act that is causing such hand wringing in some parts of the chemical industry? Many sections of the law, on their face, appear to be fairly straightforward: • By December 1977 chemical makers will have to give EPA 90 days' notice before marketing a new chemical. (This also will include "significant new uses" for existing chemicals.) Firms will have to disclose the product's chemical name, its structure or composition, proposed uses, an estimate of the amount to be produced, and by-products formed during manufacturing operations. In addition, chemical makers will have to supply any data on the health or environmental effects of the product. Jan. 3, 1977 C&EN
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Dominguez: protect trade secrets • EPA will draw up an inventory of existing chemicals. This list could exceed 30,000 separate chemicals. Although these products will be exempt from premarket notification requirements, they will not be "grandfathered." Their safety can later be challenged by EPA. • An intergovernmental agency group annually will draw up a list of no more than 50 potentially hazardous chemicals from the existing inventory for toxicological testing. • Chemicals produced in small quantities solely for R&D use will be exempt from premarket notification. Chemicals used in test marketing likewise will be exempt. • Chemicals that have no chance of human or environmental exposure, such as intermediates used in situ, also will be exempt from premarket notification. • Mixtures of chemicals that are individually pronounced safe will be considered safe as long as no new compounds are formed by mixing operations. • Pesticides, drugs, cosmetics, food additives, and nuclear materials are exempt from the law since they are covered by other regulations. • The act allows petitions and suits from citizens and public interest groups challenging EPA decisions. If EPA, based on the manufacturer's premarket data, believes the new chemical to be hazardous, the agency within 45 days must give the maker notice of its intention to prohibit the chemical. The chemical maker then can submit an argument against the ban, at which point the agency will have to seek an injunction in federal court to prevent the sale of the chemical until the manufacturer can prove the chemical safe. In a similar fashion, EPA can seek a court injunction restricting or banning the manufacture and sale of existing chemicals if the agency believes that it is "imminently hazardous." Although there appear to be a lot of 16
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exemptions in the act, there are also a lot of potential pitfalls that some industry leaders fret over. Many chemical makers privately anguish over what the agency's definition of "unreasonable risk" will be. Du Pont's Heckert sounds a note of caution, "If EPA takes the position that the burden of proof is squarely on industry's shoulders to absolutely establish that there is no risk associated with new products, we won't have any new products." He adds, "Zero risk is a phony concept." Just where EPA will draw the line on what is hazardous and what is not remains to be seen, and, of course, it will vary greatly from product to product, generally with the degree of human exposure that can be expected. Yet risk avoidance, even minimal risk avoidance, tends to be characteristic of federal regulatory agencies. Pharmaceutical industry executives who deal with the Food & Drug Administration will privately testify to this. Although few chemical industry executives believe that the industry eventually will find itself in anywhere near the position that the pharmaceutical houses are in now, some can see analogies. Says Dow's manager of special chemicals, Marvin E. Winquist, "I think there's a parallel threat in the chemical industry." Definitions are not the only concern the chemical industry has with the act. Chemical makers worry over the confidentiality of certain data they will have to supply to EPA in premarket notifications. Clearly, information about a chemical's health and environmental effects should, and will, be available for public scrutiny.
Chemical industry leaders readily concede this. But data about chemical identity, intended uses, and production estimates—normally zealously guarded as trade secrets or "market intelligence"—is another matter. Some industry people fear that such information may seep into the public domain and thus become available to their competitors both in the U.S. and abroad. One chemical industry insider, who prefers to remain anonymous, only half-jokingly says that, "the best way to make your proprietary information public is to send it to Washington." Even though that statement may be greatly exaggerated, industry concern is apparent nonetheless. Dow's Winquist, for example, probably expresses the concern of other companies like Dow that do a large amount of business overseas. "Foreign companies," he says, "could get the data and develop the product and beat us in the world market." Heckert tends to minimize this problem. "The only thing that might be disclosed," he believes, "would be a company's belief that a new product was really going to be a winner, and it was going to be produced in very large volume. They could signal a competitor that they were a serious commercial threat. But that's very hard to evaluate." Heckert points out that because of modern analytical technology the composition of very few products can remain secret from competitors for long. Others in industry, however, aren't quite as sure as Heckert about a competitor's ability to analytically "crack" the identity of a proprietary compound. One
History of Toxic Substances Control Act Toxic substances control legislation, in the words of President Ford when he signed it into law last October, is one of the most important pieces of environmental legislation that has ever been enacted by Congress. Its importance perhaps can be demonstrated by the intensity with which the Environmental Protection Agency is approaching its implementation, an intensity that surpasses the agency's handling of any other laws under its purview. A toxic substances control bill was first introduced in 1971 during the Nixon Administration. At the time the White House Council on Environmental Quality concluded that controls were necessary to ensure the safety of chemicals entering the market. In subsequent years, bills were introduced in various forms and were passed separately in the House and Senate in 1972 and 1973. The two chambers of Congress were unwilling to reach compromise each time, largely because they could not agree on the extent of testing and screening that chemicals should get before they are marketed. Historically, the Senate versions were the more stringent and thus were favored by environmentalists, and labor and public
interest groups. Milder House versions generally were favored by industry. This year, the Senate and House passed their respective versions of toxic substances control legislation, and compromise was speedily reached in the last days of the 94th Congress. The bill that came out of the conference committee is considered stringent by industry but "workable," and it had the support of environmentalists and labor and public interest groups. A lot of momentum for the general endorsement probably was gained by six years of anticipation as well as incidents involving polychlorinated biphenyls (PCB's) and, more recently, Kepone. Ironically, though, these incidents probably would have been avoided by tighter enforcement of existing laws. Says Du Pont senior vice president Richard E. Heckert, "A number of the serious situations that were cited as reason for having a toxic substances bill aren't even covered by the bill. A lot of the pesticides, the things that got in trouble, the Kepones and the like, they really shouldn't be regulated by this legislation, they ought to be regulated by the pesticide laws—they already exist."
that the public has the right to know such things as chemical structure, proposed uses, and how much will be produced in order to determine the risks involved. "The line has to be drawn between the public and the private interests," she warns. Warren predicts that the confidentiality question will have to be settled in the courts. EPA apparently isn't sure either how to handle industry requests for confidentiality, judging from comments by agency officials at public hearings last month in Washington, D.C. Deputy administrator John Quarles asks, "How can someone at EPA judge the risk to the public if he or she doesn't know what the uses are going to be?" So while the question of trade secrets is wrestled with in Washington, industry leaders are facing up to some other, perhaps more fundamental questions about the new law's effect on their business. Two key areas stand out: costs, both in time and money for compliance, and the act's impact on innovation, the industry's Hoerger: far-reaching impact bread and butter. A good deal of chemical industry spending for compliance will be organism is exposed to a relatively large for toxicology studies. amount over a short period of time (the Walk-in inhalation chambers at Dow's Toxicology, loosely defined, is the acute toxicity) and when an organism is toxicology lab house enough test animals science of finding out what effect an exposed to a relatively small amount over to allow statistical comparisons of ex- agent, usually chemical, has on a living a long period of time (the chronic toxiciposed and control animals organism. Normally toxicology involves ty). finding the maximum amount of a The "organisms" usually employed in industry spokesman believes that only a chemical that will not produce adverse toxicology studies are animals such as handful of companies—the very largest changes in the organism—or the corollary, mice, rats, rabbits, dogs, and sometimes —in the U.S. have the sophisticated how little will produce a change. Toxi- monkeys. Human volunteers are sometechnical resources to characterize a cology studies seek to find out what hap- times used for skin irritation and sensiticommercial product of unknown compo- pens when a chemical is ingested, when it zation studies, but only when there is no sition, and even then with varying degrees is inhaled, when it is spilled on the skin, chance of harming the subject. of precision. This would put smaller firms and when it gets in the eye. They also atToxicology is also an expensive busiwithout elaborate analytical labs at a tempt to find out what happens when an ness, despite the advent of some relatively competitive disadvantage. On confidentiality, George S. Dominquez, Ciba-Geigy's director of government relations and chairman of MCA's chemical regulation advisory committee, remarks that although the public has the right to know some of the information that chemical companies submit to EPA, genuine trade secrets must be protected from abuse by potential competitors. Says Dominquez rhetorically, "You're now giving them the whole package. You're not only giving them the chemical identity, but you're giving them all the market research information. You're not only telling them what to make, but what market you should sell it to. You're even giving them an estimate of what that market is because you have to give estimated production volumes. . . . What's left?" The public's right to know more often than not means the right of environmental and public interest groups to have access to chemical industry data in the premarket notices. Dominquez believes that if properly administered, the Toxic Substances Control Act provides adequate protection of industry trade secrets. Environmental groups, on the other hand, likely will seek all the industry data they can in order to make their petitions to EPA meaningful. Jacqueline Warren of the Environmental Defense Fund says Do w researchers use monkey and rats in toxicology experiments Jan. 3, 1977C&EN 17
Browning: no free lunch
quick and promising new methods. One of the simplest toxicity tests, the acute oral LDfjo, costs about $1000 per compound, depending on the degree of precision sought. This test measures the amount of a chemical that when fed to animals, usually mice or rats, will kill half of them. It is used as a rough indicator of the tox icity that might be encountered if the compound were accidently ingested but tells little else about the chemical's physiological effects. It is often the first toxicity test on a new compound.
Chemical industry toxicology institute already operating In an effort to mitigate expenses and head off duplication of work around the industry, a group of about 20 companies, including the very largest, last year set up the Chemical Industry Institute of Toxicology (CUT). An independent sci entific research lab supported by member firms, CUT plans to build a $10 million laboratory of its own in Research Triangle Park, N.C. Meanwhile, it has temporarily set up shop in Raleigh, N.C, under the direction of CIIT's first presi dent, Leon Goldberg. The institute will not test proprietary chemicals of interest to only a few companies, but rather big commodity chemicals important to the chemical industry generally. So far CUT has singled out 11 chemicals for toxi cology testing, including aniline, chlo rine, dinitrotoluene, ethylene, ethylene oxide, formaldehyde, π-hexane, maleic anhydride, methylene dichloride, phenol, and toluene. Contracted by CUT, Indus trial Bio-test Laboratories has just completed 90-day inhalation studies on ethylene and toluene and will start twoyear inhalation studies shortly. Some other chemicals on the list are being tested separately by Union Carbide and Dow.
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C&ENJan. 3, 1977
But as toxicity testing becomes more elaborate, the cost of testing increases almost geometrically. For example, the next step in toxicity testing after acute toxicity might be a prolonged subacute study of, say, 30 to 90 days. In these studies, toxicologists choose a dose of a chemical low enough not to kill the ani mals, yet higher than would be used in a chronic toxicity test. An oral ingestion study costs up to $50,000. A 90-day sub acute inhalation study in rats or mice costs more than $50,000. Long-term tests, by comparison, are the really big ticket items in toxicity testing. A two-year chronic inhalation study in rats can cost upward of $250,000, de pending on the degree of precision and the amount of pathological study desired. Similarly, a two-year dietary study of a chemical in rats usually costs more than $100,000. On the other hand, some simple in vitro tests have been developed in recent years that may help chemical firms avoid some high-cost, long-term studies. One such test is the so-called Ames test. Developed by Dr. Bruce N. Ames of the University of California, Berkeley, the test uses a mu tant strain of Salmonella bacteria to de tect chemical mutagens, and to a certain extent carcinogens. Although the test is reasonably inexpensive (about $1000 per compound), many toxicologists are re luctant to accept results of the test as the last word, since the test produces false positive as well as false negative results. The test also gives only a yes or no answer about a compound, and thus far can't clearly predict dose response relation ships. Dow toxicologist V. K. Rowe cau tions against too much reliance on in vitro tests: "Many commercial materials were once just laboratory curiosities—the Ames test might have killed them." Nev ertheless, Du Pont now uses the Ames test, along with some other mammalian cell in vitro tests in its toxicity testing. Dow also uses the test, but to a lesser ex tent. Together, the toxicity tests listed as "may be required" by the Toxic Sub stances Control Act could cost a chemical maker a total of about $500,000 per product, according to an estimate made by Dow during legislative hearings in 1975. This estimate is supported by others in the industry, although it is unlikely that the whole battery of tests would be re quired often by EPA. Yet even this figure may be artificially low because it doesn't include the ancillary costs of paperwork, personnel, overhead, and other items that firms will have to reach into their corpo rate pockets for. For the entire chemical industry, an nual spending estimates vary from a low of about $80 million (by EPA) to a high of $2 billion (by Dow) for compliance with the act. Another estimate, by consulting firm Foster D. Snell Inc. for the Manu facturing Chemists Association, puts the annual tab for the chemical industry at more than $1.3 billion. Meanwhile, individual chemical com panies have been building up their toxi
cology research efforts, partly in antici pation of the act, and partly because of a clear perception of public concern. Du Pont recently expanded its toxicology facilities in Newark, Del, 70% and the lab—started in 1935—now houses about 150 professional and clerical employees. Dow, which hired its first toxicologist in 1934, last year completed a 50% expansion of its toxicology labs in Midland, Mich., that cost $3.9 million. Dow now employs more than 50 professionals in toxicology research. Union Carbide has no toxicology labs of its own, but since 1937 the firm has had its toxicology testing conducted at Mellon Institute in Pittsburgh. Monsanto, meanwhile, is just building its own $12 million lab in St. Louis. Previously, the firm contracted out its animal testing to independent labs. Company spending for toxicology re search has been stepped up, too. Dow, probably the industry leader, annually spends about 15% of its R&D budget on toxicity testing of its products. And, says Dow's Winquist, "I expect that as the [testing] protocols get advanced, it will probably be even more." Du Pont's toxi cology lab has an annual budget of about $6 million. Many other firms are reluctant to say how much they spend on toxicology research, although it appears that they, too, have increased spending apprecia bly. Probably only a part of heightened in dustry spending on toxicity testing is the direct result of the new law. Environ mental legislation that preceded the act is partly responsible, along with steadily mounting evidence from the medical profession that chemicals previously thought to be safe are, in fact, not safe. Du Pont's Heckert observes that "the Toxic Substances Control Act is going to get a lot of credit for creating expense that it did not. Industry has been reacting more and more strongly to signals that devel oped in the medical world that certain materials, even when exposures were low
Molecular biologist at Du Pont's Haskell Laboratory prepares pour tubes for use in Ames test for mutagenicity
over a long period of time, could produce some very serious effects in man." Further, he says, "I don't necessarily conclude that EPA and this act will significantly add to our load. I think our load will go up because we're learning more all the time." Yet uncertainty remains. Carbide's Browning points out, "We have information on all the products that we make, but whether it will be adequate to meet the standards and requirements that will eventually emerge from EPA—we'll have to see." Clearly, large chemical makers have a head start in toxicity testing of their products, and they also benefit from economies of scale. Small chemical firms, on the other hand, have protested that the act will put intolerable burdens on them, and it may force some out of business. One relatively small firm (annual sales of about $100 million) believes that it will be forced to spend about $200,000 for toxicology on each new product it decides to market. Most of this testing will be done by independent laboratories. A company spokesman confides that now the firm will have to "think four times, instead of just twice" before deciding to go ahead with a new product because of the new "risks" imposed by the act. Large companies are equally concerned about the law's chilling effects on new product R&D. Browning probably captures the thinking of a large segment of the chemical industry. "We have declared no moratorium [on R&D]," he says, "but my speculation is that over a period of time the total impact for the country would be to have fewer new products." He believes that chemical makers will face a fundamental choice: "You have several research projects in front of you and you can't buy them all. One is for a new product, and new product research has certain risks in it. You might say, 'all right, I'll do that and when I get through I'll have a product.' But even though you believe the product to be safe you have to
go the further step to prove that. That's an add-on. That kind of research is more expensive than the other project which says 'let's try to make the plant more efficient . . . . When we get the work all done we won't have to worry about the toxic substances act.' . . . A lot of people are going to make the decision along the lines of process improvement to sell the same product." Dow's Winquist believes that "stifling research and innovation will probably be most apparent in minor products, [because] you now have to set a higher ante." He speculates that "you may reduce the number of seeds that you nurture along to the full plant." Yet this may not be all that bad for the industry, since, he points out, "we'll be taking better-quality seeds and planting them." In other words, chemical makers are going to have to be a good deal more certain of a new product's commercial potential before making testing decisions. Heckert observes, "As you go down the scale in size and importance of a product, at some point you run out of enthusiasm for a half-million-dollar test program." Caution on the part of industry could produce a certain amount of technology transfer abroad, Ciba-Geigy's Dominquez speculates. Chemical makers, he says, may decide to do some of their new product R&D in, say, Europe, to find out if a product will be a commercial success, or at least successful enough to justify a potentially costly bout with the Toxic Substances Control Act in the U.S. This type of thing has happened before, particularly in the pharmaceutical industry. Concern about toxicity also may cause some firms to deliberately avoid certain classes or families of compounds—for example, highly chlorinated alkyl or aromatic compounds—in their R&D work. Although this is sort of guilt by association, many firms doubtless would be unwilling to sink millions of dollars into a
Dow toxicologist P. G. Watanabe investigates metabolism of vinyl chloride in rats by mixing small amounts of gas in rats' breathing air
product fraught with potential toxicity or carcinogenicity. This same industry concern is apparent about whether EPA will treat chemicals as individuals or as classes in administering the act. Although there is much uncertainty about the law, some firms—the independent toxicology testing laboratories—are certain to benefit from the new business it will generate. One such lab, and one of the largest, is Industrial Bio-test Laboratories in Northbrook, 111. Company president Joseph Calandra says, "I think in the long run it will be g o o d . . . . I'm not anticipating a big rush for a year or so. But what we are seeing is that we're getting asked by companies—medium size and large companies—if they can get in line. For the most part these are companies we've had dealings with [in the past]. We've been having the types of inquiries [such as], 'well, okay, when the big impact comes along are you going to be able to take care of us?' " Calandra apparently believes that Bio-test will be ready. "We've expanded tremendously in the past two or three years. We sort of anticipated the Toxic Substances Control Act needs about a year and a half ago . . . . We got involved in areas where other people were not spending money. We developed long-term inhalation capabilities, as well as mediumand short-term inhalation studies—that's where our growth has been." Du Pont and Dow also have been putting money into facilities for long-term inhalation toxicity studies, since they simulate industrial exposure to chemicals to a large extent. Dow, for example, has 24 large inhalation chambers that can house groups of rats for their lifetimes. Bio-test also has some 15,000 sq ft of additional space for toxicology testing. "All we have to do is move in the cages and animals and we're all set to go," Calandra notes. To keep up with increased business, Bio-test will expand its current staff of 325 by about 20% over the next year, but this won't be easy, he says. "Our biggest problem is getting people. [Toxicologists] are hard to come by. But there's an even greater shortage of veterinary pathologists . . . . I think the total world pool of board-certified veterinary pathologists numbers only around 300." Industrial toxicologists are now in big demand. In the words of one industry insider, "They can just about write their own ticket." Calandra believes there may now be a shift in Bio-test's business. "Historically, our business has come from big companies," he says. "I think what is likely to happen now is that smaller companies will have to jump in the water. They're going to have to do certain things that they were not doing because big-brother companies were handling it for them." Even if it wanted to, EPA probably would be unable to come down hard on the industry because it simply doesn't have funds. EPA's budget for enforcing the act is about $39 million spread over the next three fiscal years—roughly the same amount of money it annually spends Jan. 3, 1977C&EN
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C&ENJan. 3, 1977
to implement the pesticide act alone. And the agency currently has only about 50 people in the toxic substances office it set up three years ago in expectation of a law from Congress. But according to Glenn Schweitzer, director of the program, "several hundred additional" staff will be hired in fiscal 1977 and 1978 to cope with the new load. Who will pay for the costs generated by the Toxic Substances Control Act? In a large sense everyone—taxpayers, consumers, anyone who uses a product that is directly or indirectly made by the chemical industry. Consumers will pay it in higher prices for the things they buy. Predicts Heckert, "Industry doesn't absorb this. You pay it one way or the other. You pay it either in higher prices, or pay it in less industry and fewer jobs. You can't duck it. The idea that if it comes out of profit it does no damage is nonsense. In the first place, it won't come out of profit. To the extent that it can be passed through, it will be. Where it can't, it simply means that business will have less muscle to grow and serve, and society will pay the price." Adds Carbide's Browning, "There's no such thing as a free lunch— ultimately this shows up in the price of the product." Some persons in industry question whether benefits from the act will be worth the costs. Some even question whether the act is needed at all. Many of the chemical calamities that finally gave the act enough steam to clear Congress are not covered by the toxic substances law and probably could have been just as easily avoided by enforcement of existing safety and environmental legislation. The Kepone incident in Hopewell, Va., for example, was a problem falling under the Occupational Safety & Health Act and the water quality laws, not the toxic substances act, some industry people affirm. Dow, one of the original, if perhaps grudging, boosters of toxic substances legislation, now has second thoughts about the law. Fred Hoerger, Dow's manager of regulatory affairs, says, "Things have changed since 1971 when this thing was first proposed . . . . We began to really raise our eyebrows during 1974 and began seriously questioning another law. Additional laws were passed, or were being passed and we began to appreciate the far-reaching impact of the air law, the water law, and the OSHA act. It was just our feeling that as laws were more completely implemented, then there would be some sort of control on most of the hazards." Even Du Pont, which publicly, at least, has the fewest recriminations about the act, will admit a preference for less regulation. Says Heckert, "We would prefer no law, simply because it makes life easier, and we're the judge of what we shall and shall not do. Everybody likes to have that degree of freedom. But I don't think any of us would be so dishonest to say that the law may be no good. It's entirely possible that some things will be caught and acted on that wouldn't be otherwise." D
