[MUSIC]. Hi everybody and welcome to week four of the course. Starting today and for the next two weeks we're going to shift our focus away from land use which we mostly looked at the first half of the course. And toward pollution and the regulation of toxic substances in the second half. And there's really no better way than today starting to introduce ourself to the overarching concept of risk. Than to use the case of pesticide regulation as a case in point. To some extent, the regulation of toxic substances in general is even the face of environmentalism and in face of environmental problems. Whether it is drums of abandon hazardous substances like these or warnings of mercury bio-accumulation in fish. Or evidence of abandoned chemical sites like in the United States called superfund sites. All of them tend to be indicative of environmental problems. As we've done before, we're going to introduce ourself to this concept in two ways. First conceptually. And we're going to talk about the role of risk in general not just in relation to hazardous substances but in general in environmental law. And then, after we're done dealing with this conceptually. We'll look at the issue technically using the example of pesticide regulation as a case in point. A good starting point when we're looking at risk conceptually is to realize an obvious thing. When we say there's a risk of something we mean it is not for certain. We're not certain that it's going to happen. But I might be surprising to you to realize that risk and uncertainty are considered slightly different things especially in economics. In economics uncertainty means, we don't really have a clue what's going to happen. It could be something an order of magnitude worse than what we think. Or it could be nothing at all. We just don't have a clue. Risk on the other hand is something about which we have information. Even though it's not for certain. And it's generally recognized as the probability of something happening. And risk has these two components. On the one hand, the probability or improbability that the thing is going to happen. And then the other component is, what is it? That's going to happen. When we deal with risk, of course, we don't just apply it to bad things like environmental risks. Sometimes we apply them to, for example, games of chance like when we go gambling. Let's introduce ourself to this concept risk in just such a game of chance. Imagine that we're going to play a lottery. That has only 10 tickets. And 1 ticket is going to be chosen. And if the lucky ticket is yours, you will get $10. It's not much of a lottery is it? But there it is. 10 tickets. One will be chosen. The lucky winner gets $10. Let me ask you right now. If I were to ask you, what is one of those tickets worth? That is to say either, what you would pay for it? Or if you had such a ticket, what do you think you could sell it for? What would your answer be? Go ahead and click on of these choices. The proper answer is $1. It certainly isn't worth nothing because after all, this ticket gives you a 1 in 10 chance of the payoff. On the other hand, the payoff is only $10. When you put the two together, a $10 payoff discounted by only a 10% chance of winning 1 in 10. The product of the two is $1. And that is what economists call the expected value. So too in environmental law. When we look at risk, we use these two factors. The probabilities and some calculation of the thing that could happen to arrive at expected losses. If that seems pretty basic to you, it doesn't take long to appreciate the explosive possibilities in environmental law. For example. Here is a glass of water. What if I were to tell you that there was a substance just a tiny bit of a substance in there. That presented a 1 in 1000 risk of death if you were to drink the glass of water. Well, if somebody drank at this glass of water and then shortly thereafter died. There would be a problem proving that the death was caused by the water. Especially of there was a day or two days or a week between the death and the drinking of the water. And you could see why. Usually in a classic tort lawsuit at common law. It's important to the law that you prove the causal relationship between two things. And typically that means you have to prove it is more likely than not. That is the preponderance of the evidence, 51% or more chance that the bad thing was caused by whatever it is you're suing about. And honestly, it would be hard to prove that the death was caused by the drink of water. When, in fact, the evidence indicated that there was only a 1 in 1000 chance of death from the substance in the water. And there might have been some time and other possible factors and so on. Hence, it's entirely possible in regular common law litigation. That one would not be able to put any liability on whoever put this substance in the glass of water. On the other hand, environmental law which is risk based, would ask a slightly different question. It would start from the fact that there is a 1 in 1000 chance of death from the water. That we established based on some sort of evidence when I gave you the problem to begin with. But now think about it. We're not talking about giving this glass of water to one person. What if it were to be given to a million people, which of course is totally plausible. A city for example could regularly supply a million people with water. Well, what do you think the risk is when a million people drink a million glasses of water containing a substance in each one that has a 1 in 1000 chance of death? Do you think that's a tiny risk because it's just 1 in a 1000? The improbability of getting cancer is of course reflected in the, in the 1 in a 1000 risk of dying to begin with. On the other hand there are a million people exposed to it. Well, if a million people are exposed to a 1 in a 1000 chance of death from every glass of water they drink. You could project statistically 1000 deaths and that is not insignificant. And hence, environmental law may suddenly start to regulate something that in fact is quite significant. When projected out into the environment where among other things there are hundreds of thousands or millions of people. Thus, the concept of risk magnifies the sweep, the scope of environmental law far beyond the more concentrated harm based focus of traditional common law. That's what gives environmental law some of its power and what makes environmental law controversial. Now that we have a conceptual understanding of risk. Let's see how a statute that is risk based works technically. And there's a good way to start with pesticide regulation. Pesticide regulation, at least in the United States, is done under an odd name statute called the Federal Insecticide, Fungicide and Rodenticide Act. Luckily it has a good nickname, FIFRA. And at the gist of FIFRA is this regulatory standard. Any pesticide that is to be sold in the United States must be registered with our Environmental Protection Agency. EPA and the test for regulation that the pesticide does not present unreasonable risks to either people or the environment. And this decision about what is reasonable or not is informed by a look at the cost and benefits of the pesticide at issue. That's the technical legal standard. There's a good reason. There's two reasons in fact why I like starting with pesticides. One is, as shown in this slide, I actually write about pesticides. Some of my research looks at how the statute came about and some of it's odd quirks. And, as well, how the statute is implemented. And how risk regulation works in particular on a case-by-case basis. But there's a far more important reason. Which is that pesticide regulation and pesticides in general were the subject of a very important book written by Rachel Carson called Silent Spring. And of course she named it Silent Spring based on her fears that pesticides were so poisoning the world. That they would kill not just the pests they were targeted at. But non-target entities like all birds. Hence, silence, Silent Spring. Silent Spring was a breath taking book. That just broke through the public consciousness and in many people's minds, launched the modern environmental movement in the United States. And our statute FIFRA was passed in large part. Because of the momentum and people's attention that Silent Spring gathered. I had you look at a case, Dow Chemical versus Blum. To give us an example of how pesticide regulation works in practice. Blum by the way, was an administrator at EPA who was making a decision in this case about a chemical substance named 2, 4, 5-T. That was owned and marketed by Dow Chemical. 2, 4, 5-T was an herbicide that would kill broad leaf plants. And it was incorporated into dozens of different pesticides. And used, in this case in particular on forests and in pastures and rights-of-way to control weeds. In this case Blum, the administrator at EPA wanted to issue a temporary suspension. Just temporarily suspending the use of 2,4,5-T until more investigation of it's dangers could be done. You can't suspend even temporarily without a reason. And to add issue to this case is whether or not EPA had a good enough reason. By the way, you may have heard of this odd sounding substance, 2, 4, 5-T because it gained notoriety. As part of a very powerful herbicide known as Agent Orange used during the Vietnam war by the United States. To deliberately defoliate forest in South east Asia. . So that we could see the enemy better. And they had no place to hide. This was such a powerful substance that not only did it defoliate trees. But it exposed Vietnamese and Americans alike to the substance that lead to a rash of lawsuits. Agent Orange lawsuits after the war. This is the same substance at issue here. Although not in as powerful a formulation as was Agent Orange. In this case. The administrator had two types of evidence. One is, all 2,4,5-T was contaminated with a substance that had known fetotoxicity and developmental toxicity. That is to say it was toxic to foetuses and to developing foetuses at any concentrations. No matter how tiny, there was no known safe effect for this contaminant that was found in all 2,4,5-T. But in addition, there was some epidemiological evidence that the spraying of this herbicide in the forest in Oregon. In particular, the forest near a town named Alsea, Oregon. Had lead to the spontaneous abortion of pregnant women at a rate greater than would occur naturally. This evidence, this epidemiological connection between the two was later referred to as the turning point. In both the agencies and the overall legal approach to 2,4,5-T. And it was in this case that the administrator introduced the epidemiological study. What I wanted you to see in the brief excerpt I had you read, was how much attention Dow Chemical put on this study? Dow Chemical and its scientists called witnesses and other experts that challenged almost all aspects of the study. It's design, the way the data were collected, the way the data were interpreted, whether you could reconcile the results here with data from other studies. It's not that they didn't have some good points. The court itself said. That, in light of all of the challenges. The scientific challenges brought by Dell Chemical, the actual, statistical link between this type of 2,4,5-T. The products this time and these abortions in the women in Oregon was possible but certainly not definite, nonetheless. And this was the point. Do you remember last time I told you that environmental law tends to take shape in implementation. And that there's a separate parallel body of law called administrative law that tends to govern implementation by regulatory agencies. And courts really do defer to expert judgments by expert agencies rather than make decisions for themselves. The important point is all of this evidence was not there for the court to decide what it would do if faced with this in a trial. Rather the court was reviewing the determination of the agency. And the question wasn't, what would the court do? The question was instead, was the agency rational? Not necessarily perfect. Just rational. Was it reasonable? In concluding that this study was suggestive enough. When combined with the other evidence of fetotoxicity. To conclude that there was some not insignificance risk. And the court ended up concluding that. Yes, EPA passed this less stringent test. But that's the only test that mattered. Having now concluded that EPA was reasonable in concluding that there really was a risk. The agents, the court had to consider whether the agency looked at the cost benefit part of FIFRA, the pesticide statute. Here, the court didn't have much of a problem. because after all, the agency was only looking for a temporary suspension of maybe a few months. So, the actual costs on the world of losing this herbicide for a few months weren't likely to be very great. Plus there was evidence that there were other alternatives. In fact, 2,4,5-T later was cancelled on a much more permanent level. And there plainly were and are alternatives to it. So the court had no trouble finding that the agency also had reasonable grounds to conclude that the benefits of getting rid of 2,4,5-T for a while. In light of this disturbing evidence plainly outweighed the costs to industry. And the costs on the ground to not having this herbicide available. That's the central issue I wanted us to get from this case. To see environmental law in implementation. To see it at the ground level. And to appreciate that at bottom risk regulation often depends on conflicting evidence. And a judgement about whether these powerful agencies that implement environmental law at least have a reasonable basis to conclude. That there is a risk. Next time let's look at another context in which risk regulation comes up. And talk about something often considered an alternative to risk-based regulation. Something known as the precautionary principle. I'll see you then. [MUSIC]
