Document JJKLeMG12R9MOwGZ4ba8zbjar

JOSEPH E. KELLER JEROME H. HECEHAR CHARLES M.MEEHAN WILLIAM H. BORGHESANI, JR. ROBERT R. TIERNAN waYNE v. BLACK DAVID L- HILL MARTIN w 3ERGOVICI JOHN S. ELDRED Carols c. Harris MICHAEL F. MORRONE Larry s. solomon JOHN B. DtJBECX CHRISTINE A. MEAGHER PETER L- oa L*. CRUZ * SHIRLEY S. PTJJIMOTO Lawrence p. halprin DEBORAH SHUR THINKER C. DOCGLaS JARRETT EDWARD L. KOHVEK ROBERT L. FLESHNER JONATHAN P LEVINE SHEILA A. MILLAR LAW OFFICES Keller and Heckman 1130 itTM STREET. N. w * OHIO BAR ONLY To: SPI-Public Affairs Committee SPI-Food, Drug & Cosmetic Packaging Materials Committee SPX-PVC Safety Committee SPI-RP/C Institute Executive Committee SPI-AN Polymers Group Re: Review of Proposed and Existing Regulations Ladies and Gentlemen: Yesterday afternoon. Vice President Bush, as head of the Presidential Task Force on Regulatory Relief, iden tified proposed and existing regulations that would be re viewed under the provisions of a Presidential Order issued last month. A list of the regulations of greatest concern to us, and a brief explanation of the analysis that a regu lation faces under the new Executive Order follow. The Occupational Safety and Health Administration's (OSHA) Cancer Policy will be reevaluated because it rejected cost/benefit analysis. Amendments, to the Cancer Policy published in January, 1981, will be withdrawn on March 27, 1981. OSHA's Occupational Noise Standard, published on January 16, 1981, will be reviewed. The Agency will with draw. the' walk-around. pay proposal;, on the basis that a rule/ , is unnecessary because most employers already compensate employees for accompanying OSHA officials during inspec tions, and, in those instances where employees are not compensated, the problem would be best settled through col lective bargaining. I might also mention that the previ ously withdrawn OSHA labeling regulation is undergoing sim ilar reevaluation at this time. see 5-1588 March 26, 1981 Page Two Ivex-ler .ojd HrcsxiN Regulation of hazardous waste under the Resource Conservation and Recovery Act (RCRA) by the Environmental Protection Agency (EPA) will be reviewed because EPA has never completed a thorough regulatory and economic analysis of the program. Major issues identified for reconsideration include the comprehensive definition of hazardous waste, and the limited extent that the rules vary program require ments based on the degree of hazard presented by the waste. A more certain estimate of the financial resources required of the private sector to meet the requirements imposed by the program will also be developed. Proposed amendments to EPA's general pretreatment standards for controlling industrial discharges into munici pal waste systems issued in January, 1981, will be- postponed pending further examination. EPA's effluent guidelines under the 1977 amendments to the Clean Water Act will also be subject to critical evaluation. Recent analysis indicates that the methodology EPA employed to determine the economic reasonableness of more stringent controls for industrial discharges may be incorrect. EPA is reexamining its bench mark cost determination to ascertain whether a lower cost figure would meet the requirements of law, and, thus, result in substantial savings to industrial dischargers of conven tional (non-toxic) pollutants. Another postponed rule that may be of interest is the Department of Commerce rules for federal interaction with voluntary standard setting organizations, with whom you may participate through SPI. The Commerce Depart ment proposals were published at 46 Fed. Reg. 1574. We have only attempted to list the regulations we thought would be of the most interest to you, but the rules designated for review range from cost sharing on university research to listing the Hawaiian Tree Snail and Todsens Pennyroyal plant as endangered species. Unfortunately, some of the rules or proposals that we would like tosee on the list were not present. Nonetheless, we are hopeful that after'.this group of regulations is considered, other regulations will be subjected to the same analysis. It is giiite important that, these regulations will all be reviewed under the standards set forth in Executive Order 12291 issued by President Reagan on February 17, 1981. The Executive Order, which is outlined below, is significant because any new regulation or proposal, must be evaluated under the terms of the Executive Order, whether it is the Food and Drug Administration's constituent policy, new EPA regulations for acrylonitrile, or revisions to EPA's vinyl chloride standard. Marcn 26, 1981 Page Three Kellzr and SECKXA.V In general. Executive Order 12291 (46 Fed. Reg. 13193) requires that regulatory action not be taken unless the potential benefits outweigh potential costs to society. Regulatory objectives must be chosen to maximize the net benefits, and the agency must select the proposal involving the least net cost. For each major rule that an agency considers, it must prepare a Regulatory rmpact Analysis (RIA) addressing these subjects. The RIA, along with a draft notice of proposed rulemaking, must be submitted to the Office of Management and Budget (OMB) at least 60 days prior to publication. A final RIA and draft rule is to be delivered to OMB at least 30 days prior to publication as a final rule. While the Executive Order does not give OMB direct authority to alter the substance of a rule or preclude its publication, it is plain that OMB's position as a regulatory clearinghouse has been firmly established. Moreover, this newly explicit OMB authority also creates another forum in which to present our views concerning the propriety of various regulatory proposals. Given the present orientation of OMB personnel, we anticipate that they will be receptive to arguments dealing with the technological and economic feasibility of regulations, and will be willing to limit the federal presence to situations where it is warranted if agency personnel prove unreceptive. During his press conference yesterday. Vice Presi dent Bush asked for public comment on the regulations or proposals now under, review. if you wish to comment, a suggested format is described in the attached letter by Vice President Bush. While this particular letter was addressed to small business groups, it should serve as a guide for all of us. It is our understanding that the Administration was particularly interested in comments addressing the costs and benefits involved, and suggestions for regulatory alternatives. We would be happy to assist in preparing or submitting comments if you deem it appro priate. If you have- any questions or comments, please feel free to contact, us. Cordially yours. Enclosure cc: Mr. Thomas J. McGrath iS ' Jerome H. Heckman see 5 _ i =, c? o ir ' 7T tr 1 H - vicS PRE!5iQSm" w*Shino;cn March 25 , 1981 SPECIMEN OF LETTER SENT TO SMALL BUSINESS GROUPS Dear As you may know, President Reagan has asked me to chair his Cabinet-level Task Force on Regulatory Relief. Unlike many efforts in the past, the Task Force's job is not to study regulation, but to reform regulation. We need your participation in this effort. Secretary of Commerce Malcolm Baldrige is a member of our Task Force and will serve as the Task Force's principal contact with the small business community. I hope you will work with Mr. Baldrige to provide us with much-needed information. Your organization is comprised of many people who have direct experience with the effects of government regula tion. Therefore, would you please send us documentation of instances in which specific regulations could be changed in order to increase benefits or decrease costs, thereby generating greater net benefits overall. We would like to have your first ten priority issues listed first. In the interest of time, it would be especially useful to us if you would be specific in the ways you wish these changed -- whether legislation would be required; whether agencies could make the change on their own initiative and how; and any other staff work that would speed up the process, such as proposed language. It is also important that you include with this report a one-page summary of each regulation issue in the format indicated on the enclosed sheet. (We know that some groups have already submitted similar reports to. the Task Force and the agencies.' For such reports, it would be sufficient simply to prepare the one-page summaries, including reference to the recipient of the underlying material so that we can ensure coordination.) see 5-1591 2 We'd like your input: by May 1, 1981. You should send this summary, together with supporting documentation, to the agency head responsible for enforcement of the regulation. To help us coordinate, we'd like you to send a copy of the one-page summaries to Mr. Baldrige, to the Executive Director of the Task Force and to my office. I appreciate your consideration on this matter. Together we can provide the regulatory relief our economy desperately needs. Sincerely, Enclosure George Bush see 5-1592 Suggested Format of One-Pace Summary of Review Requests Source of Rule: Citation: Description of Problems: Estimated Cost: Estimated Benefit Other Impact: Originator: (Agency enforcing the regulation (Precise legal reference) (Adverse impact) (Defensible estimate) (Defensible estimate) (Nonquantifiable impacts) (Name, title, address and telephone number of the person to contact with questions) Routing: Original, with supporting documentation, to the Secretary or head of the enforcing agency. A copy of the summary page to each of the following: The Honorable Malcolm Baldrige Secretary of Commerce Washington, D.C* 20230 Attn? Regulatory Relief Dr. James C. Miller XIX Executive Director, Presidential on Regulatory Relief Old Executive Office Building Washington, D.C. 20503 Attn: Regulatory Relief Task Force C. Boyden Gray, Esquire Office of the Vice President Washington, D.C. 20501 Attn: Regulatory Relief see -i e9e UNITED STATES COURT OF APPEALS For the Third Circuit Nos. 79-2194 and 79-256/ HOOKER CHEMICAL COMPANY. RUCO DIVISION. Petitioner in 79-2194 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY. RECRON II. Respondent in 79*219*1 TENNECO CHEMICALS. INC Park 80 Plaza West-1, Saddle Brook, New Jersey 07662. Petitioner in 79-2567 ECKARDT C BECK. Regional Administrator. United Slates Environmental Protection Agency. Region 11. 26 Federal Plaza. New York. New York 10007, UNITED STATES ENVIRONMENTAL PROTEC TION AGENCY. 401 M Street S.W.. Washington. D.C. 20450. Respondent in 79-2567 On Petition for Review ok Administrate i orders Issued by the Environmental Protection agency On July 2. 1979 Argued November 3. 1980 Bel'ore: GIBBONS and Weis. Circuit Judges and, BECHTLE. District Judge." (Opinion Filed February 23, 1981) * Honorable Louis Charles Bechtle, United States District .Indue tor the Eastern District oi Pennsylvania, sitting by designation. "TT TTV t-TT.tr 1^'gT '13. see i- i 598 x*.' M urphy. Jr.. Kscj. (A rgued) OPINION OF THE COURT wj a 'P -- V Cj > oo CM X. JO - u Cj J -- o CrrM-- cc * C'l :o- sA --; "- CuO o Cj {ion" O coo "a> =3 "T1 r? < a la; ?cw. 'r . C3 v V V) O.inj ,o CM 3 P 6 o"l "5 rS O i/j --i 3~ 2sc .o x S scj ?iZGna > P- o >CJ. a3c JS . < 5j o I 3 cV}* w. rV*. Cuv O <i--U 3 5 trt U1 rt.o^ i^ 3CJ ncu. rz 1 CN' ri = 3- i O jj W ^ *C; ~^C S *13 --i < p -Z O CJ `C? LT **- . . V5 <- >: u ' *> S'5 r- so oV COooD <N ^- cf- r; sJ1 5 CCl n f- CJ D fti <C*J '5 " 5T xj .j -- CJ pi _ Sr- t- o -? Z -. --O H c? rE*CB M. 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Sec W'ciirh/ i . / I'C, supra at 6(57; Exxon Carp. e. FTC, 588 F.2d 805 < 3d Cm 1078). This is mol a ease where the sole issue is ili1' authority of the agency to promulgate a regulation ami where further delineation of the circumstances is not needed to shape the issues. A. O. Smith Corp. v. FTC, 580 F.2d 515. 521 (3d Cir. 1976). Absent an application of the emergency relief valve provisions, (here is no definitive exposition of the KPA's construction of the regulation before us. As in Wcmii/, hie agency has yet to take a position with respect to an interpretation of the regulation that can be deemed as "Imal" in the present posture of this case. Id, at 667; Dresser industries v. United States, 596 F.2d 1231. 1335 (5ih Cir. J979). cert, denied, 444 U.S. 1033 ,( 1980) The informal demands in the transmittal letters impose no legal obligation to comply, and are not final agency action. In view of the continuing investigation after withdrawal of the orders, review of the agency's conduct at this time would be an interference with an active administrative proceeding. Bethlehem Steel Corp. t> EDA, 536 F,2d 156, 161 (7th Cir. 1976). We are not convinced, either, that the hardship test has been met. Although Mooker may be apprehensive of the policy stance adopted by EPA's enforcement divi sion, die company is not required to lake any action at tins time beyond that required by 30C.F.R. 61.65(a). Tenneco, of course, is free to attack the EPA position in die district court litigation. Cf. A.O. Smith Corp. v. FTC, supra iu 523. The absence of a requirement to comply A Hooker invoke* Adumo Wrecking, supra, in challenging the rmpJoyineni <->i ^63.(S5f;i> to support a emission standard v lokiiion lk:c.mso the 113 eider has been withdrawn, and Hooker v.i ukl be dble ip raise die alleged inhrmity as a dclcnsc in enlhrce- mcm proceedings, we would be rendering an advisory opinion to toiiMfler the manor on the merits at this stage. see 5-1603 witn the orders of the EPA at this time, therefore, mdi tales against a finding that the hardship factor has bey' met. Wear11/ in FTC, supra at 666. Nor can we say rha the governmental activity "by its continuing and brood ing presence, casts what may well be a substantia adverse effect on the interests of (he petitioning parties.' Super Tire Engineering Co. v. McCorkle, 3 1G U.S. 3 15 122 (1973). This case is too dependent upon the presentation o a complete circumstantial background for a satislaetor resolution of the issues at this stage. The petitioners an in no worse position than they would be had we struct down die order because of an insufficient factual record We decline to review the agency action at this point and accordingly, the petition for review will be denied. A True Copy: Teste: Cleric of the United Slate* Court oj /Xppcu! for the Third Circuit Lawsuits relating to "latent" diseases -- those appearing several years after initial exposure to toxic substances--will dom inate tort law in the 1980s. lawyers say. "We are just in the legal infancy of answering the questions" of who should pay for the growing number of medical problems of persons exposed to the chemical by-products of industrialized society, said Professor Sheila Bimbaum of the New York University School of Law. "It is impossible to predict the fu ture." Some lawyers and insurance industry representatives predict that latent dis ease suits may shake the foundations of U.S. tort law. threaten the financial health of insurance companies and some industries, and contribute to the nation's economic problems. "The goose that lays the golden egg may be killed be cause there is just not enough money lo go around." warned William Bailey, chairman of the Task Force on Cumula tive Trauma and Latent Injury. The task force was formed recently by the Ameri can Insurance Association in New York City. "The [tort] system could well grind to a halt by 1984: we had better start thinking about alternatives," said Bailey, senior vice president of Com mercial Union Assurance Companies in Boston. Lawyers cite a combination of factors bringing the problem to a head. Medical science only in recent years has iden tified links between toxic substances and diseases that give plaintiff lawyers the grounds to bring suits, said Del Haral son. a Tucson plaintiff lawyer who has brought suits relating to radiation in juries. Others share Bailey's view that plaintiff lawyers also have succeeded in pushing for judicial acceptance of strict liability theories in latent disease suits. Also, courts often have adopted a "deep pockets" policy of basing liability not on who caused injuries but on who is best able to pay for them. Bailey added. Another factor, lawyers said, is the sheer size of the problem. For example. Bailey said, about 25.000 suits seeking damages for exposure to asbestos had Say Latent Disease Suits Will Be Key Battleground in '80S . 5-ifa07 been filed through 1980. Those damages could exceed SI00 billion. Those suits may be "just the lip of the iceberg com pared with the people who may make claims in the )980s and '90s." Bailey added. In tn rc ''Agent 0>an ye'' Product Liiihilitv Litigation (MDL 381). the U.S. District Court for the Eastern District of New York, recently certified all Viet nam War veterans, their families and survivors as potential plaintiffs in the class action suit against manufacturers of the herbicide used as a defoliant in the war. The number of plaintiffs could reach 50.000. Victor Yannaeone of Patchogue. New York, the lead plaintiff attorney estimated. More than 1.000 i-eoruary '98? u me o "tw*1. w".<. -yjv .. Bailey: "The goose that lays the golden egg may be killed because there is just not enough money to go around." liability, lawyers said. In Insurance Co. of North America v. Forty-Eight Insula tions, Inc. (No. 78-1322-26), the Court of Appeals affirmed a ruling by the U.S. District Court in Detroit that applied an exposure"' theory of liability requiring several insurance companies covering the asbestos product manufacturer be tween 1923 and 1970 to share liability coverage for asbestos-induced diseases in proportion to the length of time that each insurer served the manufacturer. INA had argued for a "manifestation'' theory under which only the insurance company at the time employees learned they had contracted asbestosis should provide liability coverage. The manifestation theory would put manufacturers, virtually uninsured against potentially massive claims filed in the past few years, out of business "and leave plaintiffs without recovery," said defense lawyer Frederick Baron of Dallas. Robert Bissell, an attorney for Celotex Corporation, a Tampa, Florida, asbestos products manufacturer, noted that most insurers already have with drawn from that area under the onslaught of suits. Insurers warn that their industry is threatened by Forty-Eight Insulations. Bailey said, "There is no way you can underwrite insurance based on an expo sure theory.'" He said. "The only seri ous proponents of the exposure theory are asbestos manufacturers and insurers who could lose more under the manifes tation theory." Other federal circuits are expected soon to rule on the issue in other suits, said insurance industry representatives Baron: The Forty-Eight Insulations case will benefit both plaintiffs and manufacturers. and lawyers. If the rulings conflict, the Supreme Court may have to step in, they said. The federal government's role is a key unsettled factor in latent disease suits. Leonard Rivkin of Garden City. New York, national trial counsel for the Dow Chemical Company in Agent Orange suits, said that while the government is generally protected against suits by the Federal Tort Claims Act, "More and more courts are trying to carve out ways for plaintiffs to cause the government to be a party" in latent disease suits. Rivkin and James Ries, director of asbestos pol icy for the Johns-Manville Corporation in Denver, the nation's largest asbestos products manufacturer, said that indus try also questions whether it should be liable for injuries related to products made and used under government direc tion, such as Agent Orange and some as bestos products. In In re "Agent Orange," the court provided some answer to that question, Rivkin said. It dismissed the government and allowed defendant manufacturers to claim, in proceedings expected to start in the fall, a "government contractor's de fense" that would free them from liabil ity if they show that they manufactured Agent Orange according to government specifications. The defense could have wide impact in other cases in which manufacturers argue that they met gov ernment standards in dealing with toxic substances, Rivkin said. Industry must meet such standards. Rivkin said, add Rhetngold: Legislation may check court rulings favoring those who sue. ing, "For gosh sakes, give us a defense if we complied." But Victor Yannaconc said. "The last group claiming that (defense] was hung collectively. They were called the Nuremberg defendants" Tort lawyers generally agree that re cent rulings raise questions about how -- and whether---the tort system should be used to deal with latent disease suits. Some lawyers suggested that latent dis ease suits are pushing the tort system beyond its limits. The system "works well on a one-to-one or even a larger basis," said Dennis Connolly of the American Insurance Association, "but it works badly when there are two million against 300." Bailey warned, "You see a tort system being totally clogged in the courts" and a cost to industry and insur ers that is "potentially disastrous." Ries of Johns-Manville predicted that the eventual impact would be an increase in the cost of doing business that "would have an adverse effect on our econ omy." Others say corporate defendants and their insurers may be financially un able to fully compensate plaintiffs, a problem cited in the Agent Orange litiga tion. Suffolk Law School's Lambert, how ever, questioned whether industry is threatened by latent disease suits. "Who is trying to sell a drug company?'* Lam bert asked. "How many have become insolvent? Where are all the victims of strict liability?" Yannaconc said there are ''.ays to fully see  o. compensate the entire class of plaintiffs without draining the resources'of defen dants. For example, he said, plaintiffs in the Agent Orange litigation are seeking a decree requiring defendants to establish a trust fund out of current earnings as a reserve against claims. There is general agreement with Paul Rheingold's prediction that efforts will be made to offset, through legislation, recent court decisions favoring plaintiffs. Such efforts are already underway in Congress. A spokesman for Sen. Gary Hart (D-Cotorado) said that Han plans this year to reintroduce the Asbestos < Health Hazards Compensation Act, which would establish a pool funded by industry and the federal government to .1 compensate asbestosis victims. The bill would also prohibit damage suits by as bestosis victims. Although insurers and s industry generally favor such legislation, I there are barriers to passage, warned Bailey, who said that Hart's bill was per ceived in the last session "as too much of an effort to bail out Johns-Manville. The real scope of (he social problem must be presented to avoid that type of political problem." James Podgers A Love Cana! area resident protests. Toxic waste dumping sites: the next lawsuit battleground? see 5-1610