This is an interesting example of regulations are made when two different parts of the government disagree about how to proceed. In this case, the EPA and Department of Defense appear to have opposite views on the effects of the solvent TCE. This Los Angeles Times article below suggests that many people have been exposed to it on and near military bases.
The theory of compensating differentials predicts that if people know that they are being exposed to a risk (such as cancer) they will be compensated through either higher wages or by paying lower rents for real estate. But, if people are unaware of what they are being exposed to then these "victims" will not be compensated ex-ante for living in a nasty place.
This article suggests that DOD is blocking the EPA from carying out regulation that would mitigate this problem. Economists would argue that the optimal TCE regulation would enforce until the marginal benefits of further regulation equals the marginal cost of further TCE regulation. Calculating where these two curves cross is much easier said than done. The military has an incentive to over-state what is the marginal cost of mitigating this problem.
From the Los Angeles Times
How Environmentalists Lost the Battle Over TCE
By Ralph Vartabedian
Times Staff Writer
March 29, 2006
After massive underground plumes of an industrial solvent were discovered in the nation's water supplies, the Environmental Protection Agency mounted a major effort in the 1990s to assess how dangerous the chemical was to human health.
Following four years of study, senior EPA scientists came to an alarming conclusion: The solvent, trichloroethylene, or TCE, was as much as 40 times more likely to cause cancer than the EPA had previously believed.
The preliminary report in 2001 laid the groundwork for tough new standards to limit public exposure to TCE. Instead of triggering any action, however, the assessment set off a high-stakes battle between the EPA and Defense Department, which had more than 1,000 military properties nationwide polluted with TCE.
By 2003, after a prolonged challenge orchestrated by the Pentagon, the EPA lost control of the issue and its TCE assessment was cast aside. As a result, any conclusion about whether millions of Americans were being contaminated by TCE was delayed indefinitely.
What happened with TCE is a stark illustration of a power shift that has badly damaged the EPA's ability to carry out one of its essential missions: assessing the health risks of toxic chemicals.
The agency's authority and its scientific stature have been eroded under a withering attack on its technical staff by the military and its contractors. Indeed, the Bush administration leadership at the EPA ultimately sided with the military.
After years on the defensive, the Pentagon — with help from NASA and the Energy Department — is taking a far tougher stand in challenging calls for environmental cleanups. It is using its formidable political leverage to demand greater proof that industrial substances cause cancer before ratcheting up costly cleanups at polluted bases.
The military says it is only striving to make smart decisions based on sound science and accuses the EPA of being unduly influenced by left-leaning scientists.
But critics say the defense establishment has manufactured unwarranted scientific doubt, used its powerful role in the executive branch to cause delays and forced a reduction in the margins of protection that traditionally guard public health.
If the EPA's 2001 draft risk assessment was correct, then possibly thousands of the nation's birth defects and cancers every year are due in part to TCE exposure, according to several academic experts.
"It is a World Trade Center in slow motion," said Boston University epidemiologist David Ozonoff, a TCE expert. "You would never notice it."
Senior officials in the Defense Department say much remains unknown about TCE.
"We are all forgetting the facts on the table," said Alex A. Beehler, the Pentagon's top environmental official. "Meanwhile, we have done everything we can to curtail use of TCE."
But in the last four years, the Pentagon, with help from the Energy Department and NASA, derailed tough EPA action on such water contaminants as the rocket fuel ingredient perchlorate. In response, state regulators in California and elsewhere have moved to impose their own rules.
The stakes are even higher with TCE. Half a dozen state, federal and international agencies classify TCE as a probable carcinogen.
California EPA regulators consider TCE a known carcinogen and issued their own 1999 risk assessment that reached the same conclusion as federal EPA regulators: TCE was far more toxic than previous scientific studies indicated.
TCE is the most widespread water contaminant in the nation. Huge swaths of California, New York, Texas and Florida, among other states, lie over TCE plumes. The solvent has spread under much of the San Gabriel and San Fernando valleys, as well as the shuttered El Toro Marine Corps base in Orange County.
Developed by chemists in the late 19th century, TCE was widely used to degrease metal parts and then dumped into nearby disposal pits at industrial plants and military bases, where it seeped into aquifers.
The public is exposed to TCE in several ways, including drinking or showering in contaminated water and breathing air in homes where TCE vapors have intruded from the soil. Limiting such exposures, even at current federal regulatory levels, requires elaborate treatment facilities that cost billions of dollars annually. In addition, some cities, notably Los Angeles, have high ambient levels of TCE in the air.
An internal Air Force report issued in 2003 warned that the Pentagon alone has 1,400 sites contaminated with TCE.
Among those, at least 46 have involved large-scale contamination or significant exposure to humans at military bases, according to a list compiled by the Natural Resources New Service, an environmental group based in Washington.
The Air Force was convinced that the EPA would toughen its allowable limit of TCE in drinking water of 5 parts per billion by at least fivefold. The service was already spending $5 billion a year to clean up TCE at its bases and tougher standards would drive that up by another $1.5 billion, according to an Air Force document. Some outside experts said that estimate was probably low.
After the EPA issued the draft assessment, the Pentagon, Energy Department and NASA appealed their case directly to the White House. TCE has also contaminated 23 sites in the Energy Department's nuclear weapons complex — including Lawrence Livermore National Laboratory in the Bay Area, and NASA centers, including the Jet Propulsion Laboratory in La Cañada Flintridge.
The agencies argued that the EPA had produced junk science, its assumptions were badly flawed and that evidence exonerating TCE was ignored. They argued that the EPA could not be trusted to move ahead on its own and that top leaders in the agency did not have control of their own bureaucracy.
Bush administration appointees in the EPA — notably research director Paul Gilman — sided with the Pentagon and agreed to pull back the risk assessment. The matter was referred for a lengthy study by the National Academy of Sciences, which is due to issue a new report this summer. Any resolution of the cancer risk TCE poses will take years and any new regulation could take even longer.
The delay tactics have angered Republicans and Democrats who represent contaminated communities, where residents in some cases have elevated rates of cancer and birth defects but no direct proof that their illness is tied to TCE.
Half a dozen members of Congress last year wrote to the EPA, demanding that it issue interim standards for TCE, instead of waiting years while scientific battles are waged between competing federal agencies. EPA leaders have rejected those demands.
"The evidence on TCE is overwhelming," said Dr. Gina Solomon, an environmental medicine expert at UC San Francisco and a scientist at the Natural Resources Defense Council. "We have 80 epidemiological studies and hundreds of toxicology studies. They are fairly consistent in finding cancer risks that cover a range of tumors. It is hard to make all that human health risk go away."
But Raymond F. DuBois, former deputy undersecretary of Defense for installations and environment in the Bush administration, said the Pentagon had not been willing to accept whatever came out of the EPA, though it cared a great deal about base contamination.
"If you go down two or three levels in EPA, you have an awful lot of people that came onboard during the Clinton administration, to be perfectly blunt about it, and have a different approach than I do at Defense," DuBois said. "It doesn't mean I don't respect their opinions or judgments, but I have an obligation where our scientists question their scientists to bring it to the surface."
The military has virtually eliminated its use of TCE, purchasing only 11 gallons last year, said Beehler, an attorney who used to head environmental affairs for Koch Industries Inc., a large industrial conglomerate in Wichita, Kan.
In its fight against the 2001 risk assessment, the Pentagon has gone to the very fundamentals of cancer research: toxicology, the study of poisons; and epidemiology, the science of how diseases are distributed in the population. This scientific approach has worked better than past arguments that cleanups are a costly diversion from the Pentagon's mission to defend U.S. security.
A few months after the 2001 draft risk assessment came out, an Air Force rebuttal charged that the EPA had "misrepresented" data from animal and human health studies.
It said "there is no convincing evidence" that some groups of people, like children and diabetics, are more susceptible to TCE, a key part of the EPA's report. And it said the EPA had failed to consider viewpoints from "scientists who believe that TCE does not represent a human cancer risk at levels reasonably expected in the environment."
But comments such as these are outside the scientific mainstream. Other federal agencies have also expressed grave concern about TCE and some experts say it is only a matter of time before the chemical is universally recognized as a known carcinogen.
"Do I think TCE causes cancer? Yes," said Ozonoff, the Boston University TCE expert. "There is lots of evidence. Is there a dispute about it? Yes. Whenever the stakes are high, that's when there will be disputes about the science."
The 2001 risk assessment found TCE was two to 40 times more likely to cause cancer than was found in an assessment conducted in 1986, a wide range that reflected many scientific uncertainties. Because cancer risk assessments are not an exact science, federal regulators have historically exercised great caution in protecting public health.
The California EPA, the nation's largest and best-funded state environment agency, assessed TCE in 1999 and also found reason for concern. Its risk assessment fell in the middle of the EPA risk range, according to the study's author, Joseph Brown.
Rodents fed TCE develop liver and kidney cancer, and humans exposed to TCE show elevated rates of many types of cancer and birth defects. But industry experts fire back that evidence on TCE is still weak. Just because rats and mice get cancer from high levels of TCE doesn't prove that humans will get cancer from low levels of TCE, they say. And the epidemiological research is less convincing than animal studies, they say.
The U.S. still uses about 100 tons of TCE annually, a fraction of the consumption before the mid-1980s, when it was first classified as a probable carcinogen. It was once widely used in consumer products, such as correction fluid for typewriters and spot cleaners.
"If TCE is a human carcinogen, it isn't much of one," said Paul Dugard, a toxicologist at the Halogenated Solvents Industry Alliance Inc., which represents TCE manufacturers. "People exposed at low levels shouldn't be concerned.
"EPA's philosophy is still one of being super conservative and that is being pushed back against."
EPA officials were braced for such a controversy when the TCE assessment was issued and quickly convened a scientific advisory board to review the work. The board included public health officials at state agencies, academics and chemical industry scientists.
About one year later, the board issued its findings, praising the risk assessment and urging the EPA to implement it as quickly as possible. But the board also suggested some changes, including stronger support for its calculations of TCE's health risks and a clearer disclosure of its underlying assumptions.
The report, particularly the request for additional work, was interpreted as a serious problem by Gilman, the EPA research director.
He said the board's findings represented a "red flag" and "raised very troubling issues," all of which were key arguments by Gilman and others for stopping the assessment.
But members of the scientific advisory team dispute Gilman's interpretation, saying they felt the 2001 risk assessment was good science and their recommended changes amounted to normal commentary for such a complex matter.
"I thought by and large we supported the EPA and that its risk assessment could be modified to move forward," said Dr. Henry Anderson, the chairman of the scientific advisory board and a physician with the Wisconsin Division of Public Health. "That movement to shuttle the issue to the National Academy of Sciences was nothing like what we had in mind."
By 2004, the matter was out of the EPA's hands. The National Academy of Sciences received a $680,00 contract from the Energy Department to study TCE — a decision dictated by a working group at the White House. The briefings to the national academy on how to evaluate TCE were given by White House staff as well as the EPA.
The White House originally formed the working group — made up of officials from the Pentagon, Energy Department and NASA — in 2002 to combat the EPA's assessment of another pollutant, perchlorate. That group stayed in business to fight the TCE risk assessment. The group was co-chaired by officials in the Office of Management and Budget and the White House Office of Science and Technology Policy. The officials declined requests for interviews.
Given the controversy and stakes involved, the issue was bound to end up with National Academy of Sciences, said Peter Preuss, director of the National Center for Environmental Analysis, the EPA organization that produced the 2001 risk assessment. "It got very difficult to proceed," Preuss said.
The lead author of the 2001 health risk assessment, V. James Cogliano, agreed that the findings ran into trouble when Defense Department officials went to the White House. "Most of it was behind the scenes," said Cogliano, now a senior official at the International Agency for Research on Cancer in Lyon, France.
He added: "The degree of opposition was not surprising given the degree of economic interests involved."
The political maneuvering marked a significant change, Cogliano said. In the 1980s, Defense Department officials accepted every possible safeguard recommended by the EPA for incinerators to burn nerve gas and other chemical weapons, he recalled.
At that time, Defense Department officials said, "You put in every margin of safety, because we want to be sure it will be safe," he said. "There was no argument. There is a different spirit today."
Every health risk assessment is also getting more technically complex and more bureaucratically difficult, Preuss said.
When the EPA issued its first health risk assessment in 1976, it ran four pages and it was based in large part on studies that counted "bumps and lumps" on animals subjected to possible carcinogens. By contrast, EPA scientists now must show not only that a substance causes tumors, but the internal biological processes that are responsible. And the work is subject to greater scrutiny.
"It is true that there is more interagency review now of our work," Preuss said. "We have a couple steps where we send our assessments to the White House and they distribute them to other agencies. Each year, additional steps are taken."
All of the EPA's travails — the toughened scientific demands, the loss of authority, the interagency battles — have clearly taken a heavy toll and diminished the agency's stature.
"Inside the Beltway, it is an accepted fact that the science of EPA is not good," said Gilman, now director of the Oak Ridge Center for Advanced Studies in Tennessee, which conducts broad research on energy, the environment and other areas of science. Gilman said an entire consulting industry has sprung up in Washington to attack the EPA and sow seeds of doubt about its capabilities.
The delays in assessing TCE have also left many contaminated communities with few answers.
"My constituents who live at a recently named Superfund site … are forced to live everyday with contaminated groundwater, soil and air and can't afford to wait the years it would take for the results of your outsourced re-review," Rep. Sue W. Kelly (R-N.Y.) told EPA officials at a hearing last year.
"I have talked to a lot of sick people," said Rep. Maurice D. Hinchey (D-N.Y.), whose district includes hundreds of homes contaminated by TCE vapors, traced to an IBM Corp. factory. IBM has paid for air filtration systems for 400 homes, but has balked at more funding based on uncertainty over the health risk. "These people are deeply frustrated and increasingly angry," Hinchey said.
Meanwhile, many environmentalists are discouraged by what they view as a virtual emasculation of the EPA in this battle.
"The general public has no idea this is happening," said Erik Olson, a lawyer at the Natural Resources Defense Council. "The Defense Department has succeeded in undermining the basic scientific process at EPA. The DoD is the biggest polluter in the United States and they have made major investments to undercut the EPA."