American business doesn't usually walk away from a regulatory fight.

That's why a decision by the American Iron and Steel Institute to drop a Supreme Court appeal of a costly health regulation is something of landmark.

The institute and the Republic Steel Co. yesterday withdrew their petition to the court attacking the standards set by the Occupational Safety and Health Administration to protect coke-oven workers in steel plants.

The coke-oven case was expected to give the court the chance to settle the issue of how far OSHA must go in balancing the economic impact of its regulations on industry against the health benefits for workers. The industry dropped it, however, saying that most of the safety measures required by Osha have been taken care of already.

The court's first crack at the issue, in its July decision on the regulation of benzene, didn't settle much.

In that decision, the court struck down a new OSHA standard tightening the permissible exposures to benzene in industrial plants. Benzene, a widely used industrial chemical, causes nonmalignant blood disorders, chromosomal damage and leukemia -- a fatal form of cancer -- among workers exposed even to very small amounts.

The question on which the case turned was how much evidence OSHA needed to tighten the exposure limits down to the lowest "feasible" limit. OSHA accepted the findings of some of the scientific experts who argued that workers exposed to its original, higher standard had contracted leukemia.

Since the original standard was unsafe, it had to be lowered. OSHA concluded that there was no safe threshold level of exposure and put the limit to the lowest level that it felt the industry could achieve economically and technologically.

The American Petroleum Institute, appealing the ruling, said Osha had failed to show that any lives would be saved by the lower standard; OSHA was just guessing, it said.

The U.S. Court of Appeals for the Fifth Circuit overturned the benzene standard, saying that OSHA was obliged to balance the economic costs of its regulation against the health benefits, and the case went to the Supreme Court.

A majority of justices agreed to strike down OSHA's benzene standard, but they were sharply divided in their reasoning. The court's opinion, in which four justices joined, said that OSHA had an obligation to show "on the basis of substantial evidence" that the original, more lenient benzene standard was "at least more likely than not" to protest workers with a "significant risk" of serious illness.

The opinion sidestepped the debate on cost-benefit balancing by holding that OSHA hadn't completed the first step of satisfying the "significant risk" requirement spelled out by the court.Given that failing, there was no need to deal with the cost-benefit issue, the court said.

In a sharply worded dissent, four other justices insisted that the agency had to have the benefit of the doubt in setting standards for hazards like benzene where the connections between different exposure levels and the incidence of cancer or chromosomal damage is just guesswork.

"The critical problem in cases like [this] one is scientific uncertainty," said Associate Justice Thurgood Marshall, writing for the majority.

Since there is no reliable evidence of what happens to workers exposed for many years to the very low levels of benzene allowed by OSHA's new standard, it will be years more before scientists can establish whether a cancer threat exists, the dissenters said. OSHA could not "wait for an answer."

The court's opinion said that OSHA could use its best judgement and rely on conservative estimates of health hazards but that it had to have a reasonable basis of evidence on which to rely. How much? The court left that unanswered.

The court even singled out the coke-oven case as an example of OSHA's ability to calculate risks. There, the agency estimated that its standard limiting exposures to toxic coke-oven gases would remove a risk of cancer for 21,000 exposed coke-oven workers.

The court also noted that another government agency, the Council on Wage and Price Stability, had challenged OSHA's coke-oven standard, claiming that no more that eight to 35 lives would be saved each year from among 14,000 exposed workers. OSHA didn't try to show whether its estimate or COWPS' was correct because it said it wasn't required to quantify the benefits of its regulations or weigh their economic costs.

With the scrapping of the coke-oven case, the issue of cost-benefit balancing probably hasn't been buried but merely delayed.

The court has been asked to take up an appeal of OSHA's standard limiting worker exposures to cotton dust in textile plants.

Some observers believe OSHA's chances of defending its regulatory strategy are stronger with the cotton dust case, if the court accepts it, than with the coke-oven case. That is sheer speculation. It is also moot.