The Regulation of Environmental Contaminants in Commerce - Module 4 of 5

Module 4: The Regulation of Environmental Contaminants in Commerce

Cost-Benefit Analysis in Environmental Regulation

The Environmental Protection Agency oversees the administration of key federal laws that regulate substances known to be hazardous to human or environmental health. Some substances, including heavy metals like lead, mercury, arsenic and cadmium, are potentially harmful to people and the environment even in trace amounts.[1]

However, some products known to be toxic are also valuable commodities. These substances are regulated by the EPA pursuant to a group of federal laws that carve out a cradle-to-grave solution for environmental contaminants in the stream of commerce.  

There are four main statutes addressing environmental pollutants traded in the stream of commerce. These laws are the Toxic Substances Control Act (“TSCA,” or “Tah-Skah”); the Federal Insecticide, Fungicide, and Rodenticide Act (or, “FIFRA,” or “Fif-Rah”); the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA,” or “Cerk-Lah”); and Resource Conservation and Recovery Act (“RCRA,” or “Rick-Rah”). These statutes work together to help the EPA and regulated industries record, monitor, manage and clean up pollutants commonly produced by our economy. Each of these laws applies to toxic or hazardous substances in the stream of commerce based on the potential impacts of the pollutant and its stage in its commercially-useful life.

Substances known to be hazardous to human health and the environment are quite common in commercial activity. Toxic materials can be found in commercial materials like insulation, roofing, ceramics, batteries, ammunition, automobiles, mechanical parts, heat-resistant fabrics, packaging and just about anything else you could imagine. Even many everyday household items like cosmetics, paper products, cleaning products, solvents and paints, air conditioners, wood products and indoor fabrics contain toxic substances. Though we can’t just ban these substances without altering the way we live, we can regulate them by subjecting them to cost-benefit analyses.

Cost-benefit analysis is a common analytical approach that policymakers use to help them make decisions about key issues. It involves assessing the costs of a particular action against its potential benefits and weighing the balance of positive and negative factors. This approach aims at maximizing efficiency, as it allows activities to move forward only so long as they have a net benefit.[2] The potential harm posed by a pollutant is weighed against its estimated commercial and social value, and so long as the dangers don’t outweigh the benefits, the pollutant is allowed to be exchanged in the U.S. economy. Thus, the harms caused by pollutants must be weighed against economic needs for them.   

The Toxic Substances Control Act and the Federal Insecticide, Fungicide, and Rodenticide Act are the two primary federal laws that regulate toxic substances active in the American economy – that is, before they’re disposed of and managed as recyclables or waste. Rather than taking a strict harm-prevention approach, these laws rely on a policy design that balances the potential costs and benefits of regulating toxic substances that have commercial value.  

The Toxic Substances Control Act

The regulation of contaminants and pollutants in the stream of commerce starts with the Toxic Substances Control Act. It authorizes the EPA to record information on all new and existing chemical substances and control the substances that are determined to cause unreasonable risk to the public health or the environment. Additionally, the EPA is responsible for screening chemicals, enforcing compliance reporting, and testing substances bought or sold in the economy that could pose a hazard to human health.

TSCA requires the EPA to review most new toxins set to be distributed in the stream of commerce before they are manufactured. This review is performed according to a set procedure and often requires the cooperation of manufacturers and distributors. When a review begins, the EPA first gathers information on known risks of a chemical or substance from manufacturers and processors. This may require companies to test chemicals and mixtures of different substances for toxic effects. If a chemical is found to pose an unreasonable risk of injury to public health or the environment, then the EPA can ban the manufacture or import of that chemical, limit the amount manufactured, processed, or distributed in commerce or it can impose other restrictions on the chemical. Common limitations imposed on toxic substances in commerce range from mandatory warning labels to outright bans.

Under TSCA, the EPA evaluates new and existing chemical risks and implements ways to prevent or reduce any pollutant that the chemicals can cause before they are released into the environment. This approach prevents unreasonable risk by regulating chemicals and mixtures in different ways.[3] The EPA may also require reporting, record-keeping, testing requirements and restrictions relating to chemical substances or mixtures if doing so is necessary and proper to protect human health and the environment.[4] In addition to the EPA, states and tribes operate their own EPA-authorized programs for some portions of the TSCA. Specifically, states and tribes can develop their own standards and certification programs for lead-related inspection, toxic substance risk assessment, renovation and abatement that are at least as protective as existing federal standards.

Major TSCA programs have successfully mitigated the impacts of several highly toxic substances that either have been or still are important in our economy. This includes asbestos, radon, mercury, lead-based paint and formaldehyde. Notably, however, some toxic materials common in commercial activity are exempted from TSCA regulations, including tobacco, specified nuclear materials, firearms and ammunition, food, food additives, drugs and cosmetics.[5] Other federal laws, agencies and programs regulate these exempt chemicals, just as TSCA-exempt pesticides and similar agriculturally-useful toxins fall under FIFRA’s jurisdiction.  

The Federal Insecticide, Fungicide, and Rodenticide Act

Like TSCA, FIFRA applies to toxins with commercial value, but it’s a much more directed federal statute. FIFRA applies specifically to pesticides. FIFRA prohibits the sale or distribution of pesticides in the United States that are not properly registered or that are noncompliant with mandatory labeling or packing requirements. Like the toxic substances regulated by TSCA, pesticides that fall under FIFRA jurisdiction must be approved by the EPA after a cost-benefit analysis that weighs the potential economic, social and economic costs of a particular pesticide against its potential benefits. Under the law, this process must consider the human dietary risk from pesticide residues on food.[6]   

TSCA and FIFRA have facilitated major benchmark achievements in the regulation of contaminants in the stream of commerce on the basis of cost-benefit analysis. However, critics of this approach point out how difficult cost-benefit analyses can be when dealing with chemical pollutants. One key example lies in the EPA’s ban on the sale of most polychlorinated biphenyls (PCBs), which it passed under the authority of TSCA in 1979. PCB is a highly toxic man-made organic pollutant used in industry applications and, commercially, in homes as cooling and insulation fluids.[7] TSCA prohibits the manufacture of PCBs, controls the phase-out of the chemical’s existing use and makes sure PCBs are safely disposed of.[8] However, even though this pollutant has been banned, PCB contamination is still an ongoing environmental problem. PCBs do not easily break down, so the chemical remains in the environment for a long time and can be carried long distances by air, water, and soil. As a result, it is still found in leaves, plants, food crops and fish.[9] Thus, although the ban on PCBs was passed a generation ago, these contaminants are still posing harm to the environment.

The Resource Conservation and Recovery Act

While TSCA, FIFRA, and other more specialized statutes regulate chemicals before they are made and while they are used by manufacturers, the Resource Conservation and Recovery Act works to manage hazardous and non-hazardous materials after they have been disposed of.[10] RCRA’s hazardous waste program creates a system for controlling hazardous waste from its generation to its disposal, including the direct regulation of transport, storage, and disposal processes.[11] If there is an environmental release, RCRA provides EPA with the authority to act to prevent further contamination and ensure that any leak, spill or other contamination is cleaned up in compliance with applicable federal laws and regulations.[12]

Although RCRA provides a robust set of regulatory responses in the event that hazardous or toxic wastes are released into the environment, the intention of the law is to prevent this type of contamination from occurring in the first place. To this end, the EPA has set minimum national technical standards for how disposal facilities should manage waste. States are responsible for implementing their own waste programs, adding an additional level of oversight and compliance to this critical field of environmental regulation.[13] However, RCRA is structured so that the burden of compliance falls mostly upon private industry.

RCRA includes several programs for the safe handling, treatment, transportation, storage and disposal of wastes.[14] This includes programs that directly address the management of solid wastes, hazardous wastes and underground storage tanks. Non-hazardous solid wastes are regulated separately from so-called hazardous wastes, which are wastes that have properties that make them dangerous to human health or the environment. The EPA has developed a complex regulatory process by which hazardous wastes are identified based on objective criteria.[15] Hazardous wastes are subjected to comprehensive regulations involving permitting and oversight over their generation, transportation, treatment, storage and disposal. Together, federal and local authorities oversee comprehensive RCRA compliance monitoring programs. These programs involve inspecting facilities, reviewing records, and taking enforcement action as needed.

Ensuring RCRA compliance can be a substantial undertaking. Fortunately, however, the law provides a compliance assistance program. The program provides businesses, federal facilities, local governments and tribes with the tools they need to meet the regulatory requirements.[16] RCRA also incentivizes companies to modify manufacturing practices by providing award programs to those that generate less waste and re-use materials safely. [17] In the event that an environmental release of hazard or toxic wastes occurs, RCRA mandates that the offending party follow the cleanup requirements found in the last law we’ll discuss in this module, CERCLA.  

The Comprehensive Environmental Response, Compensation, and Liability Act

The statutes we’ve discussed so far manage known contaminants during and after their commercially useful lives. CERCLA focuses on the cleanup of inactive hazardous substances sites and on placing the liability for cleanup costs on facility owners.[18] This law plays a critical role in remediating environmental disasters and preventing damage to human health and the environment.  

CERCLA is sometimes informally called the “Superfund” law because it established a large federal fund to clean up hazardous wastes when it was passed. The federal government was highly proactive in funding and managing the cleanup of lands contaminated by hazardous chemicals when it created the Superfund. This was partially a response to a tragic event that came to be known as the Love Canal environmental disaster. This sad piece of American history demonstrates how catastrophic the impacts of unregulated hazardous waste dumping can be.

The Love Canal was a large man-made ditch dug as part of a plan for hydroelectric development in Niagara Falls, New York, at the turn of the twentieth century. The canal was abandoned, and decades later, a chemical company dumped over 21,000 tons of hazardous chemicals into the Love Canal. The dump site was covered and leased to the Niagara Falls Board of Education for the construction of an elementary school and several homes in the 1950s. By the 1960s, studies carried out by various state and federal agencies detected the presence of several toxic substances that had leaked from the Love Canal dumpsite into local water systems. Despite this evidence, the issue went largely unaddressed until 1977 when federal authorities got involved. By the next year, President Jimmy Carter had issued two emergency declarations that facilitated the evacuation and relocation of the Love Canal residents and provided federal support for the cleanup effort. This led to Congress passing CERCLA and creating the Superfund to support it, which is meant to protect human health and the environment from suffering the same impacts as the residents of Love Canal.[19]

The human impacts of the Love Canal disaster were catastrophic. Studies completed on the site in 1979 identified a 300 percent increase in miscarriages among women in the area, and over half of the children born in the Love Canal neighborhood between 1974 and 1978 had birth defects – nearly three times the normal rate in comparable areas. Nobody living or sending their children to school in the area was aware of the contamination that was placing them in danger. By 1980, federal authorities ordered a total evacuation of the Love Canal neighborhood, and America saw first-hand the impacts that toxic wastes can have on our everyday lives in the absence of protective laws and regulations.[20]

Hazardous substance releases can occur because uncontrolled or abandoned waste sites leak or because someone carries out an accidental, negligent or intentional dumping of substances into the environment. The EPA works with states to identify, monitor and respond to sites that have been contaminated by toxic releases in the past. Since many of these releases occurred over years or even decades, one of the EPA’s primary directives under CERCLA is to identify potentially responsible parties by connecting the waste found at a site to a living person or active company that may have contributed to the contamination at the site.  The EPA can then try to force the potentially responsible parties identified to clean up the hazardous pollutants on affected sites through several legal avenues including orders, consent decrees and settlements.[21]  

CERCLA has identified two ways in which EPA can respond to a release of pollution: removal or by remedial actions. Removal actions are short-term actions taken to respond to imminent and emergency releases. Remedial actions are long-term actions taken to reduce the risk of releases.[22] The EPA can also conduct a cleanup itself and recover costs from the responsible party in a cost-recovery action. Alternatively, the EPA can compel the responsible party, by judicial proceeding, to perform and fund the cleanup. Or, the EPA can enter into a settlement with the responsible party to perform all or part of the work. If a potential responsible party cannot be found, however, the EPA takes on the responsibility of the cleanup.[23]  

CERCLA is a broad law designed to identify the individuals responsible for toxic environmental contamination and hold them accountable for the cleanup. This means that the EPA begins looking for potentially responsible parties immediately when an investigation is initiated, and liability is assessed based upon the nature and degree of the party’s involvement in the creation, management or ownership of toxic waste; any potential exemptions, exclusions, or defenses that may apply; the amount of waste that the party likely contributed; and whether the party is able to help pay for the cleanup.[24]

CERCLA liability is expansive, and potential defenses are limited to showing that the pollution was a result of “acts of God,” acts of war or showing that the party acted with due care and the release was due to the egregious actions of third parties with whom the party had no legal relationship.[25]

Conclusion

The federal laws discussed in this module regulate thousands of pollutants at different stages of their lives, from their inception through disposal. Without these statutes, human and environmental health would be at great risk due to potential exposure to toxins and hazards substances. To balance the benefits of utilizing commercially-valuable toxic substances against the potential costs to human health and the environment, these laws give state and federal agencies substantial authority to regulate pollutants in the stream of commerce.

In our last module, we’ll focus on federal management of public lands and wildlife conservation.