(Editor’s Note: The first part in a two-part series on how California’s regulations affect the global economy.)

July 26, 2012

By John Hrabe

Regulations are killing California’s global competitiveness. Or, so you’ve heard from policymakers left, right and center.

“Our environmental regulatory system is obsolete, duplicative and burdensome in many areas, which is hurting our business community’s ability to thrive and compete in a global marketplace,” lamented Assembly Majority Leader Charles Calderon, D-Industry, in an opinion piece at Capitol Weekly.

Republican U.S. Senate candidate Elizabeth Emken repeated the complaint a few weeks later.

“Thanks to over-taxation, over-regulation and over-litigation, American companies are at a distinct competitive disadvantage,” Emken wrote in her policy paper on regulations. “This disproportionate cost on small business causes inefficiencies in the structure of American enterprises, and the relocation of production facilities to less regulated countries, adversely affecting our ability to compete in the global marketplace.”

“California has a daunting task to regain its competitiveness,” complained Loren Kaye, president of the California Foundation for Commerce and Education, in a blog post entitled, “Job Killing Bills Hobble California in Global Competition.” The piece continued, “It can’t be a leader in the global economy if it interferes in the global marketplace.”

While there’s some truth to the cliché, it’s not the whole story. Increasingly, it’s the regulations themselves that are being exported globally.

That makes the story of California’s over-regulation even more troubling. Unelected bureaucrats on obscure boards in Sacramento are establishing regulations for the world—in many cases based on weak or contradictory scientific data that is selectively edited by special interest groups.

“The regulatory field has a lemming-like attitude, often reflecting biases,” Dr. F. Peter Guengerich, the interim chairman of the biochemistry department at Vanderbilt University School of Medicine, told CalWatchDog.com.

Prop. 65: Hazardous Substance Warning Label

To understand the increasingly global nature of California’s regulations, consider the case of a chemical compound that you’ve likely never heard of and probably can’t pronounce, 4-methylimidazole or 4-MEI. It’s a common byproduct of the cooking process and gives sodas their caramel color.

In March 2009, regulators at the Office of Environmental Health Hazard Assessment, a department of California’s Environmental Protection Agency, began the process of adding the chemical to a list of potentially harmful substances. Products that contain chemicals on the list must carry warning labels about their potentially harmful effects. Voters created the process with passage of Proposition 65, the Safe Drinking Water and Toxic Enforcement Act of 1986.

“Prop. 65 is primarily a right to know law that provides information about exposure to listed chemicals that the public can use to make informed choices,” explained Sam Delson, deputy director of the Office of Environmental Health Hazard Assessment.“The addition of 4-MEI to the Prop. 65 list does not ban it from use in California or anywhere else.”

Of course, who wants to buy something that warns of death on its packaging?

4-MEI Does “Not Represent a Risk”

A substance can be added to the Prop. 65 warning list through one of four ways, including if it has been flagged by any “authoritative body” chosen by an unelected state committee. Some legislators say that this process deserves greater scrutiny.

“As Vice-Chair of the committee of Toxics and Environmental Safety, I have had a front row seat to the show which is legislating the use of chemicals in products that are sold and made in California,” said Assemblyman Jeff Miller, R-Corona. “Over time, what sticks with me, is that we have to be very careful about the decisions we make in California regarding banning or placing chemicals on a list of ‘chemicals of concern.’”

California’s regulators weren’t so careful with 4-MEI. The state began the review process after only one study of mice and rats showed an increased risk of cancer.

“According to California’s regulators, a level of more than 16 micrograms per day would pose a significant risk,” Time cautioned last year. “Meaning it could result in at least one excess case of cancer per 100,000 exposed people.”

The study’s findings weren’t as scary as they sound.

“Basically my advice would be just to relax … I did some simple math. … If you look at the study in terms of what the mice got, in terms of causing any effect, a human being would have to drink more than 1,000 sodas a day,” Dr. Guengerich told ABC News back in 2011, when the chemical first garnered headlines.

Dr. Guengerich’s view is backed up by health and safety agencies from all over the world. The European Food Safety Authority conducted a comprehensive review of the scientific evidence and concluded that 4-MEI is not a health concern. The same goes for Health Canada, the country’s federal health agency. It ruled that 4-MEI does “not represent a risk” to consumers.

Even the original study, which prompted the 4-MEI scare, showed a reduction of tumors in the group of female rats that received the highest dosage of 4-MEI. A 2011 study published in Food Chem Toxicol, an international food chemical toxicology journal, reinforced that finding. “4-MEI itself may possess an ability to prevent tumor formation,” Dr. F. Jay Murray wrote.

Safe Harbor Standard Raised by 81 percent Without Any New Research

Nevertheless, some consumers might prefer a “better safe than sorry standard” when it comes to potentially hazardous products. For this very reason, Prop. 65 required the state to adopt a “safe harbor standard,” or an acceptable exposure level for each chemical. The safe harbor standard for 4-MEI was originally set at 16 micrograms per day. Then, state regulators changed their minds.

The experts were only off by 81 percent. In October 2011, 32 months after the regulatory process began, California increased the safe harbor standard from 16 to 29 micrograms. State regulators confirm that the increase wasn’t based on any new research.

“The change was based not on new research but on adoption of an updated method for calculating human cancer potency based on animal studies,” Delson, the OEHHA’s spokesman, said. “So the effect of setting the NSRL for 4-MEI at 29 micrograms per day instead of 16 was to create a larger “safe harbor” and exempt a larger number of products from Prop. 65 warning requirements.”

That means the decision to label 4-MEI as a potentially hazardous chemical wasn’t based on objective scientific data. Or rather, the science itself isn’t as precise as the public is made to believe.

So, what does 4-MEI have to do with the rest of the world? For that, we return to Dr. Guengerich’s evaluation of the regulatory field’s “lemming-like attitude, often reflecting biases.” There’s a movement afoot to ban 4-MEI in Kenya. The reason: the chemical “has been restricted in the US state of California.”

Coming soon: Part Two: How California’s regulation are sold to other countries.

By WAYNE LUSVARDI

Are babies being damaged by too much perchlorate in the water? Should the amount be reduced by a mouthful of a bureaucracy, the Office of Environmental Health Hazard Assessment, part of the California Environmental Protection Agency?

New regulations could cost Californians billions as the state finally is rising from a deep three-year economic recession. Moreover, according to reputable scientists, there are no proven health benefits from reducing the level of perchlorate in drinking water from an infinitesimal 6 parts per billion to 1 part per billion, as proposed by OEHHA.  The science behind the OEHHA’s proposed new standard smacks of the recent scandal in the Delta Smelt court case.

Repeating the Delta Smelt Case?

From 2007 to 2010, water agencies such as the Metropolitan Water District of Southern California jacked up water rates by about 34 percent due to a court-ordered drought to protect a fish in the Sacramento Delta. But federal Judge Oliver Wanger eventually found that the environmental science on which the case was based was bogus and the government scientists were “zealots.” None of the water agencies across the state repealed their rate hikes — even though the drought was contrived. Water ratepayers are still not laughing.  In fact, they didn’t even get the joke. They just got stuck with a higher water bill.

And now the California OEHHA wants to lower the level of perchlorate in drinking water from 6 parts per billion (ppb) down to 1 ppb.  That is equivalent to one drop of water in an Olympic size swimming pool. But this is what might be called “dark humor.”

As Bill Romanelli of the Perchlorate Information Bureau wrote to me in an email: “The real issue on this is that given that there are no public health benefits in going from 6 ppb down to 1 ppb, it’s an unjustifiable expense regardless of the ‘solution.’  Drilling further down, the problem is one of cost.  The stricter the standard, the more ‘clean’ water is needed to dilute the supply, and the costs can go up geometrically (and will be borne by customers).”

Like California’s contrived court-ordered drought, reputable scientists are saying the new perchlorate standard is scientifically indefensible. Dr. Richard Pleus, toxicologist and managing director of Intertox consulting in Seattle and adjunct professor in the Department of Pharmacology at the University of Nebraska Medical Center, wrote in an email to me, “The [scientific] record demonstrates that, in over 60 years of research, no study has reported adverse effects on human health with exposure to environmental levels of perchlorate.”

But will water agencies have to build costly new treatment plants to comply with this new standard, only to find out much later that the scientific basis of the new rule is bogus? This is what happened in California’s infamous “wet” drought.

Perchlorate does not cause cancer, nor is it a poison.  Perchlorate is suspected to cause a nutritional deficiency of iodine in the fetus and infants. The perchlorate compound is roughly the same shape and has the same negative chemical electric charge as iodine (iodide).  Thus, perchlorate is believed to be capable of blocking absorption of iodine in the thyroid gland.  Iodine is needed for natural growth and educational development and can be obtained from fish and other foods.  Perchlorate occurs naturally. And it is industrially added to fireworks, solid rocket fuels and road flares as a booster because it is oxygen rich.

Perchlorate has been selected for regulation partly because it has an image of “rocket fuel.” And the deep pockets of industries can be made to pay mega millions to clean up groundwater basins without any direct cost to taxpayers or drain on the state budget.  But products such as soy that have a “green” image and no deep pockets haven’t been regulated. Neither have products that have a “home made by mom” image such as breads with bromide.  Yet industrial perchlorate is the perfect target for regulators.

The Bureaucratic Vetting Process

In California, the approval of a Minimum Contaminant Level (MCL) for an environmental substance goes through a 10-step process before being adopted into law.  The first five steps involve internal scrutiny by the California Environmental Protection Agency. The five steps follow the administrative departments dealing with regulations, budget, finance, health, and law must put the law on the books.

Once approved, the rule is published in the California Regulatory Notice Register.  The publication signals the start of a 45-day comment period.

Once the comments have been received, an additional 15-day public comment period is held before the final rule is drafted for review by the director of the California EPA.  If the rule is signed, there is a 30-day review by the Office of Administrative Law.

If the new rule advances that far, it is then filed with the Secretary of State and is enacted into law in 30 days.

California is presently in the process of reviewing comments and undertaking a scientific peer review before forwarding the new rule to the head of the state EPA.

Bureaucratic Kangaroo Court?

But unlike the Delta Smelt case, there will be no impartial judge, no evidence code to comply with and no cross-examination. Instead there will be public comments and a peer review by a panel of scientists hand-picked by the OEHHA bureaucrats.  Unlike picking a jury, there will be no way to challenge the selection of a peer reviewer.

The peer reviewers are not peers drawn from the community, as in done in court juries. The OEHHA has picked them from other states.

The bureaucratic review process is not democratic.  There are no checks and balances in the review process.  The governor can’t veto an adopted new standard.  A lawsuit to strike down an environmental regulation as unconstitutional would be difficult and costly.

The Lockheed and Kerr McGee corporations sued OEHHA in 2002 by claiming that they were legally entitled to a second scientific peer review of the perchlorate level proposed at that time.  The judge in the case ruled that the two firms’ request for a second opinion was valid and ordered such.

The Proponents and the Opponents

In favor of more costly and unrealistic standards are: Clean Water Action, the Environmental Working Group, National Resources Defense Council and Citizens for Safe Water.

The NRDC is the same organization that filed the 2006 lawsuit in California to protect the Delta Smelt fish based on bogus science. Teresa Heinz Kerry, former senator and the wife of Sen. John Kerry, D-Mass., has provided past funding for the Environmental Working Group.  Clean Water Action is a group of self-described activists, lobbyists and community organizers in San Francisco.

Opposed to more costly and unrealistic new standards are: the Association of California Water Agencies, the East Bay Municipal Water District, the Riverside Public Utilities Department, San Bernardino County, Golden State Water Co., the Perchlorate Study Group, the Partnership for Sound Science and Environmental Policy, the U.S. Department of Defense, numerous agricultural associations, Health Risk Strategies consulting and Exponent Science and Technology Consulting.

Ask yourself whom you trust the most: your local water agency, which is accountable to you to keep water rates low — or activists, lobbyists, and community organizers?

Who Are the Science Peer Reviewers?

None of the three science peer reviewers was asked to evaluate the costs versus the benefits of reducing the level of perchlorate in drinking water.  Their review was confined to strictly narrow scientific and statistical issues concerning the proposed 1 ppb new standard for perchlorate in drinking water.

All three of the science peer reviewers are well qualified. None of them can be characterized as “zealots,” as were the scientists in the Delta Smelt case.

But why OEHHA picked three out-of-state science peer reviewers, when there are so many equally or more qualified scientists in California, is a question. The three peer reviewers selected by the OEHHA are:

* Dr. Andrea Kirk, PhD., professor of environmental health at North Texas University.  Dr. Kirk has made $470,426 from research grants mainly on studying perchlorate levels in breast milk.  Her science peer review of OEHHA’s new rule can be found here.

* David Rich, Sc.D., MPH, is a professor at the Department of Community and Preventive Medicine at the University of Rochester Medical Center in New York.  His principal focus of research has been on strokes, diabetes and growth defects in the unborn triggered by air pollution.  Rich’s one science paper on perchlorate was co-authored with eleven other researchers. It found no evidence of lack of iodine (iodide) or deficiencies in weight, length, or head size in newborns due to perchlorate.  I couldn’t find where Dr. Rich mentioned this in his peer review of OEHHA’s new perchlorate standard.  Rich’s science review of the OEHHA new rule can be found here.

* Stephen H. Lafranchi, M.D., is a baby doctor and professor at the Oregon Health and Science University. It might be questioned why a medical practitioner was selected.  His science review of OEHHA’s new rule can be found here. 

None of the peer reviewers was asked to indicate whether perchlorate is more or less a health threat to the unborn and infants than such foods as soy, broccoli, Brussels sprouts and bromate in bread, all known also to block iodine absorption.

Neither were the researchers asked to indicate whether reducing the level of perchlorate in drinking water from 6 ppb to 1 ppb would result in demonstrably greater health benefits to vulnerable subpopulations, other than mere statistical projections.

The reviewers were also not asked whether it would be more effective to reduce perchlorate to 1 ppb in drinking water by costly treatment methods, instead of just ingesting added iodine by eating cheap iodized salt, as has been done for decades.  To answer this question might pose a threat to the livelihoods of perchlorate scientists and the public health bureaucracies that regulate it.

Iodine Supplements

The U.S. EPA’s Office of Inspector General essentially stated in a 2010 scientific analysis of perchlorate that ensuring proper prenatal supplementation of iodine in pregnant women, rather than individual chemicals, was the best approach.

The reviewers were not asked if there could be what is called a “confounding variable” — alcohol consumption during pregnancy — that could be a contributing cause of retarding or intellectual deficits in children.  Statistics don’t separate out mothers who alcohol drinkers from non-drinkers; or healthy babies from those born with congenital defects.

Most of the perchlorate studies involve measuring iodine or perchlorate levels in milk or blood, or perchlorate levels in drinking water.  There never has been a long-term comparison and control study of whether educational deficits in children significantly decreased in a community that has reduced perchlorate levels in its drinking water.

All the past cleanups of perchlorate in drinking water have focused on underground water basins where perchlorate gets trapped. Perchlorate on the ground surface can get diluted by rain and rendered relatively harmless.  Contaminated water from a well mixed with uncontaminated water in pipelines can be diluted to an acceptable level. As the old saying has it, “The solution to pollution is dilution.”  That is, unless you move the acceptable level of perchlorate to near zero, which is what the OEHHA is proposing.

Intertox: No Scientific Basis to New Rule

Intertox, a scientific consulting firm in Seattle specializing in toxic exposures, prepared scientific comments to OEHHA’s new perchlorate standard for the Environmental Study Group.  The Environmental Study Group is an association of industries that have been subject to perchlorate regulation. On its website, Intertox lists that it has worked on both sides of environmental risk assessments — both for the government and for defendants in toxic lawsuits.

Intertox is especially well qualified with perchlorate safety standards.  Intertox experts co-authored the definitive study assessing health risk exposure to perchlorate.  Intertox’s comments to OEHHA’s new rule is here.

Intertox states that reducing the level of perchlorate in drinking water from 6 ppb to 1 ppb is “unlikely to have a public health benefit.”  Intertox additionally concludes that perchlorate, a natural substance, can’t be compared to other potentially toxic substances such as mercury, beryllium, nickel and simazine.

Instead, perchlorate should be compared with other food substances that can block iodine absorption in young children such as soy, broccoli, Brussels sprouts and bromide in bread.

Intertox concluded that the most vulnerable population segment to perchlorate exposure — pregnant women and their babies — were protected under the existing standard by a factor of three times what would be considered safe.  The new standard would increase the safety factor to 10 times the safety level, without proven reductions in birth defects or educational deficits.

The California OEHHA’s own document, “Public Health Goals for Chemicals in Drinking Water — Perchlorate,” dated March 2004, states that there is no scientific justification for increasing the safety margin from 3 to 10 times the safe level for infants (p. 86).

Who Will Be Affected?

As shown in the table below, it will mainly be Southern California that will be affected by reducing the Maximum Contaminant Level (MCL) of perchlorate in drinking water from 6 ppb to 1 ppb.

Active and Standby Sources with Perchlorate Detections — 2002 to 2007

A 2005 study conducted by the National Academy of Science concluded that perchlorate in drinking water below 245 ppb does not have a measurable effect on human health.

None of the drinking water sources or systems shown in the table above is close to the threshold of 245 ppb.  The lowest is 5.4 ppb and the highest is 100 ppb, with an average of 40.1 ppb.

The level of perchlorate in the Colorado River Aqueduct is about 6 ppb.  The Colorado River Aqueduct serves all of Southern California.  This massive system would now need to construct costly treatment plants to remove perchlorate.

A 2004 study conducted by Kennedy/Jenks Consultants indicated that the cost to comply with a lower Public Health Goal (PHG) of 4 ppb of perchlorate from water wells would be from $1 billion to $2.2 billion over 20 years.  The cost to reduce perchlorate to a level of 1 ppb.  Nor was the cost to treat Colorado River Aqueduct water included.

You’re Next

If the safety level for perchlorate is dropped to 1 ppb, it likely won’t be just single-point sources of perchlorate, such as water basins, that will be targeted.  It is likely that fertilizer in home lawns that contain nitrates will eventually be the next target for regulation. Nitrates are also suspected as a potential blocker of endocrine glands. Say goodbye to your lawn and rose garden.  You may be added to the list of “baby killers or retarders.”

A Ph.D., thesis in 2008 titled “Nonpoint Sources of Nitrate and Perchlorate in Urban Land Use to Groundwater: Suffolk County, New York,” found low-level sources of perchlorate in lawns, sewage systems, turf grass and road runoff.  If acceptable perchlorate levels are going to be reduced to 1 ppb in drinking water, it won’t be long before homeowners will also be regulated.

A Matter of Cultural Values, Not Science

Environmental scientist William Cooper has asked the question, “What does it mean to reduce the level of some potential contaminant to effectively zero?”  His answer is not solely a scientific issue, but one of cultural values and what is acceptable risk.

Paraphrasing Cooper:  “Is the cup half empty or half full?  You can view the existing 6 ppb standard as a ‘license to kill’ or as regulatory overkill. What you will find that you do risk assessment for human health is that it is halfway between black magic and a Ouija board.  It basically comes down to common sense and judgment.  You cannot print money fast enough to solve all the environmental problems to the level of zero risk.”

Science has evolved to be able to measure substances that heretofore were undetectable at infinitesimally low levels. But science is not mere measurement.  Nor is it the ability to make statistical predictions that are not validated in the empirical world.  There is too much measurement and statistical projection and no valid evidence anywhere in the scientific record, or otherwise, of adverse effects from low doses of perchlorate.

How did a dietary and nutritional problem of mostly pregnant mothers and infants morph into a huge scientific and water treatment industry that proverbially strains at gnats — parts per billion of perchlorate in drinking water — but ignores swallowing a camel — alcohol consumption during pregnancy or other food substances?  Why is it science to measure the amount of perchlorate in drinking water approaching a zero limit and its statistical probability, while avoiding the monitoring of the actual number of children with retardation or educational deficits exposed to perchlorate in the real world?  Has “regulatory science” become a substitute for real science?

The uncertainty factor in minute low dosages of any environmental substance is bound to be high.  Common sense dictates that marginally lowering perchlorate levels from 6 ppb to 1 ppb won’t result in demonstrable health benefits.  If lowering perchlorate to a near zero level is a cultural value, then why do we entrust this decision to a bureaucracy that, like all bureaucracies, can be self-serving?

Perchlorate wasn’t “discovered” in California until about 1985.  Most of the major contamination sites are already in the process of being cleaned up.  What are left are the low-level sites. In a time when the governor is downsizing state agencies and the state budget has been running deficits, is it beyond questioning whether the OEHHA’s actions are a protection of bureaucratic turf more than public health?  Can government bureaucracies just unilaterally impose costs on private industries without any proven health benefit?  Where are the checks and balances to expansionist government bureaucracies?

Elite vs. Mass Politics

This is why nearly anything having to do with environmental regulation in California reflects elitist politics. There are little to no checks on the power of agencies regulating the environment.  There is no ballot initiative that could invalidate the OEHHA’s standard to reflect the “will of the people.”  The courts have not provided an adequate check and balance to expansionist policies of government bureaucracies.

If the Howard Jarvis Taxpayers Association reflects mass politics, the OEHHA reflects elite politics. That is why California’s environmental agencies, regulations and projects often are the playground for elites and the politically well connected.

The Fable of the Bear and the Hunter

At the end of David Woodbury’s novel, “You’re Next on the List: A Satire on Modern Bureaucracy,” is the following fable:

“Once upon a time a hunter cornered a bear in the wilderness and took careful aim at close range.  Just before he was about to pull the trigger, the bear held up a paw and said: ‘Wait a minute, Mr. Hunter, there’s no reason you and I can’t negotiate this matter and coexist peacefully. After all, you want a fur coat and all I want is a full stomach.  So let’s sit down and talk it over.’

“Being a typical American who knows there’s nothing to be hurt by sitting down and talking things over, the hunter agreed. So they sat down and negotiated. And both did get what they wanted. The bear got a full stomach and the hunter got a fur coat.”

Moral: You can’t negotiate with the California Bear about the nutritional standard of bears of 1 ppb — one person per bite — that is based on the bear’s self interest, not science.