TCS Daily


Meet the Regulations

By Tim Worstall - June 2, 2005 12:00 AM

We are, at times, told by business types that restrictive regulations are costing more than the entire output of the planet and we are, at similar times, told by proponents of such regulations that they are the only thing preventing business from poisoning/drowning/murdering us in our beds, cackling with glee the while. No doubt both have valid points just as they both employ the hyperbole of which the above is not in any way an example.

I'd like to try and bring a little clarity to the debate by extrapolating from a single personal anecdote and completely ignoring the larger picture, the surveys, careful analyzes and logical projections provided by policy wonks on both sides. So no discussion of the upcoming REACH Directive in the European Union, nothing on how richer we might be with a lighter burden, no discussion of how many young lives have been saved by the bureaucrat's selfless devotion to saving us from the ravages of laissez faire capitalism, just a minor, although true, story from the front lines. I've not used the names of the companies involved as I don't have their permission to do so but I do assure you that each and every event is true and that the prices and costs are correct, at least in so far as the memory of the main actor in the story, me, is capable of recalling.

Thorium is a radioactive metal that isn't used for very much any more, precisely because of its light radioactivity. The US Geological Survey (having absorbed the Bureau of Mines) estimates annual usage in the US at about $30,000 worth a year. One of the people who does use it is one of our customers and a few years back they asked us to provide some for them. About 12 or 13 lbs was needed to keep their process going for 5 years or so in the manufacturing of a particular type of light bulb, a fairly trivial enterprise you might think and certainly one that you would think would be easy to supply. Especially if like us you were on the inside of the metals business and knew that there were (and are) warehouses full of this metal in the US. The material is left over from the US Navy's nuclear reactor program and at current rates of usage there are centuries of supply simply sitting there. Should be the easiest thing in the world really, shouldn't it? Buy a piece, slap a decent profit margin on to it and send it off to the customer and, as is said in certain English circles, Bob's your parent of choice's male sibling. Then we met the regulations.

Our customer, The Very Large Lighting Company Inc. is allowed to have 15 lbs of thorium on site at any one time. A reasonable restriction given that it is indeed radioactive although very lightly so. A piece that size sitting on your desk would not fog a dosimeter in months of exposure. Still, rules is rules. The Company Looking After the Navy's Thorium did not, however, have a piece that small.

After they had told us that they were in fact supermodels (whether we wanted 50 grammes or 15 lbs the price would be $10,000, they being like certain clothes horses in that they did not get out of bed for less) they said that their smallest piece was 42 lbs in weight. That would seem simple enough, grab a hacksaw and cut a piece off the end being a reasonable thought. Ah, no, that is indeed too simple. While they may have a license to store and sell at least tens (if not hundreds) of tonnes of this metal, they are not allowed to cut it. This does actually make sense as one doesn't want radioactive dust floating around the warehouse and they didn't have a cutting machine with the correct enclosure to ensure that none escaped.

A quick search through the Rolodex (highly technically advanced, us metals brokers) found Extremely Big Radioactive Metals Company who did have a license to cut said thorium as they had both a great deal of experience and the correct machinery. The charge to cut a piece off the end of the rod of thorium would be $1,500. Rather expensive you might think, for a single slice with a machine but again, it does make sense, for whatever dust or shavings are left over have to be deposited in a landfill for long term (centuries) storage of hazardous materials.

There was just one small problem left to deal with. The EBRMC had a license to cut the thorium but they were only allowed to have 30 lbs of such metal on their site at one time. We thought of trying to claim that the cutting machine was on the edge of their site and that at least part of our 42 lb piece would not actually enter it but this was not, you might be surprised to hear, found to be acceptable. So we had to apply to the State authorities for what is known as a variance. In essence we were asking for a license to allow the EBRMC plant (a company that in both the US and other places is responsible for the enrichment of uranium and the like, so one might imagine they know what they're doing) to have a 42 lb piece of metal on site for one day. The cost of this variance was some $7,000. There was no problem, no even vague thought that it wouldn't be issued, this was just the cost of the time required to fill out the forms and chat to the various, extremely polite and professional bureaucrats involved. As above, rules is rules and if rules there are going to be then there has to be a system for reviewing those exceptional cases that will always pop up from time to time.

We also found that the 30 lb weight restriction had an effect in another way. Less than 15 lbs can be stored on a site with a simple license, less than 30 lbs can be sent around the country as long as it is properly marked but over 30 lbs required the full hazardous materials transport rigmarole. Thorium is a heavy metal so our piece was just a few feet long and it traveled from TCLATNT to EBRMC in glorious isolation in the back of an 18 wheeler plastered with warning signs and accompanied by State troopers, cars with lights flashing and perhaps the odd siren blare just for fun. This day out added a further $3,000 to the costs of getting our piece of metal.

At this point everything went swimmingly. The rod of metal arrives, is cut, dust swept up and disposed of and we now have two pieces of thorium, one some 29lbs in weight and the other 13 or so. The costs to get this far have been substantial as you can see. That there are tonnes of this material sitting around while almost no one uses it means, of course, that it doesn't really have an intrinsic value. In fact, given the costs of disposing of it according to the law, thorium probably has a negative value, yet we had to pay $10,000 for a piece to cover the pain and grief of the paperwork and transaction. A further $3,000 for transport, $1,500 to cut it and $7,000 for the variance. All of this for something that, without the paperwork and regulations, we could probably have asked for and received for free if we had been sufficiently polite.

Yet I don't doubt that each and every regulation, each and every step, could and can be defended as being entirely rational, even cost effective.

The perceptive will have noted that there are two costs in the above listing that seem to have been ignored or left out of the calculation. How did we get the 29 lbs back to TCLATNT and the 13 lbs to VLLC, our customer? As both were below the 30 lbs limit that wasn't actually much of a problem. As long as they were properly labeled they could be sent by any common carrier so we used Federal Express and that is so cheap compared to the above costs that I'm not even sure that we remembered to charge the customer for it.

There is one thing that worries me about this though, for both packages went on the same Fed Ex truck and I'm sure that that breached one or other rule but I have to admit that I've never had the courage to actually ask and find out.

The author is an entrepreneur and a TCS Contributing Writer living in Europe. Find more of his writing here.

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