Regulation and Innovation: Short-Term ... - ACS Publications

13 Regulation and Innovation: Short-Term Adjustments and Long-Term Impacts GLENN E. SCHWEITZER

Downloaded by UNIV LAVAL on July 11, 2016 | http://pubs.acs.org Publication Date: September 5, 1979 | doi: 10.1021/bk-1979-0109.ch013

Program on Science, Technology, and Society, Cornell University, Ithaca, NY 14853 During the past few years the chemical industry has responded to a wide range of environmental and health regulations without significant changes -- at least from a national perspective -- in the current a v a i l a b i l i t y and costs of products dependent on chemicals, in employment opportunities, or in the growth or configuration of the industry. Of course, there have been changing emphases in product lines in response to environmental concerns, a few products have been abandoned, and environmental control costs have been a factor in some plant closings. Nevertheless, from the public's viewpoint, the industry continues to operate at the forefront of technological opportunities in providing a wide variety of products for our ever advancing standard of l i v i n g . Indeed, the industry has exhibited a remarkable degree of technological resiliency in adjusting to the dramatic upsurge in regulatory requirements. Much of the success in significantly reducing effluents and emissions in response to air and water pollution limitations of the early 1970's is attributable, at least in part, to the earlier industrial neglect of technological opportunities for curtailing environmental discharges, both in operating old plants and in designing new ones. Similarly, when confronted with requirements several years ago to reduce worker exposure to carcinogens, the industry demonstrated technological ingenuity on many fronts -- in the rapid introduction of substitute chemicals, in new and modified engineering processes that bypass use of the troublesome chemicals, and in vastly improved engineering and r e lated approaches to containment of these chemicals. In short, the immediate economic impacts of regulatory requirements have frequently been overestimated by spokesmen for both industry and Government who have not fully anticipated the technical ingenuity of both management and engineering staffs when near-term p r o f i t a b i l i t y is at stake. However, from the perspective of both individual companies and of the industry, the immediate impacts of regulations can be almost t r i v i a l in comparison with the longer term impacts of these same regulations within an industry that operates on a global basis and on the forward edge of This chapter not subject to U.S. copyright. Published 1979 American Chemical Society

Hill; Federal Regulation and Chemical Innovation ACS Symposium Series; American Chemical Society: Washington, DC, 1979.

180

FEDERAL REGULATION

AND CHEMICAL INNOVATION

a c o n s t a n t l y changing technology. U n f o r t u n a t e l y , almost every r e g u l a t o r y impact assessment concentrates s o l e l y on the immediatel y apparent impacts on the " t i p of the i c e b e r g " while the impacts on the submerged aspects — and p a r t i c u l a r l y research a c t i v i t i e s — can have a major e f f e c t on the rate and d i r e c t i o n of i n d u s t r i a l production in the years ahead.


T e c h n o l o g i c a l P e n a l t i e s A s s o c i a t e d with Environmental and Workplace C o n t r o l s While responses to environmental and workplace standards f r e quently s t i m u l a t e c o n s i d e r a b l e i n n o v a t i v e a c t i v i t y among the environmental and chemical engineers, such a c t i v i t i e s are not w i t h out t h e i r t e c h n o l o g i c a l p e n a l t i e s . Compliance with r e g u l a t o r y requirements f r e q u e n t l y r e q u i r e s the d i v e r s i o n of f i n a n c i a l r e sources and t e c h n i c a l manpower from other a c t i v i t i e s , i n c l u d i n g innovative a c t i v i t i e s d i r e c t e d to product or process improvements. Examine, f o r example, the i n d u s t r i a l response to the i n d i c t ment of v i n y l c h l o r i d e as a s e r i o u s environmental and workplace hazard in 1974. Almost every company o p e r a t i n g v i n y l c h l o r i d e or p o l y v i n y l c h l o r i d e production f a c i l i t i e s d i v e r t e d many engineers to t i g h t e n the engineering c o n t r o l s r e q u i r e d to reduce v i n y l c h l o r i d e leakages. They succeeded in s i g n i f i c a n t l y reducing emissions in a very short time. At the same, time, however, many of these s e v e r a l hundred engineers had been d i v e r t e d to work on the v i n y l c h l o r i d e problem from other product and process improvement activities. Indeed, in some companies major development p r o j e c t s were postponed s i n c e the key personnel had been d i v e r t e d from these p r o j e c t s . A l s o , the equipment and r e l a t e d costs r e s u l t e d in d i v e r s i o n of f i n a n c i a l resources from other a c t i v i t i e s , i n c l u d i n g the support of research and development programs. In s h o r t , impending r e g u l a t o r y d e c i s i o n s on v i n y l c h l o r i d e r e s u l t e d in the r a p i d upgrading of chemical engineering approaches in a number of p l a n t s , but at the same time t e c h n o l o g i c a l progress in other areas was delayed. There are a few, but not many, examples of engineering innovations introduced in response to r e g u l a t o r y requirements r e s u l t ing in o v e r a l l cost savings as the r e s u l t of recovery of m a t e r i a l s or other newly introduced e f f i c i e n c i e s . More g e n e r a l l y , a small p o r t i o n of the c o n t r o l c o s t s will be recovered — perhaps ten to twenty percent — as the r e s u l t of improved plant performance. In r e t r o f i t t i n g o l d p l a n t s the percentage of costs that is recove r a b l e is l i k e l y to be lower; in designing new p l a n t s , it may be somewhat h i g h e r . The costs of compliance with p o l l u t i o n abatement r e g u l a t i o n s have been documented in many company, i n d u s t r y , and Government s t u d i e s . These costs o b v i o u s l y impact on company growth, i n v e s t ment d e c i s i o n s , and a l l o c a t i o n of resources among competing company p r i o r i t i e s . Such increased costs of company a c t i v i t i e s impact on t e c h n o l o g i c a l i n n o v a t i o n in s e v e r a l ways. Upgrading of production processes may be postponed. Investments in f a c i l i t i e s


13.

SCHWEITZER

Regulation

and

Innovation

181


or equipment needed f o r i n t r o d u c i n g new products or processes may be d e f e r r e d . F i n a l l y , research and development budgets may be reduced or perhaps not increased as would otherwise have been the case. A l e s s obvious i n t e r a c t i o n between regulatory compliance and innovation r e l a t e s to the r o l e of management in the innovation process and the i n c r e a s i n g amount of management time devoted to workplace and environmental requirements with l e s s time a v a i l a b l e f o r c o n s i d e r i n g new d i s c o v e r i e s and concepts. The i n n o v a t i o n process r e q u i r e s a number of r i s k - l a d e n d e c i s i o n s . Thus, c a r e f u l management a t t e n t i o n to the d e t a i l s of such d e c i s i o n s can o f t e n be c r i t i c a l to the s u c c e s s f u l development and commercial i n t r o d u c t i o n of new approaches. What Is T e c h n o l o g i c a l

Innovation?

Most i n d u s t r i a l i s t s consider innovation to be synonymous with development o f a new or improved product or process that y i e l d s a profit. Under t h i s d e f i n i t i o n , a chemical company would not cons i d e r the f o l l o w i n g a c t i v i t i e s as i n n o v a t i o n : use by the company for the first time of o f f - t h e - s h e l f technology; a company d i s c o v ery which is s u c c e s s f u l l y commercialized by a competitor; development and use of new engineering technologies to s a t i s f y p o l l u t i o n c o n t r o l requirements. These i n d u s t r i a l i s t s emphasize the many steps i n v o l v e d in the innovation process in going from discovery to p r o f i t , and they consider r e g u l a t o r y requirements as hurdles — and perhaps necessary hurdles — along the path to s u c c e s s f u l innovation. At the other extreme, p u b l i c i n t e r e s t groups could argue that any discovery that b e n e f i t s s o c i e t y in any way should be c o n s i d ered as i n n o v a t i o n . Thus, a r o u t i n e t o x i c o l o g i c a l t e s t that develops new information about a compound would be innovation. I d e n t i f i c a t i o n of i m p u r i t i e s a s s o c i a t e d with a compound would be innovation. E p i d e m i o l o g i c a l s t u d i e s would be innovations. Section 2 of the Toxic Substances C o n t r o l Act s t a t e s that regulatory a u t h o r i t y "should be e x e r c i s e d in a manner as not to impede unduly or create unnecessary economic b a r r i e r s to techn o l o g i c a l innovation . . . " The l e g i s l a t i v e h i s t o r y suggests a d e f i n i t i o n c l o s e to the d e f i n i t i o n of the i n d u s t r i a l i s t s . However, innovation needs to be examined more broadly than from the pers p e c t i v e of a s i n g l e company or the success or f a i l u r e of a s i n g l e p r o j e c t . Thus, if environmental engineers introduce new techniques to reduce the cost or improve the e f f e c t i v e n e s s o f p o l l u t i o n c o n t r o l , such techniques should probably be considered as t e c h n o l o g i c a l innovation. S i m i l a r l y , if t o x i c o l o g i s t s develop cheaper, f a s t e r , o r b e t t e r b i o l o g i c a l screening t e s t s , such d e v e l opments should be considered as i n n o v a t i o n . On the other hand, d e t a i l e d c h a r a c t e r i z a t i o n of the b i o l o g i c a l , p h y s i c a l , or chemical p r o p e r t i e s of compounds using standard methods should probably not be c l a s s i f i e d as i n n o v a t i o n .


182

FEDERAL REGULATION AND CHEMICAL INNOVATION

Research

and

The ies

a

two

rapid

few

causes

Development

for

a

ago

and

and

(b)

a

As

the

the

mix One

These

most

additional

are

being

also

pounds

that

realignment

of

additional tional more

R&D b u d g e t

environmental

often

the

new

regard

noticeable established on

company the

new

most

but

in

cals

that

are

Many

of

anticipated an

these

R&D c y c l e ,

the

cycle,

the

achievements Some in

fewer environ-

the

objectives and

and

R&D b u d g e t s

health

percent

exceeding for

of

of

substitutes

ten for

Sigpercent,

com-

agencies.

necessitated to

This

hiring

of

Sometimes

the

the

R&D b u d g e t ,

another

specialists.

been

the

compounds.

regulatory

has

is

activities.

addi-

R&D u n i t s ,

but

accommodated w i t h i n

an

of

is

broadening

of

new

placed

their

products. percent

reducing

more

R&D e f f o r t ,

occurring.

being

command l e s s

are

the

are

than

the

detailed

on

of ten

number

most

improving

uses, For

several

Perhaps with

less

example,

the

emone

R&D b u d g e t

percent. of

in

In

newly

in

another

synthesized

characterization

of

the

chemi-

changes

are

on

and

a

direct

A principal of

the

established

the

attendant

greater

the

R&D e f f o r t products

increase

likelihood

competitors,

response

or

new

to

existing

concern which

that

being

is in

is

the

or

resulting

devoted

to

lengthening

risk.

The

market

of

longer

factors,

regulations

will

inhibit

commercialization. companies their

that

they

character

will

hydrocarbons). interesting

have

be

plagued

of

their

by

since the

avoid

they

certain

because

regulatory

molecular

Another

bring

to

simply

One company h a s

compounds

which

decided

investigations

chemicals.

chemicals

in

percentage

of

eral

pected

have

remainder

regulations.

the

pounds

level,

with

significantly,

within

available

c o m m a n d e d 25

of

research

successful

realistic

are

the

synthesized.

increasing

defensive

the

years

R&D d u r i n g

companies,

effects

of

health

made

emphasis

now

favor

of

recent

concerns,

ten

search

orientation and

companies

chemicals

in

the

development

1

some

compan-

l i s t

limitation.

in

ventures

in

changing

health

targets

and

in

more

larger

the

industry

changes

priorities

been

greater

mid-1960 s

area,

to

products

the

the

positions

changes

significantly, phasis

have

R&D p e r s o n n e l

With

to

the

of

changing.

sometimes

the

Companies

R&D g r o w t h .

are

exceed

the

funds,

become

positions

overall

of

directed

have

a

environmental

typically

nificant

In

slowed

discernible

evaluations

to

chemical

regulatory

also

for

top

overinvestment

the

of

the

R&D e x p e n d i t u r e s

also

is

expenditures

for

At

R&D a c t i v i t i e s

expenditures

largely

of

Chemical

characterized

retrenchment

result

of

the

of (a)

have

researchers

of

of

Large

diversification.

direct

orientation

growth

off

maturity costs

and

of

R&D t h a t

factors:

for

control

in

subsided.

subsequent

growing

opportunities mental

in

has

levelling

interrelated

I960's


growth

years

Trends

chemicals

is in

com-

possibility

problems

due

to

abandoned

company

of

the

structures have

classes

of

(e.g.

about

appeared

100 on

backing off close

the

gen-

chlorinated commercially

lists on

proximity

of

all

sus-

uses to


food

of

13.

SCHWEITZER

supplies

or

redirect

its

cals

that

areas

to

The

now

of

as

new

in

response

limited

to

one

chemicals t i a l

to

to

new

high

the

the

small

chemicals

new

In

short,

aspects

that

are

decline

of

a

is

decided

uses

of

to

chemi-

while

ex-

characterized

by

of

some

chemistry,

very

as

high

rather of

continue

starting

a

new

investing volume

to

sources

materials

by

term small

within

of

small be

in

frequently

trend

number

than

long

produced

markets,

has

noticeable

volume,

are

clearly

limited

numbers

companies

for

small

commercialized

particularly

which

now

markets

being

is

intended

needs

larger

used

all

has

to was

1

of

There

volume in

I960 s

chemicals

emphasize

R&D r e s o u r c e s

Meanwhile,

This

customer.

with

batch-lot

to

usage.

and

molecules

chemicals

contrasted

companies

s

1

company

limits.

years.

batches large

1950

off

new

recent

another

exclusively

understanding

largely

considering

S t i l l

commercial

the

183

Innovation

almost

in

in

expand

in

markets


already

number

declined when

R&D e f f o r t s

research

are

and

drinking water.

are

ploratory attempts

Regulation

substan-

chemicals. of

the

many

large

com-

panies . The from

sequence,

synthesis

Preliminary more

the

R&D c y c l e

than

more

many

lifetimes

as

length

the

of

In

the

of

for

lot

production cycle

for

the

issues

an

addressed

ment

is

Most tive

in

become

concern

are

develop

directors

are

as

Indeed,

a

had

delayed In-

potential overall

tests) other

can

of

be

cases

of

newly

the

time

conducted

such

simply

as

in

batch-

extend

the

program. the

R&D p r o c e s s

checkpoints the

R&D l e a d

aspects

portion

are

corporate potential

to

an

usually

unpre-

built

environmental problems

to

the

necessity

permits

for

pilot

the

to

to

the

charged are

new

are

to

that

into staff

must

be

clearly the

Federal

or

to

cases

devote of

This

process

requireas

b e c o m i n g more They

regulatory

acceptability

obtain

well

as

R&D b u d g e t s .

chemicals.

with

inclined

there

to

plants.

commercialization

often

hassles

usually

in de-

effects.

the

some

requirements

test

case,

directors

in

often

cases, (e.g.

formalized

relates

approaches

questions products.

test

the

often

their

and

is

earlier

project.

delaying

which

have

In

identifying

1 1

control

embroiled

such

toxicity

new

of

one

R&D

research

their

effects,

assessments

have

In

each

further costs

In

chronic

are

in

test)

Meanwhile,

health

earlier

changing.

extended.

chemicals

Environmental

R&D " p e r m i t

pollution

raising

new

testing

steps

are

much

ago.

possible

abandoned

years.

length

cycle. in

of

R&D a c t i v i t i e s .

companies

Another state

are

activities, the

degree.

entire

market

suspected

other

R&D

years

and

many

Ames

several

being

long-term

(e.g.

case

is

ten

the

undertaken

of

major

in

molecules

activity

result

to

new

usually

evaluations

environmental

with

Large

the

involved of

R&D c y c l e

past,

required

costs

is

feasibility,

the

parallel

cedented

was

and

molecules

seven

instituted

and

biological

now

detailed

evitably,

times

for

commonplace

efficacy,

pending

timing,

commercialization

testing

far

tailed

to

of

large

conserva-

not

eager

agencies.

new

their

are

chemicals,

efforts

companies

to

to

Should these other

abandoning


a

184

FEDERAL REGULATION AND CHEMICAL

INNOVATION


complete l i n e o f products (e.g. dyes), with r e g u l a t o r y concerns being a major f a c t o r in the business d e c i s i o n s . Perhaps of even greater concern is the dampening e f f e c t of r e g u l a t i o n s on the enthusiasm and i n q u i s i t i v e n e s s of the R&D s c i e n t i s t s . While s y n t h e s i s of a new chemical is r e l a t i v e l y easy, t r a n s l a t i n g a new molecule i n t o a commercial success is not easy. One c r i t i c a l element in success s t o r i e s is an i n d i v i d u a l researcher who is w i l l i n g to devote h i s energies and r e p u t a t i o n f o r a number of years to h e l p i n g overcome a v a r i e t y o f t e c h n i c a l and b u s i ness d i f f i c u l t i e s on the path to commercialization. As the regul a t o r y d i f f i c u l t i e s i n c r e a s e , fewer researchers are w i l l i n g to devote t h e i r e f f o r t s to t h i s type of a c t i v i t y with i n c r e a s i n g odds of f a i l u r e . Changes in Corporate Approaches that A f f e c t T e c h n o l o g i c a l D e c i sions Environmental r e g u l a t i o n s now c o n s t i t u t e a r e g u l a r agenda item a t the meetings of most Boards of D i r e c t o r s of the l a r g e chemical companies. The impacts of environmental requirements permeate the e n t i r e corporate s t r u c t u r e . S t a f f s of h e a l t h and ecology s p e c i a l i s t s have expanded r a p i d l y , and medical departments have been enlarged. The competition f o r t o x i c o l o g i s t s in p a r t i c u l a r is r e s u l t i n g in unprecedented s a l a r i e s f o r these s p e c i a l i s t s . Concurrent with these i n t e r n a l company adjustments, some companies are g i v i n g greater a t t e n t i o n to the p u b l i c r e l a t i o n s aspects o f environmental consciousness, i n c l u d i n g the encouragement o f p u b l i c a t i o n of i n t e r n a l company s c i e n t i f i c f i n d i n g s , the r e l e a s e of data on environmental c o n t r o l expenditures, and the p u b l i c i z i n g of internal'company environmental p o l i c i e s . There are many examples o f how chemical companies are changing as the r e s u l t of r e g u l a t o r y requirements. Two developments that may become industry-wide trends are p a r t i c u l a r l y i n t e r e s t i n g . As the r e s u l t of r e g u l a t i o n s c a l l i n g f o r prompt r e p o r t i n g to EPA of any d i s c o v e r y w i t h i n a company that a chemical- manufactured or processed by that company may present a " s u b s t a n t i a l r i s k , " many companies have e s t a b l i s h e d extensive i n t e r n a l r e p o r t i n g systems to b r i n g such d i s c o v e r i e s to the immediate a t t e n t i o n o f top management. In the past, heavy r e l i a n c e was placed on the l o c a l doctors a t the p l a n t s i t e s and on the t o x i c o l o g i c a l s t a f f s to handle as a p p r o p r i a t e new information on chemical hazards. Now with the establishment of formal i n t e r n a l r e p o r t i n g systems, the s e n s i t i v i t y o f corporate s t a f f s a t all l e v e l s to environmental and h e a l t h concerns is at an all time h i g h . Many l a r g e companies are becoming i n c r e a s i n g l y s e l e c t i v e in purchasing chemicals from small s u p p l i e r s who do not f o l l o w sound environmental or worker p r o t e c t i o n c o n t r o l procedures. This a t t i tude is d i r e c t l y r e l a t e d to the problems a s s o c i a t e d with the production of kepone by L i f e Sciences, Inc., f o r use by a s i n g l e customer, A l l i e d Chemical Company. S i m i l a r l y , on a number of r e cent occasions l a r g e chemical companies have withheld s a l e s to


13.

SCHWEITZER

Regulation

and

Innovation

185

small customers who do not have the environmental wherewithal to handle the chemicals in a safe manner.


The Changing Regulatory

Framework Surrounding Technology Choices

About once a month, a new l e g i s l a t i v e a c t i o n , court d e c i s i o n , or r e g u l a t o r y proposal modifies the l e g a l framework surrounding r e g u l a t o r y proceedings. With each new Congress, there is an inc r e a s i n g d e s i r e to " l e g i s l a t e " r e g u l a t o r y a c t i o n s d i r e c t e d to spec i f i c products and problems and to i n c r e a s e the p r e c i s i o n of the c r i t e r i a to be used by the agencies in reaching c o n t r o v e r s i a l d e c i s i o n s . Many of the recent procedural requirements w r i t t e n i n t o r e g u l a t o r y l e g i s l a t i o n have been designed to strengthen the hand of the p u b l i c i n t e r e s t groups. Perhaps most importantly, more and more a t t e n t i o n is now d i r e c t e d by the r e g u l a t o r y agencies to procedural matters, o f t e n a t the expense of substantive i s s u e s . T e c h n i c a l personnel are i n c r e a s i n g l y i n s u l a t e d from the n e g o t i a t i o n and decision-making processes, as lawyers become more important. F i n a l l y , the complexity of the r e g u l a t o r y process i n e v i tably increases. The courts are becoming more h e a v i l y involved in t o x i c substance cases, thus f o r c i n g greater a t t e n t i o n in the administrat i v e proceedings to b u i l d i n g a r e c o r d . However, few judges are content simply to review procedural adequacies and the completeness o f the record and to insure that decision-making has not been a r b i t r a r y and c a p r i c i o u s . Rather, they are no longer h e s i s t a n t to s u b s t i t u t e t h e i r s o c i e t a l judgements f o r those of r e g u l a t o r y administrators in c o n t r o v e r s i a l d e c i s i o n s . Three recent a c t i o n s i n v o l v i n g the courts are p a r t i c u l a r l y relevant to current concerns over chemical c o n t r o l , namely: — the d i s c u s s i o n of the nature of s c i e n t i f i c evidence accompanying the d e c i s i o n of the Court of Appeals concerning the removal of lead from g a s o l i n e . — the d e n i a l of the l i a b i l i t y claims of Galaxy Chemical Company against a doctor who on the b a s i s of very slender evidence p u b l i c l y accused the company o f c o n t r i b u t i n g to an a l l e g e d i n c r e a s e of cancer r a t e s . — the current l e g a l s u i t s of a number of former employees of American Can Company, who are a l l e g i n g increased b r o n c h i a l problems a t t r i b u t e d to t h e i r employment with that company, against many of the chemical s u p p l i e r s of that company a f t e r the workers had exhausted worker compensation claims against t h e i r d i r e c t employer. With regard to the a d m i n i s t r a t i o n of r e g u l a t o r y programs, t o x i c substances l e g i s l a t i o n is r e s u l t i n g in a more i n t r o v e r t e d Government. The agencies now seem more concerned with i n t e r n a l c o o r d i n a t i o n and i n t e r n a l n e g o t i a t i o n s and l e s s s e n s i t i v e to developments in the p r i v a t e s e c t o r and to the need f o r and impact of r e g u l a t i o n s . As the r e g u l a t o r y agencies continue to grow, as t h e i r programs overlap to a greater degree, as t h e i r l e g i s l a -



186


t i v e l y mandated tasks i n c r e a s e , and as d e c i s i o n s become more complex, the l i m i t e d time a v a i l a b l e to top management is i n c r e a s i n g l y devoted to intra-agency and inter-agency n e g o t i a t i o n s and c o o r d i nation. Further, the continuously changing l e a d e r s h i p of the agencies is always low on a l e a r n i n g curve which is quite long in view of the complex character of the chemical i n d u s t r y . Not surp r i s i n g l y , these officials are more comfortable in i n t e r n a l d i s cussions than exposing t h e i r u n c e r t a i n t i e s to e x t e r n a l s c r u t i n y . F i n a l l y , concerns over p o t e n t i a l c o n f l i c t s of i n t e r e s t are a s i g n i f i c a n t deterrent to b r i n g i n g the t e c h n i c a l e x p e r t i s e of the chemical i n d u s t r y i n t o the decision-making stream, e i t h e r through personnel appointments to Governmental posts or through e f f e c t i v e Government-industry i n t e r a c t i o n s . As a r e s u l t of the inward l o o k i n g tendencies which are becoming more commonplace throughout the Government, p r i n c i p a l forums f o r meaningful i n t e r a c t i o n s between Government and i n t e r ested p a r t i e s , and p a r t i c u l a r l y the i n d u s t r i a l s e c t o r , are inc r e a s i n g l y l i m i t e d to h i g h l y s t r u c t u r e d p u b l i c meetings and adm i n i s t r a t i v e hearings. This development has s e v e r a l drawbacks. The l i k e l i h o o d of a d v e r s a r i a l confrontations over minor i s s u e s is g r e a t l y increased. Suspicion over Government motivations runs high. The r e c e p t i v i t y of Government to e x t e r n a l views is reduced since many compromises have already been made w i t h i n the agencies p r i o r to p u b l i c s c r u t i n y of r e g u l a t i o n s , and Government officials are not anxious f o r these compromises to become "unstuck". F i n a l l y , the range of a l t e r n a t i v e approaches that can be r e a l i s t i c a l l y cons i d e r e d is very narrow given the usual s t r i c t n e s s of the ground r u l e s surrounding such p u b l i c s e s s i o n s . Meanwhile, the r o l e of the s c i e n t i s t is changing. On the one hand, s c i e n t i s t s are being asked to provide p r e c i s e estimates of chemical r i s k s o f t e n based on very sketchy l a b o r a t o r y data. Then they are f r e q u e n t l y excluded from the d e l i b e r a t i o n s l e a d i n g to determinations as to whether the r i s k s are acceptable to s o c i e t y , only to be c a l l e d i n t o l e g a l proceedings l a t e r to help defend such value judgements. As the r e s u l t of pressures from the l e g a l prof e s s i o n to be as c l e a r as p o s s i b l e as to r i s k s , and p a r t i c u l a r l y with regard to p o s s i b l e carcinogenic e f f e c t s , many s c i e n t i s t s are now taking s i d e s in very c o n t r o v e r s i a l debates (e.g. carcinogen threshhold vs. no threshhold) even when they b e l i e v e that c l e a r cut p o s i t i o n s may be d i s t o r t i n g s c i e n t i f i c r e a l i t y . The i n s p e c t i o n s by Government to insure compliance with Good Laboratory P r a c t i c e s are r e s u l t i n g in an upgrading of shoddy pract i c e s in many l a b o r a t o r i e s . However, t h i s i n t r u s i o n i n t o the inner sanctum of the s c i e n t i f i c establishment is indeed a r e v o l u t i o n a r y challenge to the long h e l d concept of s c i e n t i f i c i n t e g r i t y . At the same time, the i n c r e a s i n g scope of l a b o r a t o r y t e s t s p r o s c r i b e d by Government — w h i l e s e t t i n g a minimum standard which must be achieved by all — will i n e v i t a b l y discourage some innovative e f f o r t s by companies to explore other approaches to t o x i c o l o g y which in the long run might have proven more e f f e c t i v e than the


13.

SCHWEITZER

Regulation

and

Innovation

187


accepted t e s t requirements. In t h i s regard, there probably is still time to b u i l d i n t o Governmental r e g u l a t i o n s f l e x i b i l i t y which recognizes that there may be b e t t e r and cheaper ways to conduct t e s t s and which rewards i n d u s t r y f o r devoting e f f o r t s in t h i s direction. Thus, r e g u l a t i o n is impacting on R&D in many ways. Increasing a t t e n t i o n is being devoted to very v i s i b l e changes in R&D a c t i v i t i e s in response to r e g u l a t o r y trends. However, there are a l s o more i n d i r e c t impacts that will be important in the years ahead. These i n d i r e c t impacts are already developing t h e i r r o o t s in the changing l e g a l and a d m i n i s t r a t i v e apparatus surrounding the r e g u l a t o r y process and in the changing a t t i t u d e s and approaches of the many p a r t i c i p a n t s in chemical a c t i v i t i e s . Modifying the L e g i s l a t i v e Base Fundamental to s i g n i f i c a n t improvements in the r e g u l a t o r y process is a reshaping of the l e g i s l a t i v e base which d r i v e s the r e g u l a t o r y a c t i v i t i e s of the executive agencies. At the top of the p r i o r i t y l i s t should be (a) a r e c a s t i n g of the o b j e c t i v e s of concern, and (b) the establishment of mechanisms which will help d e c i s i o n makers understand the impact — both p o s i t i v e and negat i v e — of r e g u l a t i o n s on s o c i e t y . S p e c i f i c a l l y , S e c t i o n 30 of the Toxic Substances C o n t r o l Act should be r e c a s t . This p r o v i s i o n r e q u i r e s an annual accounting to Congress of r e g u l a t o r y a c t i o n s taken by EPA but does not even r e f e r to the f a r more important i s s u e , namely, the impact of the law — e i t h e r d i r e c t l y as a r e s u l t of these a c t i o n s or in other ways — on h e a l t h and the environment and, at the same time, on other s o c i e t a l concerns. U n t i l the Congress recognizes that the number of r e g u l a t i o n s that are promulgated may have little relat i o n s h i p to the s t a t e of the environment, a preoccupation with the weight of the F e d e r a l R e g i s t e r will continue to take precedence over more meaningful h e a l t h and environmental concerns. C l o s e l y r e l a t e d to the need f o r a r e f o c u s i n g of l e g i s l a t i v e o b j e c t i v e s is the need f o r a l e g i s l a t i v e l y mandated Commission to evaluate the impact on s o c i e t y , i n c l u d i n g the chemical i n d u s t r y , of r e c e n t l y enacted l e g i s l a t i o n and to present recommendations f o r mid-course c o r r e c t i o n s in the l e g i s l a t i o n that will s u r e l y be in order in s e v e r a l years. Quite understandably the complexities of the chemical i n d u s t r y defy an easy and quick grasp by lawmakers of the impact of l e g i s l a t i o n on the t e c h n o l o g i c a l base that u n d e r l i e s 15 percent of U.S. i n d u s t r y and that a f f e c t s every consumer. A s e r i o u s e f f o r t to improve such understanding, d i r e c t l y i n v o l v i n g at l e a s t a few of the key Senators and Congressmen, seems essential. Given the stakes i n v o l v e d , both environmental and economic, such a study e f f o r t , even if only p a r t i a l l y s u c c e s s f u l , should serve s o c i e t a l i n t e r e s t s in many ways. F i n a l l y , prompt steps are needed to a l t e r some of the p r o v i sions of the Toxic Substances C o n t r o l Act which d i v e r t a t t e n t i o n from the main problems at hand and can only l e a d to long and




188

p r o t a c t e d l e g a l c o n f r o n t a t i o n s with little environmental p a y o f f . S p e c i f i c a l l y , a lower chemical production l i m i t (e.g. one or ten pounds per chemical per year per manufacturer) should be adopted f o r a p p l i c a b i l i t y of t h i s new law in the absence of i n d i c a t i o n s that in s p e c i f i c cases the lower l i m i t should be removed. At present, even a few grams of a chemical produced f o r commercial purposes is a u t o m a t i c a l l y subject to a v a r i e t y of l e g a l p r o v i s i o n s . I t is c e r t a i n l y true that a few grams of a poisonous chemi c a l can be a problem. However, there are more than enough problem chemicals produced in much l a r g e r q u a n t i t i e s that need a t t e n t i o n r a t h e r than complicating the research and r e l a t e d i s s u e s that i n e v i t a b l y a r i s e in d e a l i n g with all chemicals produced in such small q u a n t i t i e s . Secondly, the extensive requirements f o r immed i a t e p u b l i c a t i o n by EPA in the F e d e r a l R e g i s t e r of the r e c e i p t of premanufacturing n o t i f i c a t i o n s and of the reasons f o r not t a k i n g r e g u l a t o r y a c t i o n s under s e v e r a l l e g a l p r o v i s i o n s are simply inv i t i n g unnecessary a d v e r s a r i a l c o n f r o n t a t i o n s when the resources i n v o l v e d could be b e t t e r expended in d e a l i n g w i t h more s i g n i f i c a n t i s s u e s . C r i t e r i a could be e a s i l y e s t a b l i s h e d concerning the need f o r and frequency of F e d e r a l R e g i s t e r n o t i c e s . C l e a r l y , the area of t e s t i n g of e x i s t i n g chemicals will be fraught with s c i e n t i f i c u n c e r t a i n t i e s and c o n t r o v e r s i e s over p r i o r i t i e s and cost s h a r i n g . This is p r e c i s e l y the area where industry has a s t o r y to t e l l , an opportunity to help shape f u t u r e approaches, and an opportunity to help reduce the a d v e r s a r i a l tensions that c h a r a c t e r i z e Government-industry r e l a t i o n s at present. S p e c i f i c a l l y , the l a r g e companies should pledge themselves to a prompt doubling of the budget of the Chemical Industry I n s t i t u t e of Toxicology, with the " e x p e c t a t i o n " that Government would recogn i z e such t e s t i n g as j u s t as important as t e s t i n g in response to F e d e r a l R e g i s t e r n o t i c e s . Perhaps the lawyers from i n d u s t r y would want to provide a little p r o t e c t i o n by c o u p l i n g t h i s i n i t i a t i v e with a c i t i z e n s p e t i t i o n to EPA concerning the s p e c i f i c chemi c a l s to be t e s t e d . Should such an i n i t i a t i v e work — i . e . not only r e s u l t in needed t e s t i n g but a l s o gain r e c o g n i t i o n that such v o l u n t a r y a c t i o n s count in the Government r e p o r t card — then a second i n i t i a t i v e under S e c t i o n 6 of the new law should be considered. S p e c i f i c a l l y , i n d u s t r y might commit i t s e l f to p r e p a r a t i o n and d i s t r i b u t i o n of s a f e t y data sheets, r e f l e c t i n g a v a i l a b l e h e a l t h and environmental data, on all chemicals that are s o l d . Again, the Government would be expected to recognize such an i n i t i a t i v e as an important complement to the current l i m i t e d r e g u l a t o r y approach under S e c t i o n 6 of p l a c i n g l i m i t a t i o n s only on p o l y c h l o r i n a t e d b i phenyls and s e l e c t e d c h l o r o f l u o r o c a r b o n s . The Carcinogen

Issue

The u n c e r t a i n t y as to the Government's approach to c a r c i n o gens is c u r r e n t l y having a major dampening e f f e c t on research a c t i v i t i e s of a number of companies. While prompt a r t i c u l a t i o n of



13.

SCHWEITZER

Regulation and Innovation

189

a Government-wide p o l i c y is t h e r e f o r e very important, the current approach of OSHA needs some m o d i f i c a t i o n to r e f l e c t sound s c i e n c e and improved p u b l i c a d m i n i s t r a t i o n . The OSHA concept of c a t e g o r i z i n g chemicals which e x h i b i t c a r cinogenic tendencies on the b a s i s of demonstrated potency has e l i c i t e d broad support. However, the c a t e g o r i z a t i o n schemes that are adopted should be uniform throughout the Government. EPA, CPSC, FDA, and DOT are in the midst of addressing the carcinogen i s s u e . Therefore, the f i n a l OSHA set of standards should be coupled to equal3.y formal a c t i o n s by the other agencies d i r e c t e d to a cons i s t e n t approach f o r c a t e g o r i z i n g carcinogens according to t h e i r demonstrated potency. Each agency, of course, must then determine the appropriate r e g u l a t o r y response to chemicals in each category depending on the exposure l e v e l s and s t a t u t o r y requirements concerning economic impact. Secondly, the concept that one or two animal experiments should be the o v e r r i d i n g determinant of potency r e g a r d l e s s o f other a v a i l a b l e evidence is not sound. While c e r t a i n types of t e s t r e s u l t s may s t r o n g l y suggest c e r t a i n l e v e l s of potency, g u i d e l i n e s r a t h e r than r i g i d t e s t r e s u l t c r i t e r i a should be establ i s h e d f o r each category, with the category assignment made on a chemical-by-chemical b a s i s a f t e r c o n s i d e r a t i o n of all r e l e v a n t evidence. While OSHA s motivations in attempting t o automate the c a t e g o r i z a t i o n system are understandable, r e s p o n s i b l e p o l i c y d e c i sions should be made on the b a s i s of all a v a i l a b l e evidence, r e cognizing that in some cases r e s u l t s of a s i n g l e t e s t may be f a r more s i g n i f i c a n t than all the other evidence combined. F i n a l l y , with g u i d e l i n e s in hand, the task would then be to place i n d i v i d u a l chemicals i n t o appropriate c a t e g o r i e s . This is a s c i e n t i f i c task that should be undertaken by the best a v a i l a b l e s c i e n t i f i c t a l e n t in the country. F u r t h e r , t h i s task should be undertaken in a manner that will serve the i n t e r e s t s of all concerned Government agencies and not j u s t OSHA. Therefore, an expert s c i e n t i f i c panel, drawing members from both the p u b l i c and p r i v a t e s e c t o r s and with the f u l l support of OSHA and other regul a t o r y agencies, should be e s t a b l i s h e d under the aegis of the C o u n c i l on Environmental Q u a l i t y . T h i s Panel would recommend f o r Government-wide a c t i o n the appropriate category f o r each chemical a s s o c i a t e d with c a r c i n o g e n i c tendencies. With regard to OSHA, these recommendations should then t r i g g e r the a p p r o p r i a t e workplace standard f o r the category of chemical. Should the Secretary of Labor disagree w i t h the Panel's recommendations, he would of course have the o p t i o n of separate rulemaking processes in those cases of disagreement. As Government agencies grow l a r g e r , there is an i n c r e a s i n g r e l u c t a n c e to e n t r u s t any r e s p o n s i b i l i t y to groups not under the d i r e c t c o n t r o l of the i n t e r e s t e d agency. In t h i s case, where the i s s u e s are s c i e n t i f i c and where much of the nation's best t a l e n t is in the p r i v a t e sector, the p u b l i c i n t e r e s t r a t h e r than f r a g 1


190



merited i n t e r e s t s of i n d i v i d u a l Governmental o f f i c e s should be recognized and an appropriate o r g a n i z a t i o n a l response developed. The stakes i n v o l v e d in the OSHA r e g u l a t o r y proceeding are s u b s t a n t i a l , not only in terms of worker r i s k s , but a l s o in terms of our economic welfare and the processes of good Government. While the Department of Labor's d e s i r e to promulgate a standard without delay is commendable, it is e s s e n t i a l that the complexi t i e s of s c i e n c e , the i n t e r r e l a t i o n s h i p s of Governmental programs, and the appropriate r o l e f o r i n d i v i d u a l Government o f f i c e s be c a r e f u l l y weighed p r i o r to reaching a f i n a l judgement as to the workplace standards that will best serve the p u b l i c i n t e r e s t .

Literature Cited Draft Economic Impact Assessment for the Proposed Toxic Substances Control Act S. 776, Environmental Protection Agency, June 1975. Study of the Potential Economic Impacts of the Proposed Toxic Sub stances Control Act as Illustrated by Senate Bill S. 776, Manu facturing Chemists Associaton, June 26, 1975. Legislative History of the Toxic Substances Control Act, Prepared by the Environment and Natural Resources Policy Division of the Library of Congress, U.S. Government Printing Office, December 1976. Preliminary Assessment of the Environmental Problems Associated with Vinyl Chloride and Polyvinyl Chloride, Report on the A c t i v i ties of the Vinyl Chloride Task Force, Environmental Protection Agency, September 1974. Voluntary Environmental A c t i v i t i e s of Large Chemical Companies to Assess and Control Industrial Chemicals, Environmental Protection Agency, EPA 560/4-76-009, September 1976. Gee, Edwin A. and Tyler, Chaplin, Managing Innovation, John F. Wiley, 1976. Nason, Howard Κ., Steger, Joseph A. and Manners, George Ε., Sup port of Basic Research by Industry, Prepared for the National Science Foundation (NSF-C76-21517), 1978. "R&D Expenditures of Leading Chemical Companies," Management Bul l e t i n , Ε. I. DuPont Public Affairs Department, September-October 1977.


13.

SCHWEITZER

Regulation

and

Innovation

191

Quinn, James Β., "U.S. Monetary Policy: A Heavy Hand in Tech nology," Technology Review, October/November 1976. Ashford, Nicholas A. and Heaton, George R., "Environmental and Safety Regulations: Reasons for their Adoption and Possible Effects on Technological Innovation," Testimony to Senate Commerce Committee, June 23, 1975.


"Views of Industry R&D Vice Presidents on Federal Policy and In dustry R&D Innovation," As Expressed to Dr. Frank Press, Director, Office of Science and Technology Policy, October 25, 1977. Wiedenbaum, Murray L., "Government Regulation and the Slowdown in Innovation," Presented to the Chemical Forum, Washington, DC, October 11, 1977. Evaluation of the Possible Impact of Pesticide Legislation on Research and Development Activities of Pesticide Manufacturers, Arthur D. L i t t l e , Inc., Prepared for the Environmental Protection Agency, 1975. "Identification, Classification, and Regulation of Certain Toxic Substances," Occupational Safety and Health Administration, 29 CFR Part 1990, October 4, 1977. "Regulatory Analysis of a Proposed Policy for the Identification, Classification, and Regulation of Toxic Substances Posing a Poten tial Occupational Carcinogenic Risk," Department of Labor, October 17, 1978. "OSHA Proposal for the Identification, Classification, and Regula tion of Toxic Substances Posing a Potential Occupational Carcino genic Risk," Report of the Regulatory Analysis Review Group, October 24, 1978. "Letter from Edward Strohbehn to Eula Bingham on OSHA Generic Car cinogen Proposal," Council on Environmental Qualty, October 24, 1978. "Technological Innovation and Health, Safety and Environmental Regulation," Office of Technology Assessment Proposal 78-11, Sep tember 1978. "Domestic Policy Review of Industrial Innovation: Work Plan," The Domestic Council, The White House, September 18, 1978. "Detailed Guidelines for Analyzing Economic Impacts," Environ mental Protection Agency, July 11, 1978. RECEIVED

March

9,

1979.


Regulation and Innovation: Short-Term ... - ACS Publications

Recommend Documents