From the Editor

This year marks Regulation’s twentieth anniversary as well as my assumption of the magazine’s editorship. Departing editor William A. Niskanen is irreplaceable; fortunately, he has joined Regulation’s editorial advisory board and will continue to be a welcome advisor.

This is also the first issue of the redesigned Regulation. We have given the magazine a classic look. Give thanks to designer Robert Winward, managing editor Darcy Olsen, and production editor Patricia Felder for making the makeover.

We have also endeavored to improve Regulation’s different sections. The Letters section has grown over the past two years, both in length and in importance. More and more, it is a forum in which vital regulatory issues are vigorously debated. We hope it will continue to serve as a forum for debate, and we invite all readers to submit their comments and thoughts.

In the Perspectives section, which has replaced Currents, experts will offer analyses and commentaries on a wide variety of current regulatory issues. We are also introducing five regular columnists:

• Fred Smith, president of the Competitive Enterprise Institute, will comment on technology policy.

• Brink Lindsey, an attorney at the law firm Willkie Farr & Gallagher and a former senior editor of Regulation, will write about trade issues.

• Frank Wilner, chief of staff at the Surface Transportation Board, has the dubious distinction of being a bureaucrat writing for a magazine that is not known for seeing much value in agencies like his. He will share with us his insights in his column appropriately titled "Belly of the Beast."

• Tim Lynch, assistant director of the Cato Institute’s Center for Constitutional Studies, will question the constitutionality of various regulations in "Advisory Opinion."

• Sheldon Richman, vice president of policy affairs at the Future of Freedom Foundation, will explore the humorous side of regulations.

In Readings we will offer more reviews of books on regulatory issues. Our efforts are helped by Peter VanDoren, the Cato Institute’s assistant director of environmental studies, who has joined Regulation as book review editor. Welcome aboard Peter!

Our main features will continue to look behind the headlines, the agencies, and the legislation, examining in-depth the assumptions behind, the effects of, and the alternatives to current regulations. In addition to traditional regulatory topics, we will continue to break new ground, focusing on issues before they make the headlines or congressional desks.

Rounding out our changes, Jerry Taylor, the Cato Institute’s director of natural resources, has inherited the title of senior editor and will continue to lead our efforts in the areas of energy and the environment.

In 1977 Regulation’s first editor, Anne Brunsdale, explained that the magazine was needed "because the extension of regulation is piecemeal, the sources and targets diverse, the language complex and often opaque, and the volume overwhelming." Regulation will continue to be devoted to analyzing the implications of government regulatory policy and the effects on our public and private endeavors.


Edward L. Hudgins



Kessler’s FDA: An Autopsy

The departure of the Food and Drug Administration’s chief David Kessler will close a chapter on one of the country’s worst regulatory regimes. The question now is whether the abuses that characterized his regime will set a pattern for future regulators or whether they will be a lesson on the deadly consequences of placing unchecked power in the hands of unelected bureaucrats.

Federal law requires the FDA to evaluate the safety and efficacy of pharmaceuticals and medical devices. The actual testing is done by manufacturers and private laboratories, not the FDA. That agency is not an Underwriters Laboratories; it is an agency of paper shufflers. Today, by a conservative estimate, on average it takes eight years and costs nearly $400 million to bring a new medicine to market. Much of that time is spent administering FDA-mandated tests, not for safety but efficacy, and complying with other FDA requirements. During those delays thousands of Americans die and countless others suffer needlessly.

If Kessler, a 1990 Bush appointee, had wished to perform a true public service, his top priority would have been to reduce the agency’s inefficiencies and even to ask whether there were market-based approaches to safety and efficacy superior to the government’s command-and-control approach. Instead, he took a hostile, antagonistic approach to industry that complemented attempts by the Clinton administration to nationalize healthcare: Hillary Clinton accused pharmaceutical companies of milking the public with high prices.


Sensationalism Not Science

Kessler’s regime often substituted sensationalism and scare tactics for science. For example, in 1992 yellow journalists highlighted claims by women that their silicone breast implants caused various connective tissue diseases. Without clinical tests or clear scientific evidence, Kessler banned most implants and publicly fanned the flames that led to a $4.1 billion court settlement that drove manufacturer Dow Corning into bankruptcy.

Yet there were no data indicating a higher incidence of disease among women with implants than among women without them. Nor did studies by the University of Michigan, the University of Maryland, the Mayo Clinic, or the Harvard Medical School find a causal link between implants and connective tissue diseases. As executive editor of the New England Journal of Medicine, Dr. Marcia Angell, wrote in her book Science on Trial: The Clash of Medical Evidence and the Law in the Breast Implant Case, "The FDA responded like a political, not a regulatory body."

Sensationalism also characterized Kessler’s approach to defibrillators—a device used to revive patients whose hearts have stopped. In the early 1990s scare stories in the press alleged that these devices were malfunctioning, killing patients. Yet after seven years and some 7 million uses, there had been only 630 reported "failures" of defibrillators, about half of which were caused by operator error or other factors not related to the devices. And "failures" generally did not mean that the devices had delivered shocks that killed the patients; after all, their hearts had already stopped beating. And in some cases the devices simply had to be recharged. Even though the defibrillators functioned correctly in 99.995 percent of the cases, pressure from Kessler forced the manufacturer to stop production for years.


Abuse of Authority

Some of the FDA’s more bizarre uses of power have been successfully challenged. For example, the FDA proposed classifying a home testing kit for the HIV virus as a Class 3 medical device—the class that includes heart valves and like devices. The kit essentially consisted of a cup for holding a urine specimen that would be sent to a lab. That attempt was shot down by a U.S. court of appeals.

The FDA ignored the court’s implicit warning and soon announced its intention to classify an envelope used for mailing hair samples to a lab for drug testing as a medical device. When the company providing the envelopes challenged the FDA in court, the agency backed off.

Moreover, the FDA’s initial objections to a home testing kit for drugs sought not to guarantee the safety and efficacy of the product but to promote Kessler’s social agenda—the FDA claimed the kit might cause "family discord." After ridicule from both Republicans and Democrats in Congress, the FDA backed off. But the fact that the agency could use its authority to certify a product’s efficacy as a means to determine for parents how they should deal with their children’s drug use points to the serious nature of the agency’s abuse of power.


Expanding Power

Kessler worked to expand the FDA’s power well beyond its traditional or legal scope. His vendetta against cigarettes in the name of protecting children is the most well-known example of this. Never mind that all fifty states prohibit the sale of tobacco to children. Cigarettes are neither pharmaceuticals used to treat particular ailments nor medical devices by any reasonable definition, despite the fact that the FDA classifies them as "nicotine delivery devices." Congress has considered and so far has declined to place cigarettes under the FDA’s jurisdiction. Yet this did not stop Kessler from using a convoluted rationale to extend his agency’s jurisdiction to cigarettes. The FDA’s actions against cigarettes are now being challenged in court.

Kessler’s FDA has also claimed jurisdiction over outdoor laser light shows and banned them within 20 miles of a Las Vegas airport. Airline pilots have complained that such shows interfere with flying. One would think that would be a problem for the Federal Aviation Administration; but, lasers are classified as medical devices. Thus, the FDA argued that even if lasers were not used for medical care, they were still under FDA jurisdiction under the Radiation Control for Health and Safety Act, Title 21, of Code Part 1000.


Banning Advertisements

Another instance of the FDA’s quest for power could auger regulatory battles to come. Kessler not only claimed his agency could regulate tobacco but that it could censor communications about the product. The FDA is still trying, for example, to ban signs and banners at sporting events, such as the Virginia Slims tennis tournament, that display the names of cigarette companies. The FDA is also attempting to ban color cigarette advertisements from magazines.

With Kessler’s disregard for free speech, the agency’s 1996 conference "FDA and the Internet" should have come as no surprise. The FDA’s current monopoly on the dissemination of information on drugs and medical devices means, for example, that it is a federal crime for a manufacturer to send an article to a doctor that documents test results showing the beneficial health effects of aspirin on the heart. The truth is no defense. Manufacturers can only say what the FDA permits.

The telecommunications revolution clearly undermines the FDA’s censorship ability. After all, patients and healthcare providers might have direct access to a manufacturer’s information over the Internet. Thus, the FDA’s conference dealt explicitly with the need to regulate web links and chat rooms. Of course, it is easy to post information from other countries, outside the FDA’s jurisdiction. Thus, there were representatives from Britain, France, Switzerland, Brazil, the Netherlands, and the World Health Organization to discuss global censorship.

The FDA also considered classifying "expert systems" computer software as "medical devices" subject to agency censorship. Doctors routinely consult piles of books to piece together the best evaluation of complex symptoms and ailments and to devise the best strategies for treating them. Needless to say, such a process can be speeded up significantly if the information is on CD-ROM and a physician can search for cross-references at Pentium speeds. The medium, whether ink on paper or a digitized piece of plastic with a good search engine, does not make government control any less an act of censorship.

In light of Kessler’s obsession with censorship, a bizarre form of censorship that predates his tenure seems appropriate: it is illegal for the manufacturer of a product that the FDA has approved to advertise that its product is FDA approved.


Future of the FDA

Since the Republicans took control of Congress in 1993, Kessler has gone out of his way to speed up the approval of drugs with vocal patient groups. But his agency, for example, still persecutes Dr. Stanislaw Burzynski who has been legally treating cancer patients with non-FDA approved therapies for decades. (See "FDA: Keeping Medication from Cancer Patients" by Sue A. Blevins in this issue.) The FDA has reduced the review time for products, but drug development times have not decreased. Part of the problem is that before the official clock starts ticking for FDA approval, manufacturers must secure FDA approval for the type of methodology and tests to be performed. That period seems to be as long if not longer than the time it takes to get FDA approval.

Kessler’s resignation might have been motivated more by the scandal over his double-billing travel vouchers and other shady practices with his expense account than by his belief that his job at the FDA is done. It would be difficult for him to take the moral high ground in the face of congressional hearings on his theft of taxpayer dollars.

But Kessler’s departure should not cloud the lesson of his reign or of any command-and-control regulatory regime. The FDA has been out of control, exercising power in an arbitrary manner, extending the scope of its power at every opportunity. And the advent of personal computers and the Internet explains the FDA’s assault on freedom of information. Easy, rapid communication between patients, manufacturers, and healthcare providers leaves little role for the FDA.

Kessler’s FDA underlines for policymakers how far America has moved away from the rule of law and how deadly the results of the congressional delegation of lawmaking powers can be. Unelected FDA bureaucrats who have received broad authority from Congress literally make up restrictions out of thin legal air. The burden is placed on Congress to try to undue what the agency has wrought.

Congressional hearings on a new FDA commissioner offer an opportunity to question whether the current FDA model should be scrapped in favor of a free market approach. One proposal that would be a step in the right direction would be to allow manufacturers to opt out of FDA efficacy tests in favor of tests by private laboratories. A second proposal would be to allow doctors and patients to use any medication or treatment desired as long as they have been informed that the medicines or treatments have not met FDA approval.

Kessler himself actually defined the fundamental problem with the FDA when he spoke concerning the choice to use breast implants, "It has become fashionable in some quarters to argue that women ought to be able to make such decisions on their own. If members of our society were empowered to make their own decisions about the entire range of products for which the FDA has responsibility, however, then the whole rationale for the agency would cease to exist." Quite so! And that is the issue that Congress should consider as it determines the future of the FDA.

Edward L. Hudgins
Editor of Regulation and director of
regulatory studies at the Cato Institute



Cheers to the Court

The announcement by several liquor companies that they will abandon their self-imposed ban on television advertising has been met with consternation by Democratic and Republican Party spokesmen alike. In the advent of recent Supreme Court decisions expanding protection for liquor advertising, any new law that imposes a blanket ban on television liquor ads will probably not survive judicial review.

Last term the Supreme Court handed down a decision, 44 Liquormart Inc. v. Rhode Island, that is destined to have a profound impact not only on liquor price advertising but also on the free flow of commercial speech generally. Not since the landmark decision Virginia State Board of Pharmacy (1976) has the Court come as close to recognizing full First Amendment protection for truthful, nonmisleading commercial speech. 44 Liquormart demonstrated that the Court can bring a degree of order to the historically volatile issue of commercial speech by returning to first principles supporting the free flow of truthful commercial information.

In 44 Liquormart the Court struck down two Rhode Island laws that banned alcohol retail price advertising. One law prohibited advertising by vendors, the other by the Rhode Island media. The Court held that blanket bans on truthful, nonmisleading commercial speech were repugnant to the First Amendment. The Court also hinted that future bans of this kind might no longer be judged under the "intermediate scrutiny standard" established in Central Hudson Gas & Electric Corporation (1980). Under the intermediate scrutiny standard, a state could act against commercial speech if it had a substantial state interest and if the means were narrowly tailored to accomplish its ends. Instead, the Court suggested that it might use the "strict scrutiny standard" that is ordinarily reserved for cases of suppression of political speech.

The Court has come a long way in a short time in the area of commercial speech. In Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico (1986) and its progeny, including San Francisco Arts and Athletics Inc. v. United States Olympic Committee (1987), the Court gave broad deference to allegations by state legislators concerning harm purported to follow from certain kinds of commercial speech. In these decisions the Court allowed legislatures to act without offering any proof of harm.

But in Rubin v. Coors (1995), the first decision on liquor labeling, the Court announced a major departure from the doctrine of deference to legislative findings. That decision struck down a federal prohibition limiting alcohol content in malt beverage labels. The Rubin Court demanded that government prove harm, not merely speculate as to its existence, to justify commercial speech suppression. The harms recited must be "real," the Court implored, and the regulations must alleviate those harms "to a material degree."

Rubin v. Coors and 44 Liquormart join two other recent commercial speech decisions, Edenfield v. Fane (1993) and Ibanez v. Florida Department of Business and Professional Regulation (1994), in which the Court deemed constitutionally defective the absence of tangible proof of harm. That precedent will provide far greater guidance to the lower federal courts than the topsy-turvy precedent that marked the period from 1980 to 1993. The Court may now be expected to require, in every case, that the state present tangible proof of harm as a condition precedent to restriction of commercial speech and will probably forbid any absolute bans on truthful, nonmisleading commercial speech as long as counterspeech and less-restrictive nonspeech regulations are available to achieve the state’s ends.

44 Liquormart’s greatest contribution to commercial speech protection lies in its rejection of Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico. Posadas was built upon the logical fallacy that a "greater power" held by the state to prohibit an act includes a "lesser power" for the state to prohibit advertising about the act. In 44 Liquormart the Court abandoned that logic, explaining that it could no longer abide by the fallacious assumption "that words are necessarily less vital to freedom than actions or that logic somehow proves that the power to prohibit an activity is necessarily ‘greater’ than the power to suppress speech about it."

44 Liquormart also signals a return to principles favoring the free flow of truthful commercial information first articulated in 1976 in Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council. In both cases the Court deemed state paternalism an evil to be zealously guarded against in the commercial speech context. The Court found repugnant the notion that the suppression of truthful commercial information could somehow better serve consumers than the free exchange of information in the open market:

Bans against truthful, nonmisleading commercial speech . . . usually rest solely on the offensive assumption that the public will respond ‘irrationally’ to the truth. The First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own good.

44 Liquormart sets a potent precedent against a number of commercial speech bans enacted at the state and federal levels. In particular, the FDA’s regulations prohibiting all nutrient-disease relationship statements on food and dietary supplement labels are now quite vulnerable to constitutional attack. That is because the agency never established that alleged harms attendant to consumer edification about the health benefits of lawfully marketed products were in fact real. Nor did the agency establish that the regulations adopted would alleviate the alleged harms to a material degree.

Moreover, a recent FDA advanced notice of proposed rulemaking concerning the regulation of commercial health information on the Internet, which seeks to prohibit unapproved drug indications from reaching consumers, may never result in a rule that can pass constitutional muster. The FDA cannot directly and materially advance its interest in protecting consumers from misuse of prescription drugs by suppressing truthful, nonmisleading health information about those drugs. The means chosen do not materially advance the ends; suppression of truthful, nonmisleading health information will not significantly lessen abuse of prescription drugs. And there are numerous less-restrictive alternatives, for example, counterspeech by the FDA over the Internet, that do not involve suppression of speech.

The FDA will find 44 Liquormart vexing because truthful yet unregulated health information is not only indispensable to public edification concerning improved health but also rests squarely within the protective compass of precedent favoring disclosure of information rather than suppression

The immediate result of 44 Liquormart will be freedom to advertise alcohol price information, perhaps even through the medium of television. In the long run 44 Liquormart’s legacy will be the strengthening of the principle that truthful, nonmisleading commercial speech may not be suppressed as long as counterspeech or regulatory alternatives unrelated to speech are available to achieve the government’s ends. 44 Liquormart may also prove to be the first case in a line of precedent affording truthful, nonmisleading commercial speech heightened First Amendment protection.


Jonathan W. Emord
Constitutional and administrative attorney with
Emord & Associates, Washington, D.C.



FDA: Keeping Medication from Cancer Patients

One of the most egregious infringements on individual liberty is the Food and Drug Administration’s war on cancer patients. For more than fourteen years, the FDA has tried to prevent Americans from using an experimental anticancer drug because it has not met its approval.

Here is how the war began. Stanislaw Burzynski, a Polish-born physician with a doctorate in biochemistry, discovered a nontoxic cancer therapy in 1967. In 1970 he escaped communist oppression and came to America to work on his new discovery. Since 1977 more than twenty-five hundred Americans have sought out Burzynski’s experimental therapy, which he named antineoplastons (meaning anticancer). Most of his patients had been diagnosed as terminal after chemotherapy and radiation had failed or made their illnesses worse. Although Burzynski makes no claim to cure all types of cancer, his treatment has benefited many patients—clinical x-rays show that many tumors were reduced following antineoplaston therapy; some patients have gone into complete remission; and none of Burzynski’s patients have experienced toxic side effects.

Even so, the American Cancer Society placed Burzynski’s therapy on its "unproven methods" blacklist in 1983. Several months later the FDA sought an injunction to stop him from treating patients with antineoplastons because it had not approved the treatment. Federal Judge Gabrielle McDonald denied the FDA’s request to shut Burzynski’s clinic. Instead, the judge ruled that Burzynski could continue to treat patients in Texas, but she prohibited him from shipping antineoplastons across state lines.

For the next eleven years, Burzynski fought numerous battles with the federal government—his research clinic was raided by FDA officials; his medical records were confiscated; and he was subjected to three federal grand jury investigations between 1986 and 1994, but no indictments were handed down. Burzynski continued to treat hundreds of terminally ill cancer patients with remarkable outcomes for many. In 1994 the FDA even approved Burzynski’s manufacturing facility and granted him permission to conduct clinical research trials.

Then on 24 March 1995 Burzynski appeared on the CBS television show "This Morning," accompanied by three patients. The patients had been diagnosed with terminal cancer, but after receiving antineoplastons it appeared that they were free of cancer. That very afternoon the FDA raided Burzynski’s clinic. A fourth grand jury investigation got underway.

In the meantime, Congress held hearings to determine whether the FDA was acting improperly. In July 1995, one of Burzynski’s patients gave a dramatic testimony before a congressional subcommittee. Paul Michaels was four years old when he was diagnosed with an inoperable brain tumor, and he later underwent antineoplaston therapy. Paul, then fourteen years old, told the subcommittee, "It’s like I’m at war against cancer, and the government keeps trying to take away the only weapon I have."

On 20 November 1995, the fourth grand jury returned an indictment against Burzynski. He was charged with one count of contempt of court for violating the order against interstate delivery of antineoplastons, thirty-four counts of mail fraud for submitting false or misleading insurance claims, and forty counts of distributing a non-FDA approved drug in interstate commerce. A mistrial was declared on 3 March 1997 with mail fraud charges dropped, but prosecutors plan to retry the case.

According to Dean Mouscher, spokesman for the Burzynski Research Institute, "Mail fraud charges were brought about because Dr. Burzynski mailed healthcare bills that the federal government alleges are false and misleading." Why were Burzynski’s bills allegedly false? "He used a chemotherapy code on his bills rather than a code for antineoplastons, because no such code exists," said Mouscher.

According to federal law (Title 18, U.S.C. Section 1341), any person who mails a false or misleading healthcare bill can be charged a $250,000 fine and sentenced to five years in jail for each piece of mail. The law applies to mail sent by government and private carriers. Burzynski says, "My main ‘crime’ is that I did not prevent the patients who came to receive the treatment with antineoplastons in my clinic in Houston from leaving Texas and continuing self-administration of antineoplastons outside the state of Texas."

Representative Joe Barton (R-Tex.) wonders if the FDA has misused its power in order to punish Burzynski. According to the Washington Times, Barton said, "It is extraordinarily rare for a grand jury to fail to indict at the request of a U.S. Attorney." Its failure to do so after three attempts, he said, is "virtually unprecedented."

Burzynski’s case highlights the crux of the problem with most regulations today: they restrict the freedom of individuals to engage in voluntary transactions. Representatives Barton and Peter DeFazio (D-Ore.) recently reintroduced the Access to Medical Treatment Act, H.R. 746, which addresses this issue. The act specifies that patients may be treated by a licensed healthcare practitioner with any medical treatment desired, even if the treatment has not been approved by the FDA. The bill stipulates that practitioners must inform patients about the risks and benefits of the proposed treatment and whether a drug is FDA approved.

FDA reform is desperately needed to help Americans access medical treatments of their choosing. Many regulations take freedoms away from individuals, but FDA regulations are taking lives. Should we allow the FDA to maintain that role?


Sue A. Blevins
President, Institute for Health Freedom



Sound Standards Require Cost-Benefit Analysis

On 12 March 1997 the period for public comment on the new national ambient air quality standards (NAAQS) closed. The Environmental Protection Agency is scheduled to finalize standards for ground-level (tropospheric) ozone and particulates by the middle of July. There has been no shortage of public comment, but it seems unlikely that it will impact the standard-setting process.

The Clean Air Act requires the EPA to establish and enforce air quality standards that protect public health with an adequate margin of safety. It proscribes the consideration of economic factors in setting those standards. Economic factors may be considered only at the implementation phase. This is a very high-minded objective. Who but a Philistine could disagree with it? Well, nearly any economist might.

In a world of scarce resources (the real world), people must be concerned about balancing incremental costs with incremental benefits. Trying to set air quality standards without considering costs is akin to buying an automobile without regarding prices. If the choice were between a Chevrolet and a Mercedes and cost could not be considered in the decisionmaking process, which would you choose? After choosing the Mercedes, you would be faced with the cost issue. Easy financing would be a small comfort if making the monthly Mercedes’ payment would mean that you would have to live in a studio apartment instead of a three-bedroom home.

Unfortunately, two factors stand in the way of setting an economically sensible air quality standard for ozone. First of all, the point where incremental costs equal incremental benefits was crossed with the passage of the 1990 Clean Air Amendments. The standard we are currently trying to meet costs between $4 and $28 to produce $1 in benefits. A more restrictive standard, such as the one proposed, will be even more costly.

The cost-benefit characteristics of the proposed ozone standard are, of course, the subject of much debate. The EPA has presented some very modest figures for both benefits and costs in its Regulatory Impact Analysis. But cost-benefit estimates from industry are quite different, particularly costs. A study funded by the American Petroleum Institute estimated the range of costs for the Chicago area alone. API’s lower bound estimate for Chicago equals the EPA’s upper bound estimate for the whole country ($2.5 billion).

A second factor hindering the effort to set a sensible standard for ozone is that health effects from ozone occur at levels produced by natural processes. That is what the Clean Air Scientific Advisory Committee stated clearly in its closure letter to EPA administrator Carol Browner. CASAC concluded:

Ozone may elicit a continuum of biological responses down to background concentrations. This means that the paradigm of selecting a standard at the lowest-observable-effects level and then providing an ‘adequate margin of safety’ is no longer possible.

In other words, the proposed standard will probably be a way station and the case will be pressed for a standard that is very near background levels—that is, 0.07 parts per million over eight hours and with only one allowable exceedance a year. This is the standard favored by the American Lung Association, for example.

No one should minimize the trauma that a severe attack of asthma causes the asthmatic or his or her loved ones. But the EPA staff report estimates show that for each one million persons exposed, we can expect just one to three more summertime respiratory hospital admissions per day for each one hundred parts per billion increase in the ozone level. Asthmatic hospital admissions in the New York City area likely would be cut by only about ninety patients per year out of a total 14,700 summertime asthmatic admissions—a mere 0.6 percent—as a result of reaching the proposed standard relative to the current standard.

The EPA has also proposed a secondary standard to protect plants and buildings. Two fundamental objections can be lodged against that standard. First, ozone concentration data for rural areas are very limited, which makes accurate assessments of air quality in many of those areas impossible. Second, incremental cost and benefit estimates for meeting the proposed secondary standard versus meeting the current goal have not been included in the agency’s Regulatory Impact Analysis. The agency, thus, is requiring that substantial financial and human resources be expended to prepare implementation plans to protect primarily commercial crops without knowing whether the hypothetical benefits outweigh the costs.

With regard to particulates, the main argument against setting daily and annual standards for PM 2.5 (particulate matter with a diameter of 2.5 microns or less) at this time is the uncertainty of the medical and atmospheric science. Relatively few medical studies are available to support the fine particle standard.

It is curious, to say the least, that the statistical link that has been demonstrated is between fine particles and cardiovascular deaths, not deaths due to respiratory disease or lung cancer. Proponents of a new standard suggest that fine particles are more easily inhaled into the lungs than large particles. But this does not explain why the heart and arteries would be significantly compromised while the lungs are less affected.

Further, the atmospheric science of fine particles is not very well developed. A variety of airborne suspects has been identified, but it is not clear which may be the most important or which characteristics of the particles cause the harm. There are also very few monitors collecting data on PM 2.5.

Setting a separate PM 2.5 standard at this time appears to be another case of "ready, fire, aim," as former EPA administrator William Reilly once described hasty responses to perceived environmental problems. So, what should be done? The EPA is not required to tighten the ozone standard or to create a new particulate matter standard. In the case of ozone there is little evidence that a tighter standard will increase protection for the sensitive population. For particulates the science is not adequate to warrant a new PM 2.5 standard.

Rather than press forward with a tighter air quality standard for ozone and a new standard for fine particulates, the EPA should appeal to Congress and the White House to revisit the Clean Air Act. Two basic reforms are required. First, the fundamental objective of the act needs to be changed from "protecting the public health with an adequate margin of safety" to "protecting the public against unreasonable risk of important adverse health effects." Second, cost-benefit analyses should be required, not proscribed, when setting air quality standards.


Kenneth W. Chilton
Director of the Center for the Study of American Business at Washington University in St. Louis, Missouri.

Stephen B. Huebner
The Center’s Jeanne and Arthur Ansehl Fellow



EPA’s Sham Science Reveals Political Agenda

The Environmental Protection Agency’s recent decision to purchase 158 homes, empty two hundred apartments, and relocate the inhabitants of the Escambia section of Pensacola, Florida, like its previous decisions to purchase Love Canal and Times Beach, proves beyond doubt that dioxin has made the transition from possible health risk to certain political tool. It also shows that Superfund, the program under which the Escambia actions were taken, can be stretched to justify any action that politics may require.

America’s first dioxin scare centered on Love Canal, a community located near the Niagara Falls that was built on a chemical waste dump. In the late 1970s self-appointed epidemiologists claimed the town’s residents had unusually high rates of cancers and birth defects. The hype carried the day—residents of Love Canal were evacuated in 1980, some houses were torn down, and the remainder were boarded up. Careful studies subsequently showed the hype was just that—hype. In fact the rates of cancers and birth defects in Love Canal were not atypically high—they were rates that would be expected in a community of that size. Two years ago, the houses that had not been razed were reconditioned and sold to eager buyers.

In a second dioxin scare the federal government bought and bulldozed Times Beach, Missouri, in 1983 because of dioxin found in the soil of unpaved roads (and nowhere else). The buyout led to the only biological effect ever identified at Times Beach: the populations of wild turkey and deer have grown exponentially inside the fence that keeps hunters and predators off the site of the former town.

Now, dioxinlike chemicals that are far less toxic than dioxin are present in the soil of a former wood-treatment plant in Escambia. The EPA, worried that the chemicals might contaminate the groundwater, dug up the soil, heaped it into a pile, and covered it with a thick plastic blanket. Nearby residents dubbed the heap "Mount Dioxin" and demanded that their homes be purchased and that they be relocated. The residents refused examinations by U.S. Public Health Service doctors because they expected that the doctors would find nothing wrong. On 3 October 1996 the EPA announced its intent to purchase the nearby homes and apartments, and officials are now appraising the value of the housing.

Along with dioxin, politics has been central in all three cases. Love Canal, the first televised chemophobia drama, led to the passage of Superfund. Times Beach was a response to the widespread criticism of Reagan’s "do-nothing" EPA. The timing of the Escambia decision (a month before the presidential election) and the facts—that Escambia is a minority community and that the concentrations of dioxin in Escambia have been deemed acceptable by the EPA at other sites—strongly indicate that politics, not dioxin, was the primary consideration. A number of EPA officials have stated their belief that the White House, not the EPA, was responsible for the Escambia decision.

Dioxin is such a strong word in the environmental lexicon that everyone seems to "know" it causes cancer, birth defects, and a host of diseases. But common knowledge is wrong. The EPA’s own Science Advisory Board concluded that the only human disease known to be associated with dioxin is chloracne, which is a skin disease found only in people who have been exposed to very high concentrations of dioxin or related chemicals. No chloracne cases would be expected in people exposed to the tiny concentrations of dioxin found in Love Canal, Times Beach, or Escambia, and none have been seen.

The absence of dioxin-related diseases in human populations cannot prove that harm has not or will not occur, because it is impossible to prove a negative. But absence is a strong indicator and scientists depend on such evidence all the time.

In 1995 the SAB stated in a review that the EPA’s four-years-in-the-making, six-million-dollar "reassessment" of dioxin had "a tendency to overstate the possibility for danger." Now, nearly two years later, the EPA is still rewriting its assessment. The SAB especially criticized the EPA’s method for estimating the risks of dioxinlike compounds: "Simple additivity ignores . . . the chemical and biological properties of these chemicals." Regrettably "simple additivity" is the basis of the Escambia decision.

The EPA’s actions have destroyed any hope that science might lead to better public policy decisions. All the science in the world will not displace the argument that "there must be something wrong or the government wouldn’t have bought Love Canal, Times Beach, or Escambia."

The events surrounding Escambia show that any concentration of dioxin may be used to cloak political decisions. The 104th Congress looked to "better science" as the guide to regulatory reform at the EPA. While better science could help, regulatory reform clearly requires that the 105th Congress take a hard look at both the science and the politics behind EPA policies.


Michael Gough
Director of science and risk studies, Cato Institute



Wetlandowners Swamped by Regulations

Uncle Sam gave landowners a postelection surprise in December 1996. Bowing to pressure from Clinton administration officials and environmental lobbyists, the Department of Defense published the "Final Notice of Issuance, Reissuance, and Modification of Nationwide Permits" in the Federal Register. The statute took effect 11 February 1997 and will expand one of the nation’s worst regulatory policies—the governing of so-called wetlands.

To understand why the Department of Defense is concerned about activities in the nation’s soggy places, one must go back twenty-five years. In 1972 Congress passed the Federal Water Pollution Control Act. Tucked away in Section 404 of the act was the prohibition on discharging dredged or fill material into "navigable waters" without a federal permit. The provision was designed to protect the country’s rivers against pollution, the "navigable waterways" over which Congress has jurisdiction. The Army Corps of Engineers was given the job of determining where and how the act would apply. But like many innocuous-sounding statutes, Section 404 mutated into a monster.

In 1975 the Natural Resources Defense Council, in NRDC v. Calloway, challenged the Corps’ commonsense assumption that its authority under Section 404 was limited to traditionally navigable waters. A federal court ruled that Section 404 coverage should be expanded to all "waters," including wetlands. But since the Corps did not have, nor was ever likely to have, the resources to regulate activities in all of these waters, in 1977 it created a system of nationwide permits covering certain kinds of activities, headwaters, and isolated wetlands.

In response to a 1984 federal court ruling in National Wildlife Federation v. Marsh, the Corps consolidated the headwaters and isolated wetlands into one nationwide permit, known as Nationwide 26 (NWP 26). That permit established three classes of isolated wetlands and applicable procedures. If a wetland was isolated—that is, not connected to another body of water—and was smaller than one acre, the landowner did not have to notify the Corps of intent to fill the wetland. If the wetland was larger than one acre but smaller than ten acres, the landowner had to write the Corps a letter describing the project and the amount of wetland to be filled. If the Corps did not respond to the letter within thirty days, the permit was granted automatically. Wetlands ten acres or greater would require an individual permit issued by the Corps before action could be taken.

The new rule issued by the Clinton administration effectively replaces NWP 26, removing even the minimal protection it granted property owners. For the next two years, an isolated wetland must be one-third of an acre or smaller if a landowner wishes to fill it without notifying the Corps. If an isolated wetland covers more than one-third of an acre but fewer than three acres, the landowner can simply send the Corps a letter describing the project. But, rather than a maximum thirty days, the Corps now has forty-five days in which to reject a permit. An individual permit from the Corps will be needed for use of land greater than three acres.

Yet even this modicum of remaining flexibility will not last long. According to the final rule, NWP 26 will be eliminated after two years. By 1999 every landowner possessing what the federal government defines as isolated wetlands will be forced to file for an individual permit if they wish to modify their land, no matter how insignificant the modification.

One consequence of the Corps’ change in policy is that owners of small and large parcels of land will face increased uncertainty, red tape, and delays if they wish to utilize their land. A study of the Army Corps of Engineers’ permitting program by Virginia Albrecht and Bernard Goode for the law firm of Beverridge and Diamond found that in 1992, applicants who had applied for an individual permit had to wait an average of 373 days for the Corps to make a decision on their permit. The town of Tiverton, Rhode Island, had to wait 705 days for the Corps to allow it to fill a forty-four square yard wetland for a mosquito control project. And one landowner in Louisiana, J.R. Haskins, had to wait 1,159 days for the Corps to allow him to put in a trailer home.

Indicative of the delays small landowners are likely to face is the fact that the Corps currently processes approximately fourteen thousand NWP 26 permits for parcels of land between one acre and ten acres in size, with a thirty-day period for the Corps to give its decision. By comparison, the Corps processed 5,040 individual permits in 1996 for parcels of land over ten acres. The workload associated with the additional processing of those fourteen thousand individual permit cases would increase the workload fourfold. According to the final rule published by the Corps, "An IP [individual permit] workload increase of this magnitude would render the program ineffective and would be a disservice to the American public and overall environmental protection." In addition, the Corps estimates that in 1996 there were another twenty thousand cases of activities on parcels of land smaller than one acre that could require individual permits in the future. According to the Corps, complete elimination of NWP 26 would result in a sevenfold increase in the individual permit workload.

A perpetual problem with the application of Section 404 is that it was not intended as a wetlands protection program, consequently, it has largely failed to protect them. In the end, the Corps denies only one-half of 1 percent of all permit requests. Many environmentalists acknowledge the ineffectiveness of current permitting policy. Ted Williams in Audubon magazine described Section 404 as "a hoax perpetrated and perpetuated by a wasteful, bloated bureaucracy that is efficient only at finding ways to shirk its obligations and that when beaten on by developers, spews wetland destruction permits as if it were a piņata."

Most environmentalists advocate solving this problem by tightening current regulations, which is exactly what the Clinton administration has done. Unfortunately, the sevenfold increase in wetlands cases for the Corps, due to the new restrictions, will make the program even less effective.

Ironically, the new regulation is not necessary. While the Corps wastes millions of dollars each year creating paperwork that protects virtually no wetlands, several voluntary economic-incentive programs have protected and restored hundreds of thousands of acres of wetlands. Those endeavors, such as the Wetland Reserve Program and the North American Water Fowl Management Plan, have been so effective at restoring wetlands that there has been a net increase in wetlands in the United States.

Just when the United States stopped losing wetlands, the Clinton administration deftly made wetlands policy more burdensome, bureaucratic, and inefficient. While Congress did not vote on the new regulation, it will have a chance under the Congressional Review Act of 1996 to review and reverse this policy. How Congress deals with the new wetlands rule will test both the effectiveness of the CRA and the political will of regulatory reformers.


Jonathan Tolman
Policy Analyst, Competitive Enterprise Institute



NHTSA Air Bag Mandate Misfires

They would "provide protection against injury without car occupants having to take any action at all." They were "an extension of the passive protection philosophy embodied in many other public health and safety measures such as inoculation programs, pasteurized milk, and fire sprinkler systems." Claims that "not enough is known about these systems" were baseless, because they had "undergone more research, development, and testing under all kinds of laboratory and real world conditions than any auto safety device ever proposed."

They were air bags, the year was 1977, and that was the rosy picture painted in one brochure produced by the National Highway Traffic Safety Administration as it campaigned for its new passive restraint mandate. Another NHTSA handout raised their virtue to even greater heights and advised, "The lap belt is not necessary to obtain the full protection of a passive restraint system in a front or front angular collision."

The public relations campaign, spearheaded by NHTSA administrator Joan Claybrook, worked. The agency’s passive restraint mandate—requiring either air bags or automatic seat belts for front-seat car occupants—survived congressional review, court challenges, and even the Reagan administration. In 1991, Congress changed the rule to an air bag only mandate.

But on balance air bags have proven dangerous to children—over thirty children have been killed by air bags in low-speed collisions that normally present little risk of injury. Short drivers seated close to the steering wheel, especially women, also appear to be at risk.

While air bags have saved lives on balance, approximately fifteen hundred to date, their performance has been significantly lower than NHTSA promised. In 1977 NHTSA claimed that an air bag alone would reduce an occupant’s fatality risk 40 percent in all crash modes combined and 65 percent in frontal collisions where airbags work best. NHTSA’s latest study, released August 1996, indicates that the figures are 13 percent and 34 percent respectively. Lap-shoulder belts, on the other hand, are 45 percent effective overall.

The air bag saga has led to a number of astounding reversals among proponents of the mandate. For over a decade, the consumer safety establishment characterized concern over air bag risks as a touchstone of mendacity. A 1991 press release from the Center for Auto Safety, for example, listed among the auto industry’s alleged "past lies and distortions" its opposition to air bags "on the grounds that they could kill children." But when concern over air bag risks became newsworthy in 1996, the center joined in a press conference at which, in the words of the press release, "Auto safety advocates . . . revealed documents dating back to the 1970s which showed that the current . . . child injury problem with air bags were foreseen by auto industry tests."

Claybrook once claimed that air bags "fit all different sizes and types of people, from little children up to 95th percentile males." At present, Claybrook claims she tried to warn the public about air bag risks when she headed NHTSA but her warnings were drowned out by the auto industry’s "sales push" for the device.

Most ironic, perhaps, has been NHTSA’s response to the public: over the course of two decades, public opinion has gone from pivotal to irrelevant to pivotal once again. In late 1976, NHTSA decided to negotiate a demonstration program under which the auto industry would manufacture a half-million air bag equipped cars. A major purpose of the program was to increase public acceptance of the devices by demonstrating their real world operation. This was important to the agency for practical and political reasons; it was still smarting from its ill-fated attempt to increase belt use through ignition interlocks. In 1972 the agency had mandated those devices, which prevented cars from starting unless the driver’s seat belt was buckled. But the interlocks so outraged the public that Congress quickly killed the rule.

In 1977, however, under the Carter administration, the agency switched course. Not only did it replace the newly negotiated demonstration program with an across-the-board mandate, it dismissed the issue of public acceptance entirely. Brock Adams, the new transportation secretary, declared, "[The demonstration program] needs reconsideration because I cannot agree that consumers would respond to passive restraints in the same fashion as the ignition interlock." Unlike the ignition interlock’s element of "forced action," air bags were "not even visible to the occupant."

But as the number of deaths caused by air bags increased, the agency moved from denying the relevance of public reaction to keeping a lid on it. A 1991 NHTSA memo noted its concern that "bad press on these few cases could cause a lot of harm to the public’s positive perception and receptiveness to air bags." In 1993, when NHTSA formulated the mandatory warning that appears on the sun visors of air bag equipped cars, it chose relatively weak language, in part at the urging of auto safety groups (including Advocates for Highway and Auto Safety, cochaired by Claybrook) who warned against "unnecessarily alarming statements" that might "instill anxiety."

Now, faced with public outcry and congressional pressure, NHTSA is hurriedly considering a host of regulatory fixes: liberalized rules to allow consumers to deactivate air bags; changes in federal performance criteria to permit less forceful deployment; and requirements for "smart" air bags, which supposedly sense and respond to occupant characteristics.

The fate of these proposals is unclear. What is clear is that if we had known in 1977 what we know today, the air bag mandate would never have survived politically. Regardless of how many lives the mandate might save on balance, the public would have rejected its forced use.

The air bag mandate began as an attempt to override individual choices regarding seat belts. To many people it represented the height of paternalistic government—a 1976 Department of Transportation tally of over seven thousand letters received shows a majority opposed the mandate. But in retrospect, the mandate has also taught us something about technocratic government. The public, after all, might have accepted the official line that air bags save lives and let the matter rest at that. It did not. Whether we are concerned about paternalism or technocracy, the strength of public reaction against a rule once deemed reaction-proof is, at heart, an encouraging sign of limits to public acquiescence.


Sam Kazman
General Counsel, Competitive Enterprise Institute

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