VOL. 17, NO. 2 WATER RESOURCES BULLETIN

AMERICAN WATER RESOURCES ASSOCIATION APRIL 1981

POLICY PROBLEMS ASSOCIATED WITH WATERBORNE ASBESTOS’

Michael Sheehan’

ABSTRACT: This article discusses the implications of accepting various standards of scientific evidence in disputes arising over the dumping of potentially hazardous materials into public waterways and drinking water supplies. Standards based on the types of risks and levels of benefits suffered and received by adjacent populations are evaluated within the context of the several pieces of federal legislation which relate to water quality. A case study of Reserve Mining Cor- poration’s dumping of taconite wastes into Lake Superior is presented to illustrate the ramifications of decisions based on differing perspec- tives of the problem and its impacts by the courts, the affected public, RMC, and the regulatory agencies involved. (KEY TERMS: waterborne asbestos; Reserve-Mining Corp; voluntary- involuntary risk; EPA; OSHA; taconite; FWQCA.)

INTRODUCTION

In 1947 Reserve Mining Corporation began the mining and beneficiation of taconite ore in its facilities at Babbitt and Silver Bay, Minnesota. Beneficiation relies on a process where taconite ore is crushed flour fine and separated magnetically into high tenor iron ore and tailings. Approximately 100,000 tons of ore are processed daily, producing approximately 33,000 tons of “output” along with 67,000 tons of waste tailings and half a billion gallons of waste water. Waste water and tailings are discharged into Lake Superior at a point several hundred yards off the coast.

After a substantial amount of controversy in the late 196Os, the US. Environmental Protection Agency convened a Federal Enforcement Conference to investigate charges that Reserve was polluting Lake Superior to the detriment of the health and welfare of other lake users.

In due course, the conference report - critical of Reserve - was translated into a suit by EPA, the states of Minnesota and Wisconsin, and a small army of environmental groups in federal district court to prevent Reserve from further polluting the lake.

Initially the suit was based on three assertions by EPA (Schaumburg, 1976: 154-6): First that Reserve was violating the conditions of its Federal and state discharge permits; second that Reserve’s tailings qualified as interstate pollution endangering the health and welfare of lake users in several states; and finally, that Reserve’s Activities violated the 1899

Rivers and Harbors Act’s general prohibition of refuse dis charges into navigable waterways. In mid-1973, however, a new issue arose which overshadowed all the rest: tailings from the Silver Bay facility, too fine to sink, were dispersed beyond their intended dumping ground by Lake Superior’s currents. These fine tailings were found to contain small, sharp asbestos- like fibers, some of which were being carried into the drinking water supplies of towns and cities to the southwest of Silver Bay, most notably Duluth.

The discovery of these fibers caused quite a sensation in the communities which were directly effected as well as in legal, environmental, and business circles and led to the filig of two additional causes of action in the pending court case. In the first, EPA asserted that discharge of Reserve’s fiber- bearing tailings into Lake Superior endangered the health of those communities using the lake as a water supply; in the second, EPA argued that the Silver Bay ore crushing operation created a health hazard through the discharge of similar fibers into the ambient air.

Reserve countered with the argument that though (airborne) asbestoid fibers were perhaps ‘known carcinogens,’ conclusive evidence did not exist of any carcinogenic effect from the waterborne fibers in the Lake Superior communities. The struggle between EPA and RMC over the waterborne discharges thus directly parallelled the scientific debate over whether thresholds exist for carcinogenic materials below which expo- sure is ‘safe.’

The Argument Over Thresholds

From the point of view of public policy, the United States has held consistently to an implicit threshold theory position up until the passage of the Delaney Amendment to the Food and Drug Act in 1956 and for the most part thereafter as well. Any level of exposure to any material was considered safe unless the injured party could prove the contrary. I t has only been in the decade of the seventies that improvements in scientific technology and experimental methods have shown that previously accepted “safe” levels of various substances are in fact unsafe. This rejection, or continuous revision down- wards, of previously accepted threshold levels - vinyl chloride

‘Paper No. 80098 of the Water Resources Bulletin. Discussions are open until December 1, 1981. ’Assistant Professor, Graduate Program in Urban and Regional Research, The University of Iowa, Iowa City, Iowa 52242.

275 WATER RESOURCES BULLETIN

Sheehan

rzcent example of such a phenomena (Doniger, 1976) - ILIF led to the decline of the “safe threshold” notion in the

The nonrhreshold theorists can be divided roughly into two Those who hold that it only requires a single hit by a

.irr@e molecule of a carcinogen on a susceptible cell to produce 1 malignant tumor (Bingham, 1971, p. 692), and those that liolil that the body of current knowledge is inadequate t o s m t l f v the scientific approval of ‘safe’ levels even absent < i r i i i evidence of carcinogenic effect. The latter position waq -bc ~ i i c eventually accepted by the district court

.icntific communi t~

inii,li

Thr t)istricr Court Decision [ ) I : 4pril 20, 1974, the nine-month trial ended in a deci-

sin,? requiring Reserve to cease all air and water discharges of fiblous material at once (Mitchell, 1975, p. 54). The district :‘<>lir-t based its decision on the emergency provisions (Section 504l of the Federal Water Quality Control Act which allows .)f injunctive relief when the public is faced by an “imminent” iianger. The company immediately appealed, winning a stay

I!‘ the district court order. After a subsequent hearing, the ,ippeals court ruled that: 1 ) fiber levels were not at occupa- ~innal risk levels; 2) the low levels present could not be mea- wrctt , and therefore, could not be expressed as a health risk; :ind 3 ) i t was not known what level of exposure was unsafe f ScIuumbrirg, 1976. p. 196).

This paper considers two aspects of the appeals court ruling: lu the occupational hazard level for asbestos the appro-

priatc standard in nonoccupational cases of this sort? (2) What i s thc implication from the standpoint of economic efficiency (dtsfiried by Schultze, 1977, p. l ) , as how well society meets ~

in quantity and quality - the material wants of its members) 4’ allowing discharges to continue when health damage cannot l v tletcrniined with certainty?

VOLUNTARY VERSUS INVOLUNTARY RISK rhe Occupational Health and Safety Administration

(OSHA) regulates the risks under which workers work. Occu- pational hazards are “voluntary” risks: workers implicitly agree !‘) w o r k under risky conditions in exchange for wages sufficient I:: :ompensate them for the hazard faced. The concept of wluntary risk also carries with i t the implication that, were the level of risk to change, the time element involved in an dteration of the risk-benefit agreement would be relatively shoi-t. since there is normally a more or less continuous bar- gaining relationship between the group facing the risk and the group asking that the risk be faced (Starr, 1969, p. 1233).

I n some industries voluntary risks are regulated by the :government. In the case of Reserve, for example, OSHA pro- f g c f s plant workers hy determining the allowable number of fibcrs per cubic meter of ambient air within the confines of f ? ~ ’ plant itself (for asbestos the current standard is 2 fibers :w?- CM3 per 8-hour period). Yet while this “voluntary risk” +x iegnry is appropriate for those deriving financial benefit from ‘ 1 lirect relationship with Reserve. it is not at all pertinent for

individuals held at risk by Reserve without any direct pensa tion.

The latter situation is clearly the one which faced thc habitants of Duluth: while very few individuals benefited f r m Reserve directly, all were directly endangered by its discharges In the taxonomy of risk, this falls into the “involuntary” ca tc gory for two reasons. First, in the vast majority of cases. I h w is n o direct benefit relationship between those affected and those creating the hazard. Second, the process o f adjusting the hazard into some equilibrium with social welfare i s tiwe consuming, cumbersome, expensive, and uncertain : worse :i

is all but ineffective in regulating short-term or relatively .;mal! variations in hazard.

Individuals faced with voluntary risks can gencrally :I..?<* tiate for greater benefits in compensation: those faced with involuntary risks are generally limited to the choice of either quitting a risky situation or minimizing i t s impact in some other fashion, normally at their own expense. Thus. thc people of Duluth, unable to leave their water supply wcre lett to filter it through a new and costly water treatment system

This distinction between voluntary and involuntary risk 1’;

reflected in government regulation of hazardous substanccs Table 1 compares the OSHA occupational (i.e., voluntary risk) standard with the EPA ambient (7.e.. general or i n v o l i i n t ~ n ~ 1

standard for seven major toxic substances. In every standard is substantially more stringent foi the pro tec t iov 1 x 1

thosc involuntarily affected.

Acceptable Risks It has been shown that the level of acceptability ? i ~ i i :

voluntary risks is considerably lower than for voluntary lick. (Starr, 1969, p. 1234; Rowe, 1977, p. 302: Kates, 197% 45ff). Taking the risk of dying from disease as the norin. ihv risks associated with voluntary activities (hunting, smoking general aviation, flying on commercial aviation) arc substar:” tially higher than for involuntary risks (natural disasters, pow?t plant disasters, the danger to nonflyers from commercial :+via- tion, etc.). Starr has compared “acceptable” voluntary versus involuntary risks for different levels of imputed benefits (scr! Figure I ) , and reached the conclusion that “(t)he public ap pears willing to accept voluntary risks roughly 1.000 times greater than involuntary exposure risks. . .’? (Starr. 06‘’ p. 1234).

requires a more stringent standard to be used for involuntary than voluntary risks. It is equally clear that the Rewrvc- created health hazard confronting the people o f Duluth ant i other lakeside cities should be regulated by the stricter stanii- ards associated with involuntary risks. The appeals court ruling, based on the voluntary occupational standard, w:is ni’t reasonable in this context.

From an empirical perspective, then. it is clear (hiit

k,PA AND THE LA% In its ruling staying the district court inlunctiorr, the appeal,

court held explicitly that the use of the emergency provi<i(ws

276 WATER RESOURCES BULLETIN

Policy Problems Associated With Waterborne Asbestos

TABLE 1. Ambient and Occupational Standards for Various Chemicals.

Pollutant

Regulating Agency

EPA OH OSHA Ratio

Beryllium ~~ ~ ~ ~ ~-

Ambient guidelines, 0.01 pg/m3 30-day avg

Mercury (nonorganic) Ambient guideline, 1.0 pg/m3 30-day avg

Alkyl Mercury

Sulfur Dioxide

Ambient guideline, 1.0 pg/m3 30-day avg

0.03 ppm annual avg 0.14 ppm 24-hOUr avg

Carbon Monoxide

Particulates 0.075 pg/rn3

9 ppm 8-hour avg

-~ ~

2 pg/m3 8-hour avg 5 pg/rn3 ceiling

100 pg/m3 c e h g

200* 500*

loo*

10 pg/m3 &hour avg 40 pg/m3 ceiling

5 ppm 8-hour avg

50 ppm 8-hour avg

5 Pdm3

1 o* 40*

167* 36*

5

67

Source: Wm. D. Rowe, 1977, p. 306. *Effects of different measurement periods have been ignored, since translation is not directly possible.

AVERAGE ANNUAL BENEFIT/ PERSON INVOLVED (DOLLARS)

Figure 1. Risk (R) Plotted Relative to Benefit (B) for Various Kinds of Voluntary and Involuntary Exposure.

Source: Starr, 1969, p. 1234.

(section 5 0 4 ) of the Federal Water Quality Control Act re- quires the administrator to have proof of an imminent public health hazard. By deciding in favor of the “floating body” interpretation of sections 307 and 504 the court held, in effect, that the wording of the Federal Water Quality Control Act would not justify precautionary action on the part of the EPA administrator without firm proof. Yet to require proof of the toxic characteristics of waterborne asbestos at this time is an unreasonably severe burden: asbestos in municipal water sup- plies has been identified and perceived as a problem only re- cently and such information does not yet exist. Further, asbestosis (cancers caused by asbestoid fibers) manifest them- selves only 20 to 40 years after exposure (Peterson, 1977,

p. 333). The most that could be expected at this point is evidence demonstrating carcinogenic characteristics in other modes and forms. Such evidence exists and is conclusive. Dismissing these findings as insufficient for a prima facie deter- mination with the implication that acceptable proof will only be available in 20-40 years, would be to use cities like Duluth as laboratories and to value the profits of one company above the public welfare.

New Legislation Though EPA acted vigorously in the Reserve case (although

EPA lost on the “floating body” issue, in the final decision the appeals court held that Reserve had violated its NPDES permit and would have to eventually switch to an on-land disposal system), it has been dragging its many feet in the implementa- tion of new legislation designed to resolve the “floating body” issue in favor of the public.

The Safe Drinking Water Act

empowered the EPA administrator In the Safe Drinking Water Act (SDWA), 1974 Congress

“. . . upon receipt of information that a contaminant which is present in or is likely to enter a public water system may present an imminent and substantial en- dangerment to the health of persons. . . may take such actions as he may deem necessary in order to protect the health of such persons.: (42 USC, 300i(a) Emphasis added)

This is clearly “precautionary” language. Yet when the EPA set maximum contaminant levels (MCLs) for some toxic sub- stances in 1975 (Federal Register, December 24,1975) a limit for asbestos was not among them.

277 WATER RESOURCES BULLETIN

Sheehan

liesporiding t o suggestions that waterborne asbestos be .cgidated or at least monitored (in the interest of collecting 1:tr.i I:: s:ipport a fiiture decision). EPA indicated concern but

!iiiwi !cr take either action noting that ‘&. . . for the moment i .it’) !:ick. sufficient evidence regarding analytical methods,

cf1L.cis o r occurrence in the environment to establish ’ (Fedcral Register, Deccmber 24, 1975, p. 59567). The

5’::gL~~~c WCII! on ! < I u y . however, that “regarding asbestos, !.U3v :iiiil Fl’A :ire sponsoring a riumber of studies this year

.. . ! I ) establish health effects. analytical methods and $ 1 ..,I:~Y-’ !Federal Register. December 24, 1975. p. 59567).

: i ~ ! c l : v pressi1r-e EP.4 has added asbestos to its list nf i : : i i !> h:+zardoii:~ siibstsnces. ;IS of this writing

I ! . . . !‘.’.Y(;! ~ ~ i i i ! i : ! ~ ~ I s <(!I wterbornc asbestos h : ~ yet

- - .

~ : r ‘ ; s ; h \ i ~ ~ ! t ’ < i !: ,)*:;YO! , I ; * ; . ,

: ’ m p ! . ; . ~ ir:lsscd the Toxic Suhstarlces (‘cwtrol Act ~~v.p:iiding WA’s ;iiitliority 10 rcgulatc lhl: ii!tru-

, I . : I . ! . ?x i . . siibst:inLw (timi substances of iinknown toxi- !!,I<* ~ ~ i ! ~ ; i ! - ~ ) i i i i i ~ ~ i i t . I:nder TOSCIA. EPA inay require

: < 1 1 ‘ pciiiarkctirig safety substantiation froin 11’ ! t ic EP4 adiiiinistrator finds t h x t the avail-

,!)!. , ! . + I , ? i<. ,iwil~fickitt I ( I permit :I reasnned evaluation of thc i i ? k i :.v zrivironinental effects. hc can ordei- a halt to the

:.i.?i!.i!:Ic.Iilr~’. ~Jisiril~iition. o r use o f the substances invnlved : 1 .T i W’. ?CiOlt(c)( I)(A): Rodgers. 1977, p. 0001.

1 . : .ictions uridcr TOSCA a company in Reserve’s situation , v i w l < ! !iavc the obligation to prove that waterborne asbestos &!I :lilt pose a Iiealth hazard, instead of‘ EPA having to prove ?:(- .:;wtrary. Doubtful situations are to be resolved in favor \!. I!;:* piihlic.. Within this incentive structure manufacturers of

:?o?ci!tially hazardous makrials have an interest in safety test- .II;! , ,.ht:i wllcctioii. ctc.. which, in the cnd, results in more in- !,.mwd decisions o i i thc part of the EPA. Conversely, under ilic FWQCA manufacturers have an incentive to d o as little r ~ . ~ s ~ : ~ i d i as possible on the public health effects of their dis- Aiargeh thereby requiring EPA t o expand money and effort gatliering proof; a biireaucratically impossible task when the !vmIm of substances which ought to be tested is as large as

’ ~:~ :v :wi : i l e iy . :i Iwphole exists in the statute which re- ...!:iiy .’< !1w :idiiiiitisti-afor to deteritline if the “hazard may be .: ~ l . ~ i : > \ l l d ro ;I ‘sufficient extent’ by the use of another statute

.iriiiiiiiistered hy I-’P,A,” and if so, EPA must act under that ; ~ : , : : I I C ’ r;tther ttian TOSCA (Doniger, 1978). Relying on this y r i x i e n EPA has decision to act under the relatively limited i%r...::i<ia)i:~ of‘ Il1c FWQCA.

OPTIMIZING PUBLIC WELFARE UNDER RISK

i r ! .:coiioiiiics it is generally agreed that more socially effi- t,ict!i: solutions occur when externalities are internalized, i.e., 4e1? all the benefits and costs created by the firm are brought h w t : !o the firm. In order for the firm to choose among out- ;xi: levels. technological processes, prices, etc., in such a way ‘ I : i i .:ontribute to the social welfare optimum, all the impacts

278

of all its activities have t o enter into its prolit ~~alculw: . 1 1 case of the potentially irreversible health haxards cause asbestos waste dumping by firms like Reserve. this principl: is violated.

First, the effects of discharges wollld begiil to a p p ~ i i t L l i ! >

after 20-40 years, and would continue inti) thc indcfinir i future. (It was shown that Lake Superior would riccd !I;> i years to purify itself o f taconite wastc ‘Pctsrsm: p. 335) . This time span i s far beyond the rcasonali:!c !il’:- .’-. pectaricy of citrporations in general. iniich Icr;s R h K wlii;:!~~ ;.. a wholly owned subsidiary of AKMCO :~IM! Rep:!!~!!. k! Corporations existing only to process t t i c r:!itidIy ~ . l ~ : ~ i i : ! i s V ! : .’

ilp. 31 cllrreili ~ : I I C S of depletion. in npp In this type of siiu:ition. without so111r~ 1lii!?It r)r cxlciidctl liability, Kewve :]I.:. w a p i n g inout pecuniary dnnxtges arisir cxpecctetl gestation period of the asbcs i lw

Second. many of the potcntial d versible and ( ! f large valrie ciirren! resources would be sufficient I i l l anything approaching a worst-cssc sc.:vwit : i Rc.4. ‘s”

position. i v i t h e other hand, i \ that Ihr risk !~ : Ivaligi!-i*. ’:

if thc risk is :IS sinall as Kesclvc claiins t l i : ~ ~ !~o!iipii~!

he nhle to Imid itself against potential d;ii!:~s i i l :i r c i

price.) This nieaiis thai the niaxiniriiii possihb :i:ihili::: . ’

.4KM(’O and Republic a t the time tha t I.h? liebilli:. w most likely coinc due: will far exceed t h e wllalci-:ii v;iIi : ! ; -

atiached assets in the form of Reserve i1sdC. ‘ I l i a i k i t ) , a :

th:it some fraction - possibly a large frac.tio!i o!’ c would go unsatisfied. The difference bctwecn claims arid pensation is, in effect. a subsidy provided to tlic !wni:i< i‘

Reserve by those bearing the involuntary risk. Sinco wr;i(’i:i tioris like Reserve are receiving this implicit subsidy OH ;! y!i tc,n-of-waste-produced basis. they produce t o o i i iuch ariil :::3i at too low a price relative to socially optimal valiies. T l i ~ i s .

clearly a case of market failure; and the government’s rcfiiwl t o control the potentially hazardous proliferation of ;iSbc.;toi;l effluent in the air and water contributes to econor!iic. iiii,tfi. ciency in the neo-classical sense.

-

i t is doubtf^li! :];: i t 8 %

Conclusion

This paper has distinguished for policy piirpow, “K: . c. 1 1 .

of risks, voluntary and involuntary. I n ihc c ~ i w :IF ; ! : ; I ~ . . r g .

pollution affecting the public at large, i t was shown t ha t whilt: conclusive evidence exists that asbestos is ;I carcinogen 1 3 1 d !\ therefore strictly regulated in the work place). no effort Iw been made to protect the involuntarily exposed puhlic. i n t i i t .

appeals court ruling staying the emergencv injiinction issircii by the district court, the court’s logic w a s Aearlv incorrec.t !I . , assuming that. Reserve’s discharges were r i o t :in iiniiwiiat-. health hazard because the level of contaniiriatiori wasriot a! thll occupational level. All the evidence indicates that the thres- hold for involuntary tisk acceptability is far below tlic vnliir! tary occupational levels.

In the final section, it was shown that torcing an invnlw tardy exposed public to carry the burden nf future potrntii!l

WATER RESOURCES BULLETIN

Policy Problems Associated With Waterborne Asbestos

damages is, in effect, a redistribution of income from the population at risk to the polluter and its customers. Such a situation encourages the firm to produce more than the socially optimum level of output, and charge a price that does not re- flect the true costs of production. This is clearly inefficient from a social welfare point of view.

LITERATURE CITED

Bingham, Eula, 1971. Thresholds in Cancer Induction. Archives of

Doniger, David D., 1978. The Law and Policy of Toxic Substance Con-

Federal Register, v. 40, no. 248, December 24, 1975. Kates. Robert W.. 1978. Risk Assessment of Environmental Hazard.

Environmental Health 22:692-695.

trol. Johns Hopkins University Ress, Baltimore, Maryland.

ACKNOWLEDGMENTS

Whey, New York, New York.

bon. Mitchell, John G., 1975. Corporate Responsibility in Silver Bay. Audu-

Peterson, Jerrold M., 1977. Estimating an Effluent Charge: The Re-

Rodgers, Wm. H., 1977. Environmental Law. West Publishing Co., St.

Rowe, Wm. D., 1977. An Anatomy of Risk. Wiley, New York, New

serve Mining Case. Land Economics 53(3).

Paul, Minnesota.

York.

I would like to thank my colleagues Donna Loveland, Peter Fisher, Joe Coffman, and Bart Lander for their assistance in editing this manu- script. The comments of the anonymous referee were of substantial value in improving an earlier draft of this paper and were greatly ap- preciated.

Schaumberg, 1976. Judgment Reserved. Reston Publishing Co., Reston,

Schultze, Charles L., 1977. The Public Use of Private Interst. Brook- ing, Washington, D.C.

Starr, Chancey, 1969. Social Benefit Versus Technological Risk. Science 165(3899).

Virginia.

279 WATER RESOURCES BULLETIN