Risk Analysis and Cost-Benefit Analysis of Environmental Regulations
Congressional research reportDec 2, 1994
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Risk Analysis and Cost-Benefit
Analysis of Environmental
Regulations
Linda-Jo Schierow
Analyst in Environmental Policy
Environment and Natural Resources Policy Division
A
December 2, 1994
Risk Analysis and Cost-BenefitAnalysis
of Enviromental Regulations
SUMMARY
Concerns about the national economy, environment, public health, and the
quality of EPA's regulatory process have led Congress to consider proposals to
require EPA analyses of risks, costs, and benefits of proposed regulations.
Proponents of analysis want the results used to design more efficient regulations
and to prioritize environmental problems for Federal attention. Risk analysis
summarizes available scientific information about hazardous activities,
chemicals, or technologies and the effects they may have on exposed animals or
people under various conditions, for example, with or without regulation. Risk
and economic analyses can be qualitative or, if information is sufficient,
quantitative, but economists can only quantify economic benefits of environmental regulations if scientists can quantitatively estimate risks to health and
the environment.
Economic analysis and risk analysis of many management options already
are required by executive order and statute; EPA has conducted such analyses
for 20 years. The quality of its analyses and the influence of the results on
management decisions have been both praised and criticized.
Some
environmental statutes prevent EPA from using analytic results in developing
regulations.
Prospects are high that the 104th Congress will consider legislative
proposals to promote EPA risk and economic analyses. Five general questions
are at issue: 1) How valuable is the information provided by risk analysis for
policymakers? 2) Is risk analysis a scientific basis for environmental decisions?
3) Should risk analysis be used to quantify environmental and health benefits?
4) Should priorities be based on relative risks? and 5) Given that EPA already
analyzes risks, costs, and benefits, would additional requirements for analysis
improve risk management? People generally agree that risk analysis is valuable
for summarizing scientific information, but disagree about its scientific
objectivity and information value for environmental policyrnakers, because risk
is only one aspect of environmental problems. Also, the quality of information
provided by risk analysis depends heavily on the quality of available data, which
varies, so that the results of risk analysis almost always are debatable.
Some general legislative approaches include: 1)authorizing or requiring
EPA to analyze regulations, 2) authorizing or requiring EPA to consider costs
and/or risks in making regulatory decisions, 3) requiringto Congress on
the results of regulatory analyses, 4) authorizing fundinp for analysis, 5)
requiring research and development of analytic methods, the database, or
guidelines for risk assessment, 6) establishing guidelines for risk assessment or
presentation of results, and 7) requiring peer review. An appended comparison
of analytic requirements in key legislative proposals and executive orders finds
President Clinton's order to be most comprehensive.
CONTENTS
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
RISK ANALYSIS AT EPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Origin of Environmental Risk Analysis . . . . . . . . . . . . . . . . . . . . 5
Influence of Federal Guidelines on EPA Risk Analysis . . . . . . . . 5
State of the Art of Risk Analysis: EPA . . . . . . . . . . . . . . . . . . . . 8
RISK MANAGEMENT AT EPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Comparative Risk Analysis at EPA . . . . . . . . . . . . . . . . . . . . . . 10
Economic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
The Influence of Environmental Statutes . . . . . . . . . . . . . . 14
Statutes Requiring Analysis of Federal Regulations . . . . . . 22
President Reagan's Executive Orders (Now Revoked) . . . . . 23
EPA's Response to the Reagan Orders . . . . . . . . . . . . . . . . 24
Regulatory Planning and Review in the Clinton
Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ISSUES IN EhVIRONMENTAL RISK MANAGEMENT . . . . . . . . .
How Valuable Is the Information Provided? . . . . . . . . . . . . . . . .
Is I t a Scientific Basis for Environmental Decisions? . . . . . . . . .
Should It Be Used to Quantify Environmental and Health
Benefits? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Should Priorities Be Based on Relative Risks? . . . . . . . . . . . . .
Would Additional Analysis Improve Risk Management? . . . . . . .
THE INFORMATION VALUE OF RISK ANALYSIS . . . . . . . . . . . .
Key Factors Determining the Quality of Information Provided .
Quality of the Database . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Assessment Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LEGISLATIVE ACTMTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
LEGISLATION IN THE 103RD CONGRESS . . . . . . . . . . . . . . . . . . 53
OUTLOOK FOR THE 104TH CONGRESS . . . . . . . . . . . . . . . . . . . . 54
SELECTED REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
APPENDIX . REQUIREMENTS FOR ANALYSIS OF RISKS. COSTS.
AND BENEFITS IN SENATE-PASSED BILLS OF THE 103RD
COKGRESS: A COMPARISON WITH REQUIREMENTS IN
EXECUTIVE ORDERS OF PRESIDENTS REAGAN AND CLINTON
. . A2
Risk Analysis and Cost-Benefit Analysis of
Environmental Regulations
INTRODUCTION
Many Governors, Mayors, Members of Congress, and others are concerned
about the high cost of compliance with environmental regulations. In
particular, some believe EPA has promulgated requirements that achieve small
increments in environmental quality or human health protection without
adequately considering the economic costs of those decisions. They argue that
the resources consumed in promulgating, enforcing, and complying with such
regulations could better protect public health and the environment if they were
more commensurate with the risks potentially avoided by regulation and were
directed to controlling environmental hazards posing greater risks. Therefore,
many support legislation requiring risk analysis of environmental problems and
economic analysis of EPA regulations. EPA supporters argue that EPA has
analyzed risks, costs, and benefits for major regulations and most other
significant decisions for more than a decade. However, many of the Agency's
decisions are driven by specific statutory mandates, discussed below, that may
limit EPA's regulatory flexibility or its ability to consider cost when developing
regulations. Other risk management decisions are driven by ambiguous
legislative language which EPA cautiously interprets for various reasons,
including uncertainty about health risks and lawsuits from environmental
groups. Congress establishes priorities for EPA's regulatory activities when it
mandates deadlines for issuance of regulations in environmental legislation and
authorizes or appropriates funds for specific programs. According to some
sources, EPA has little discretionary authority to choose targets for regulations
based on risks.'
Various legislative proposals in the 103rd Congress addressed the issue of
how EPA should manage risks. Some would have required EPA to conduct
formal economic analyses of existing and proposed environmental regulations
and forego regulation when costs exceed auantifiable benefits. Others would
have had EPA evaluate regulations and their alternatives based on the
magnitude of risk potentially controlled by each option. Still others would have
required EPA analysis of the relative magnitude of risks addressed by its
regulations. More modest proposals would have established an office of
environmental risk within EPA or mandated research to improve the quality of
risk analysis or communication of the results. Prospects are high that the 104th
Congress will continue to debate these proposals.
'
For example, DanBeardsley, former EPAofficid with the Office of International Activities,
a s quoted in: Roberts, L. "Countingon Science a t EPA.' Science,v. 249, August 10, 1990. p. 618.
This report describes and analyzes the issues and legislative options related
to risk analysis and risk management at EPA and considers the potential impact
of proposed legislation on EPA's rule-making process and final regulations. The
report begins by defining some key terms used in the discussion and by
providing: background information on EPA's historical use of risk and economic
analyses; provisions of existing law that authorize, mandate, or constrain the
use of the results of risk analysis and economic analysis by EPA; and various
studies of EPA's risk analysis and economic analysis policies and practices. The
second major section of the report summarizes and analyzes proposals, issues,
and legislative options. The report concludes with a brief summary of the
legislative activities in the 103rd Congress and a list of selected references. (For
more information about specific proposed legislation, see CRS Issue Brief IB
94036, The Role of Risk Analysis and Risk Management in Environmental
Protection and the CRS Report Comparison of Environmental Risk Provisions
in the 103rd Congress, 94-716 ENR.)
The Environment and Natural Resources Policy Division of CRS conducted
an advanced workshop on cost-benefit-risk analysis ofproposed EPA regulations
on July 19, 1993. Guest speakers who presented five perspectives were: John
Graham, Professor and Director, Harvard Center for Risk Analysis, Harvard
School of Public Health; James D. Wilson, Regulatory Issues Director: Monsanto
Company, and President, Society for Risk Analysis; Erik Olson, Senior Attorney,
Natural Resources Defense Council, and former EPA employee; Adam Finkel,
Fellow, Center for Risk Management, Resources for the Future; and Richard D.
Morgenstern, Director, Office of Policy Analysis, Office of Policy, Planning, and
Evaluation, U.S. EPA. The purpose of the workshop was to examine areas of
agreement and disagreement among panelists regarding the advantages and
disadvantages of increased use of cost-benefit-risk analysis of EPA regulations.
Drs. Graham and Wilson spoke in favor of, and Mr. Olson spoke against, an
increased role for cost-benefit-risk analysis at EPA. Dr. Finkel provided
arguments both for and against an increased role for cost-benefit-risk analysis
at EPA. Dr. Morgenstern discussed the legal, fiscal, and practical considerations
that affect EPA's use of cost-benefit-risk analysis. The speakers' presentations,
answers to follow-up questions, and participation in an open discussion with the
moderator and audience provided valuable information that is referenced
throughout the analytic section of the report.
BACKGROUND
DEFINITIONS
Experts in risk analysis disagree about how "risk and related terms should
be defined. For the purpose of this discussion, however, the following
definitions have been adopted. "Environmental risk is defined as the
probability of occurrence of a particular adverse effect on human health or the
environment as a result of exposure to an environmental hazard; an
"environmental hazard may be a hazardous chemical in the environment, a
natural hazard, or a hazardous technology (for example, a dam).
"Environmental risk
assessment refers to any
f o r m a l or i n f o r m a l
scientific procedure used
to produce a quantitative
estimate of environmental
risk. For example, risk
assessment is often used
to estimate the expected
rate of illness or death in
a human population exposed to a hazardous
chemical based on the
number of experimental
animals affected b y
various doses of the
chemical as measured in
risk analysis"is defined more
laboratory e ~ ~ e r i m e n t s ."Environmental
~
broadly to include any quantitative or qualitative scientific description of an
environmental hazard, the potential adverse effects of exposure, the risks of
these effects, events and conditions that may lead to or modify adverse effects,
populations or environments that influence or experience adverse effects, and
uncertainties with regard t o any of these factor^.^ Generally, risk analyses are
based on scientists' evaluations of results of scientific research, extrapolations
of these results to predict the type and to estimate the extent of effects in
exposed populations, and judgments about the number and characteristics of
persons exposed to hazards at various levels. The final step in risk analysis is
"risk characterization,"which summarizes scientific judgments about the
existence and overall magnitude (that is, the incidence) of adverse effects given
specified levels of exposure to a hazard.
"Riskmanagement"is the process of deciding what should be done about
a hazard, the population exposed, or adverse effects: implementing the decision,
and evaluating the results. Decision makers may consider social, political,
economic, legal, ethical, and engineering information as well as scientific risk
estimates in choosing among available risk management options. Comparative
risk analysis and economic analyses use the results of environmental risk
assessments but are risk management activities, conducted to inform decisions
about management options. Risk management decisions often require value
Laboratory studies of toxicity a r e supervised and interpreted by toxicologists.
Epidemiologists, who also contribute data for risk assessment, study the health of human
populations who have been exposed, usually accidentally or occupationally, to a hazard.
3
Others might use these terms differently. The important point is that i t is necessary to
distinguish between an analysis that focuses exclusively on the numbers associated with a hazard
and a broader analysis t h a t also considers such qualitative features as the dread a hazard inspires
or the irreversibility of harm. A similar distinction is drawn between "economic analysis'' and
"cost-benefit-risk assessment" below.
judgments on such questions as "What level of risk is acceptable?" and 'What
level of expenditure is reasonable?" Another aspect of risk management is "risk
communication"which includes any information exchange about a hazard or
risk.
A "comparativerisk analysis" evaluates a number of environmental
hazards relative to one another and assigns to each a priority, based on one or
more characteristics of the individual hazards. Often ranks are based on the
relative magnitude of risk, which presupposes that a quantitative environmental
risk assessment has been conducted for each hazard. A comparative risk
analysis may group hazards, for example, as "high," "medium,"or "low" risks, or
arrange them in rank order. Alternatively, hazards may be evaluated based on
the amount of risk that may he avoided using available technologies and
resources. This is often referred to as ranking according to "riskreduction
opportunities."
"Economicanalysis"refers to any systematic procedure to evaluate real
or anticipated resource expenditures and losses (costs) relative to real or
anticipated gains (benefits).
"Cost-benefit-risk assessment is the
quantification and monetary valuation of the expenditures, gains, and losses.
and the calculation of net benefits to society associated with the adoption of a
particular regulation (or alternative management strategy) to address an
environmental hazard. Quantitative environmental risk analysis (that is, risk
assessment) is a necessary prerequisite to the conduct of cost-benefit-risk
assessment of environmental regulations, because the "benefits"are the risks
avoided (that is, the adverse effects on human health or the environment. or
risks of such effects, that the regulation is meant to address.) Risk assessment
may be used to estimate the number of people or animals likely to be harmed by
exposure to the hazard under each regulatory strategy, including a "do-nothlngdifferent" strategy that reflects the current policy, or regulation. or laissez faire.
Benefits may be expressed in such terms as numbers of lives saved or illnesses
or species extinctions avoided. Risk that is expected to remain after a new
regulation is implemented may be subtracted from the risk under current
conditions to estimate risk reduction opportunities -- that is, the "expected
benefit -- of each regulatory alternative. If benefits are translated into
monetary terms to allow cost-benefit-risk assessment, various techniques may
be used to calculate the dollar values of health effects; these values may be
derived from studies of how- much people are willing to pay to avoid exposure
to a hazard or particular adverse effect, or based on savings of direct costs, such
as health care expenditures, salary loss for the duration of an illness, or the
years of work lost to premature death. The intent is to estimate the gross
monetary value of benefits to society, rather than to individuals. "Netbenefit
is the expected monetary benefit less the cost of implementing the regulation.
RISK ANALYSIS AT EPA
Origin of Environmental Risk AnaIysis
Most of the major environmental protection statutes have provisions that
require, or have been interpreted by EPA to require, decisions about the amount
of pollution or potentially polluting activity that is considered to be "safe." To
inform such decisions, EPA began soon after it was formed in 1970 to systematically collect and analyze data to describe and evaluate environmental conditions
and trends. EPA's earliest efforts to evaluate environmental data, however,
were frustrated by the difficulty of defining "good environmental quality;
scientists could not agree on a definition. They readily agreed, however, that
the environment should not be hazardous to human health or ecosystems.
Therefore, EPA began to focus efforts on defining risks.
Procedures for analyzing hazards and measuring risks existed prior to 1970,
but had been developed for purposes other than environmental protection (for
example, to determine life insurance rates or the likelihood of flooding) and had
not been widely applied to more complex environmental hazards. Because EPA
urgently needed suitable tools to carry out its mission. it supported the
development of the newly consolidated field of riskanalysis and helped to found
the Society for Risk Analysis,4 The Agency was among the first to apply the
methods of risk analysis to problems in environmental protection. EPA
developed new procedures and adapted methods from such disciplines as sanitary
and industrial engineering, psychology, economics, sociology, statistics, and
operations research. By the mid 1970s, EPA was conducting risk analyses to
support some of its decisions.
Influence of Federal Guidelines on EPA Risk Analysis
Other Federal agencies with responsibilities for protecting human health
and safety, such as the Food and Drug Administration (FDA) and the
Occupational Safety and Health Administration (OSHA), also were conducting
risk analyses by the mid 1970s. Each agency independently developed analytic
procedures suitable for its mission, authority, and budget; published results of
risk assessments; and: designed risk management activities with reference to
scientists' risk estimates. However, because agencies often shared jurisdiction
over an industry or chemical and sometimes came to different conclusions about
the level of risk associated with chemicals or industries, as well as the level of
risk that should be regulated (a risk management decision), some independent
investigators and industry scientists were of the opinion that certain Federal
scientific risk assessments were of poor scientific quality. They criticized the
*
The Society for Risk Analysis is an international organization of professionals with a strong
interest in risk analysis. The membership is multidisciplinary including toxicolo&ts,
epidemiologists, statisticians, chemists, physicists, politicaI scientists, economists, psychologists,
journalists, sociologists, policy analysts, public affairs speciaiists, and educators. Researchers,
practitioners, and users of risk analysis attend the annual meeting LO present papers and learn
about the latest risk research.
Federal Government for allowing inconsistent analyses of risks.5 Often
criticisms targeted EPA which tended to produce higher risk estimates and to
regulate more stringently.
These criticisms of Federal risk analyses focussed on the diverse choices
made by different agencies to cope with inherent uncertainties of risk analysis
that arise from missing or ambiguous information on hazards and gaps in
current scientific theory. Although generally characterized as a scientific
activity, risk analysis is not, and probably can never be, entirely objective or
fact-based. Risk analysis was developed to evaluate what is known about things
that cannot be known with certainty. Thus, risk analysis produces an estimate,
never an exact prediction, of the magnitude and severity of risk. (Weather
forecasts* for example, are risk estimates.) Environmental risk analysis is
especialIy beset by many uncertainties, because data usually are sparse, and
scientific theories explaining hazards, exposures, and effects often have not been
established. To conduct a risk analysis under these conditions, requires choices
among plausible alternative assumptions and competing theories to bridge the
gaps. Because these choices cannot be based on science alone, they are subject
to challenge. For example, if data are availabIe for two animal species, which
data should an analyst use or how should data be combined to estimate risk to
a third species? The National Academy of Sciences (NAS) identified 50 choices
beyond the realm of science (so-called "inference choices") that affect risk
a n a l y ~ e s .For
~ an excellent, though somewhat dated, discussion of inference
choices in the context of cancer risk analysis, see chapter two inMahing Cancer
Policy by Mark Rushef~ky.~
In 1977, the EPA: OSHA, the Consumer Product Safety Commission
(CPSC), and FDA responded to the criticisms of risk analyses by establishing an
Interagency Regulatory Liaison Group (IRLG) to coordinate procedures for
analyzing cancer risks.' The Food Safety and Quality Service of the U.S.
Department ofAgriculture (USDA)joined the IRLG soon thereafter. The IRLG
proposed in 1979 a general "cancer policy" to coordinate risk analysis and risk
management across agencies to the extent permitted by statute. According to
the NAS: this was "the first evidence that all the [Flederal regulatory agencies
agreed on the inference options applicable to the identification of carcinogenic
hazards and measurement of risks".'
Environmentalists also criticized EPA's risk assessments, but their complaint was t h a t EPA
used risk assessment to justify less rigorous enforcement of environmental statutes.
National Academy of Sciences. Risk Assessment i n the Federal Gouernment: Managing the
Process. Washington, D.C., National Academy Press. 1983. pp. 29-33.
Rushefsky, Mark E. Making Cancer Policy. NewYork, State University of New YorkPress,
1986, p. 37-54.
'The IRLG was disbanded i n 1981
However, the IRLG policy was controversial. Some scientists and industrial
and environmental groups accused the Carter Administration of allowing policy
prescriptions to influence scientificjudgments. In response, Congress authorized
a study by the NAS on institutional arrangements that might improve the
agencies' use of risk analysis.I0
The NAS published the results of the study in a 1983 landmark report,
Risk Assessment in the Federal Gouernment: Managing the Process, also known
as "The Red Book." It described the risk analysis policies and practices of all
Federal agencies and concluded that no change in institutional structure was
necessary or desirable to improve risk assessments. In addition, the Academy
provided a general framework for cancer risk assessment that still is used today;
recommended that agencies separate risk assessment from riskmanagement; and
suggested development of uniform general risk assessment guidelines for the
Federal Government.
In 1985, the NAS framework was adopted by the White House Office of
Science and Technology Policy (OSTP), which included scientists from the
regulatory agencies, the National Institutes of Health, and other Federal
agencies. Although the OSTP decision was not binding on the agencies' risk
analysis practices, it provided a consistent basis for developing agency
guidelines.
The Reagan and Bush Administrations convened numerous interagency
meetings, conducted studies, and issued guidance in the hope that uniform
policies and procedures might be established to guide risk analysis and
management in the Federal Government. However, no formal guidelines
materialized. In August 1994, an interagency work group for the Clinton
Administration released Draft Principles for Risk Assessment, Management, and
Communication to serve as a "general policy framework" for implementing
regulatory policy.
Many argue that interagency guidelines cannot, or should not, be
established, because the different missions and objectives of Federal agencies
require them to adopt different approaches to analyzing and managing risks.
Others claim that such guidelines are undesirable because they might freeze
development of risk analysis a t an immature stage, when its procedures are still
rapidly evolving. Still others favor adoption of formal guidance because it would
make the decision-making process more transparent to outside observers and,
they argue, reduce the influence of politics on scientific judgments made during
risk analyses.
In response to criticisms and calls for consistent risk analyses, EPA became
in 1977 the first Federal agency to propose interim guidelines for its cancer risk
The study was authorized i n the Act making appropriations for Agriculture, Rural
Development, and Related Agencies programs for the fiscal year ending September 30, 1981 (P.
L. 96-528). The study was carried out by the National Research Council with support from the
Food and Drug Administration.
assessments. In 1986, it was the first agency to establish final guidelines for
analyzingrisks of cancer and other health effects, all of which were based on the
1983 NAS framework (51 Federal Register 33992-34054, Sept. 24, 1986). In
addition to cancer risks, the 1986 guidelines for analysis addressed: the risk
that a chemical will cause mutations affecting future generations or damage to
human development (developmental risks); human exposure to individual
chemicals; and human health risks of chemical mixtures. The Agency revised
its guidelines for developmental risks in 1991 and for exposure in 1992 (56
Federal Register 63798-63826, Dec. 5, 1991; 57 Federal Register 22888-22938,
May 29, 1992).
In recent years, EPA has continued to be "the main player in developing
and revising risk assessment guidelines ... [Olnly EPA has completed scientific
reviews of some of its guidelines and formally modified them in response to new
scientific information," according to the Congressional Office of Technology
Assessment." EPA's cancer risk assessment guidelines currently are being
revised. In addition, guidelines currently are being developed for analyzing
neurotoxicity and reproductive risks and for exposure measurements. The
Agency has proposed a rough framework for ecological risk analysis based on
recommendations of the NAS."
State of the Art of Risk Analysis: EPA
Concerns about the scientific quality of risk analyses by Federal agencies
have generated numerous studies: often at the request of Congress. A 1987
Office of Technology Assessment comprehensive study of agency policies for
animal carcinogenicity studies and for identifying: assessing, and regulating
carcinogens concluded:
Both risk assessment and risk management incorporate policy choices
and reflect the values of the risk assessors and managers. Some
agencies have attempted to establish separate staffs for the two tasks,
but this separation does not eliminate the need to make policy choices
about the assumptions used in risk assessments.
The values and policy preferences of decision-makers, risk assessors,
and representatives of industry, labor unions, environmental
organizations, and public interest groups often differ. Scientists
disagree about the nature of scientific evidence. These differences
"
U.S. Congress Office o f Technologv Assessment. Researching Health Risks. Washington,
U.S. G o d . Print. Off. 1993, p. 120.
l2 U.S. EPA, Risk Assessment Forum. Framework forEcologica1 RiskAssessment.EPAi630/a921001. Washington, U.S. Environmental Protection Agency, February 1992. 41 p.
U.S. EPA, Risk Assessment Forum. Report on the Ecological Risk Assessment Guidelines
Stmtegic Planning Workshop. EPA!630/F-92!002. Washington, U.S. Environmental Protection
Agency, February 1992. 57 p.
U.S. EPA, Risk Assessment Forum. Drafi Ecological Risk Assessment: Issue Papers.
EPAi630fR-941004A. September 1993. 544 p.
explain some of the past controversies over the regulation of specific
carcinogenic chemicals and the development of agency policies.
... Adoption of general guidelines cannot resolve these specific
disputes.13
Responding to a mandate in the Clean Air Act Amendments of 1990, the
NAS National Research Council assessed the current state of EPArisk analyses.
The 1994 NAS report Science and Judgment in Risk Assessment concluded:
e
EPA should generally retain its conservative approach to risk
assessment (in which the Agency makes judgments that err, if
necessary, on the side of public safety) in the initial phase of setting
standards, but EPA should more clearly state its principles.
e
EPA should develop and use an iterative approach to risk assessment,
beginning with relatively inexpensive screening techniques and moving
on to more resource-intensive levels of data gathering, model
construction, and model application as each situation warrants. At
each level, risk should be reevaluated to produce a more precise
estimate. Iteration should cease when no further refinement of the
risk estimate is needed to inform risk managers.
e
EPA should work to continually improve the models and data used in
risk assessments and develop a standard procedure for deviating from
its conservative approach to risk assessment when warranted by
scientific considerations.
e
In its reports to decisionmakers and the public, EPA should present
information about the sources and magnitudes of uncertainty as well
as point estimates of risk.
e
"Risk assessment is a set of tools: not an end in itself. The limited
resources available should be spent to generate information that helps
risk managers to choose the best possible course of action among the
available options" (p. E-14).
The Clean Air Act Amendments of 1990 also established a Risk Assessment
and Management Commission to consider the NAS report, methods for
measuring and describing risks of chronic human health effects from exposure
to hazardous substances, methods to reflect uncertainties, and risk management
policy issues. The Commission also was directed to comment on the possibility
of developing a consistent risk assessment methodology, or standard of
acceptable risk, among various Federal programs.
l3U.S. Congress. Office of Technology Assessment. Identifying a n d Regulating Carcinogens:
Background Paper. OTA-BP-H-42. Washington, U.S. Govt. Print. Off., November 1987. p. 6.
Members of this Commission have been appointed and the first meeting was
held May 16, 1994.14 At this meeting it was agreed that the Commission would
address the contentious issues surrounding proposed legislation requiring risk
analysis and Executive Order 12866 on regulatory review (discussed below). The
Commission is about two years behind the schedule set by Congress, and hopes
to issue its final report in March 1996.
RISK MANAGEMENT AT EPA
The 103rd Congress debated whether EPA has adequately considered risks
and costs when exercising its discretionary authority. Specifically, some
questioned whether EPA has targeted its resources to address hazards posing
the largest environmental risks and whether EPA regulations to reduce risks are
worth the cost of compliance and implementation. The 104th Congress is
expected to continue debating these issues. This section of the report
summarizes EPA's use of risk comparisons and cost-benefit-risk analysis in
regulatory decisions.
Comparative Risk Analysis at EPA
In the mid 1980s, the EPA Administrator commissioned a special task force
to compare the risks associated with major environmental problems that
remained to be controlled, given the level of Federal risk management that
existed a t the time. The purpose was to help the Administrator determine
where available EPA resources could be applied to greatest effect." Senior
EPA career managers and technical experts assigned to the task force ranked 31
environmental problems in a 1987 report Unfinished Business: A Comparative
Assessment of Enuironmental Problems.
EPA scientists based their ranking on available data, but reported that data
gaps and uncertainty about risks plagued their efforts. Ranks did not take into
account the feasibility of controlling risks, the economic benefits of activities
posing risks, the limits of EPA's statutory authority, or the distribution of risks
and benefits geographically, over time, or among people. Problems were ranked
based on relative risks within four categories: human cancer risks: other risks
to human health, ecological effects, and human welfare (including such effects
as visibility impairment and damage to building materials). Scientists grouped
environmental problems within categories as relatively high, moderate, or low
risks.
l4 The ten members of the Commission are: Barbara Bankoff (appointed by President Bush),
Peter Y. Chiu and Alan Craig Kessler (appointed by President Clinton), David P. Rall and Korman
Anderson (appointed by the Majority Leader of the Senate), Gilbert Omenn and Joshua Lederberg
a p p ~ n t e dby ~ n 9zp e a x ~ rof t h e Hou:e . Y ~ r y n : n\Yeidor :i?poinrcri by rhc .Mtnur.ry Lcddcr '1
the House . .Jni.. Doul: ;iono!nrcd hv rhc .2l!!lor:ro Lcauer b i i h c Stcare . and Uernsrd Goidate:n
(appoint&by the President of the National ~ c a i e m yof Sciences)
..
l5 U.S. E P 4 Office of Policy Analysis. Unfinished Business: A Comparative Assessment of
Environmental Problems. Washington, U.S. Environmental Protection Agency, February 1987.
p. xiii.
The exercise revealed that no environmental problem ranked relatively high
or relatively low in all four categories of risk. Problems ranked relatively high
or moderate in three or more categories included: criteria air pollutants (that
is, lead, sulfur dioxide, nitrogen oxides, particulates, carbon monoxide, and
tropospheric ozone), stratospheric ozone depletion, pesticide residues on food,
and other pesticide risks. Other relatively high risks to human health included:
hazardous air pollutants, indoor air pollution, indoor radon, pesticide
application, exposure to hazardous substances in consumer products, and worker
exposures to chemicals. Additional problems posing high risks to ecologs; or
human welfare included: global warming; surface water pollution; physical
alteration of wetlands, estuaries: and other aquatic habitats; and mining wastes.
Interpretation of these results requires caution. For example, the low
relative risk of hazardous waste sites (as indicated by data available in 1987)
was due, in part, to the existence of regulations and availability of funds to treat
the problem. Problems such as indoor air pollution were characterized as
relatively risky, at least in part, because they were not regulated by any Federal
agency.
EPA scientists next compared the relative risk of each problem with its
budget allocation and the results of national polls of public concerns. The public
reported: high concern about chemical waste disposal, water pollution, chemical
plant accidents, and air pollution; moderate concern about oil spills, worker
exposure, pesticides, and drinking water; and low concern about indoor air
pollution, consumer products, radiation (other than nuclear power), and global
warming.
EPA concluded that its budget correlated better with the priorities of the
public than with the scientists' evaluations of residual risks. However, there are
several reasons why this conclusion may be suspect. First, EPA did not ask the
public to rank environmental hazards: and it did not use the results of scientific
studies of how people rank hazards based on risk. (The results of one such
study are shown in the figure titled "How People Evaluate Hazards.")16
Rather, EPA staff compiled public responses to questions asked in national
opinion polls in 1985 and 1986 about 19 environmental problems which roughly
coincided with the 31 hazards ranked by EPA scientists. Thus, the scientists'
rankings were assigned after hours of careful deliberation, while the public was
simply responding to a few questions in an opinion poll. In addition, the
scientists and public responded to different questions. Scientists addressed the
question, "Of the environmental hazards that are recognized, which pose the
highest risks and remain to be controlled?" The public was asked, "Which of
l6 Scientists, engineers, and other experts in the evaluation of hazards tend to use and
interpret the term ''risk in a narrow actuarial sense (e.g., as average, annual mortality rates for
a population), whereas nonexperts may employ or interpret any of several common meanings of
the term, depending on the context. Often, the public interprets "risk" in a very personal way,
depending on whether they or their families are exposed. In scientific studies that asked the
public to estimate the annual mortality rate for hazards, public and scientific hazard rankings are
more similar. For example, see Fischhoff, B., S. Watson, and C. Hope. "Defining Risk." Policy
Sciences, v. 17, n. 2, (1984). p. 123-139.
these 9 problems are most serious?" or in some cases, "How serious is the
problem of [chemical waste disposal, for example]?" Finally, the public responses
were compiled and interpreted by EPA staff.
EPA's Science Advisory Board (SAB), an advisory group of independent
scientists, reviewed EPA's efforts in its 1990 report Reducing Risk: Setting
Priorities and Strategies. SAB praised EPA for considering "the long-term public
policy importance of understanding relative risks," but criticized the accuracy
and methods of ranking and the omission of important environmental problems.
It devised its own method and ranked a different, though overlapping. set of
environmental issues. The results were largely consistent with those of the EPA
scientists, but the SAB expressed more concern about ecological risks because
of "the vital links between human life and natural ecosystems." The SAB
identified the following hazards that remained to be controlled as the highest
human health risks: ambient air pollutants (both toxic and criteria),
occupational chemical exposures, indoor air (including radon), and pollutants in
drinking water. Relatively high-risk problems affecting ecology and human
welfare included: habitat alteration, loss of biological diversity, stratospheric
ozone depletion, and global climate change.
Congress appears to support EPA's efforts to rank and compare
environmental risks, but to question whether the Agency uses relative risks in
the preparation of its budget proposals. Recently, the National Academy of
Public Administration (NAPA) initiated a study mandated by a provision in
EPA's FY 1994 appropriations legislation (Public Law 103-124). NAF'A is "to
address whether the Agency's resources are being directed to the most pressing
environmental hazards, the Agency's statutory mandates in the context of
relative risk to human health and the environment, and the effectiveness of the
Agency's organizational structure," (S. Rept. 103-137, p. 110). Congress urged
NAF'A to work with the Risk Assessment and Management Commission
(established under the Clean Air Act Amendments of 1990 and discussed above)
and NAS. NAPA hopes to report study results prior to February 1995.
Econolnic Analysis
EPA began analyzing the costs of proposed regulations in the early 1970s.
Benefit analysis began a bit later because it is more difficult to describe
systematically the progress a proposed or existing regulation will achieve toward
goals such as "fishable, swimmable waters" or safe drinking water. At first: the
results of EPA's cost-benefit analyses often compared costs expressed in dollars
with benefits described qualitatively. Gradually, however, quantitative measures
of benefits replaced qualitative descriptions. Recently, the consistent measure
of the benefits of an environmental regulation became the risks avoided,
expressed as, for example, numbers of lives saved or critical ecosystems
protected. To permit mathematical calculations of "net benefits" or a benefitcost ratio, analysts use various methods to translate the measures of avoided
risk into dollars."
Statutory directives, executive orders, and judicial decisions encouraged this
development of methods for expressing and comparing the costs and benefits of
environmental regulations, but legal mandates also sometimes discourage EPA's
use of economic analysis when developing regulations. The following sections
describe some key provisions of Federal faw and how they might influence EPA
actions.
The Influence of Environmental Statutes
Many of EPA's regulatory decisions are driven by specific statutory
mandates concerning the degree of protection to be achieved, the actions to be
taken, and the criteria to be considered. These mandates vary in specificity,
sometimes granting EPA broad discretionary power, and other times little or no
power, to consider the economic impacts of its decisions. Some authorize or
even require consideration of economic factors, but others do not. A few have
provisions that arguably inhibit EPA's ability to consider costs. No statutory
provision requires an analysis of net benefits as part of the rulemaking process
(although requirements in some statutes to weigh costs and benefits may imply
a net benefit analysisj. Selected relevant provisions of some key environmental
statutes are described below and are summarized in Table 1.
Section 109 of the Clean Air Act ( C M , 42 U.S.C. 7401-7626)mandates the
establishment of national primary ambient air quality standards for
l7 As defined above, "net benefit'' is the value of the benefit less the cost, that is, the
difference of costs subtracted from benefits. The benefit-cost ratio is the quotient of benefits
divided by costs.
Table 1.
Statutory Authority for Considering Risks, Technological Capacity. and
Costs in Developing Regulations
Authorized considerations*
Degree of Protection
§ 109 (national
primary ambient air
quality standards)
Risk
Protect public health with an
adequate margin of safety
3 112(d)
Risk, techi~oiogy,and cost
"The maximum degree of reduction
in emissions ... achievable" taking
into account costs and any non-air
quality health and environmental
impacts and energy requirements;
may consider health threshold with
respect to pollutants for which it has
been established, "with an ample
margin of safety"
Risk (human health);
risk and cost (environmental
protection)
Provide a n ample margin of safety to
protect the public health or to
prevent, taking into consideration
costs, energy, safety and other
relevant factors, a n adverse
environmental effect
3 202 (emission
standards for new
motor vehicles)
Risk, technology, and cost
Standards which reflect the greatest
degree of emission reduction achievable through technologg. available,
taking into consideration cost,
energy, and safety factors; technology
must not present a n unreasonable
risk to health, welfare, or safety
Clean Water Act
3 307 (effluent
limitations for
industrial discharges
of toxic pollutants)
Risk, technology, and cost
Defined by applying best available
technology, economically achievable,
"which will result in reasonable
further progress toward the national
goal of eliminating the discharge of
ail pollutants," and to "provide an
ample margin of safety'' taking into
consideration "the toxicity of the
pollutant, its persistence,
degradability, the usual or potential
presence of the affected organisms in
any waters, the importance of the
affected organisms and the nature
and extent of the effect of the toxic
pollutant 012 such organisms, and the
extent to which effective control is
being or may be achieved under
other regulatory authority.''
-
Statute
Clean Air Act
(emission standards
for hazardous air
pollutants from
stationary sources)
§ 112(11
(emission standards
for residual risks of
hazardous air
pollutants from
stationary sources)
.~..
Table 1.
Statutory Authority for Considering Risks, Technological Capacity, and
Costs in Developing Regulations
Statute
Authorized Considerations*
Degree of Proteciion
Safe Dnhking Water
Act $ 1412ib)(4)
Risk, technology, and cost
Set water quality goal such that "no
known or anticipated adverse effects
on the health of persons occur and
which allows an adequate margin of
safety;" set the enforceable standard
as ciose to health-based goal "as is
feasible," given the best technology
availabie (taking costs into
consideration)
Resource
Conservation and
Recovery Act
§ 3004ia)
~isk"
"That necessary to protect human
health and the environment"
$ 408 (pesticide
residues in
unprocessed food)
Risk and cost
To the extent necessary to protect
the public health, giving appropriate
consideration to the necessity for the
production of an adequate,
wholesome and economical food
supply
8 409
(noncarcinogenic
pesticide residues that
are concentrated in
foods)
Risk
Assure that "the proposed use ... will
be safe;" "reasonahie certainty in the
minds of competent scientists that
the additive is not harmful to man or
animai;" "the proposed usages of such
additives are in amounts accepted ...
a s safe"
5 409 (carcinogenic
pesticide residues that
are concentrated in
processed food)
Risk
No residue permitted if the pesticide
is found to induce cancer when
ingested by man or animal
Federal Insecticide,
Fungicide, and
Rodenticide Act
5 3(b)i5) and § 2ibhl
Risk and cost
"Without unreasonable adverse
effects on the environment;"
"unreasonable adverse effects on the
environment" is defined as "any
unreasonable risk to man or the
environment, taking into account the
economic, social, and environmental
costs and benefits of the use of any
pesticide"
Federal Food, Drug
and Cosmetic Act
l8 The Act neither encourages nor excludes consideration of costs.
Table 1.
Statutory Authority for Considering Risks, Technological Capacity, and
Costs in Developing Regulations
Authorized considerations'
Degree of Protection
B 4 (to require testing)
Risk and cost
"Prevent unreasonable risk of injuryto health or the environment"
9 6 (to regulate)
Risk and cost
"To protect adequately against such
(unreasonable) risk using the least
burdensome requirement;" "it is in
the public interest;" "shall consider ...
a comparison of the estimated costs
of complying ... and the relative
efficiency ... to protect against such
risk of injury"
Comprehensive
Envhwnmental
Response,
Compensation, and
Liability Act 5 121
Risk, technology, and cost
"At a niinimum which assures
protection of human health and the
environment;" a t least attains any
promulgated standard, requirement,
criteria, or limitation under a
Federal law or State environmental
or facility siting law that is more
stringent; "at leasc attains Maximum
Contaminant Lewl Goals estahlished
under the Safe Drinking Water Act
and water quality criteria established
under section 304 or 303 of the Clean
Water Act, where such goals or
criteria are relevant and appropriate
under the circumstances of the
release or threatened release;"
However, remedial action may
achieve a lesser standard if
compliance is technically
impracticable from a n engineering
perspective, compliance would result
in greater risk, the State has not
consistently applied its standard,
Federal funds are inadequate, or
other conditions are niet
Statute
Toxic Substances
Control Act
* These are apparently authorized considerations, given the paraphrazed or quoted statutory language
under the heading "Degree of Protection". Other interpretations of the cited statutory provisions are
possible and may have legal precedence.
pollutants from numerous or diffuse sources whose emissions may cause or
contribute to air pollution that may "reasonably be anticipated to endanger
public health or welfare" I§ 108(a)(l)]. Under this provision, EPA is required
to set standards such that their attainment and maintenance "are requisite to
protect the public health in the judgment of the Administrator, based on air
quality criteria and allowing an adequate margin of safety. Air quality criteria
are compilations of information reflecting the latest scientific knowledge
relevant to the assessment of risks to public health or welfare posed by the
presence of criteria pollutants in the ambient air I§
108(a)(2)1. This statutory
provision only authorizes consideration of environmental and human health
risks.
In contrast, the CAA § 112(d) requires EPA to consider risks, available
technologies, and costs in promulgating regulations to control emissions of 188
hazardous air pollutants from major industrial source^.'^ It directs EPA to
require source facilities to apply the "maximum achievable control technology,"
taking into account costs and other factors. However, subsection (0 of this
section also requires EPA to evaluate and report to Congress on the need for
health-based standards for these hazardous air pollutants. If Congress fails to
act on the basis of EPA's report, EPA is required, if necessary, to promulgate
technological standards for industries that provide an ample margin of safety to
protect public health and reduce the lifetime excess cancer risks for the most
exposed individual to less than one in a million. (This provision will take effect
after 2001.) This latter provision does not permit EPA to consider the cost of
regulation because the statute defines the level of protection EPA standards
must afford."
Subsection (0 also requires prevention of adverse
environmental effects "with an ample margin of safety" but allows consideration
of costs, energy, safety and other relevant factors.
The CAA § 202 requires EPA to establish emission standards for new motor
vehicles which reflect the greatest degree of emission reduction achievable
through available technology that does not itself pose an unreasonable risk to
health, welfare, or safety. These emission standards are set after consideration
of cost, energy, and safety factors.
Finally, section 312 of the Clean Air Act requires EPA to conduct
comprehensive analyses of the impact of the Act on the public health, economy,
and environment of the United States and to report to Congress every two years
l9 Prior to enactment of the Clean Air Act Amendments of 1990, $112 was widely known as
the "cost-blind" statutory provision that required EPA to base decisions on risk alone, t h a t is,
without regard to cost. However, the extremely slow pace a t which EPA established risk-based
regulations led Congress to amend the law.
The statute requires provision of "an ample rnargm of safety to protect public health in
accordance with this section (as i n effect before the date of enactment of the Clean Air Act
Amendments of 1990)." The reference to the Act prior to amendment indicates that Congress
intended a strict interpretation of this language. The Court of Appeals for the District of
Columbia Circuit decided in 1987 that section 112 of the Act required EPA to determine what is
"safe" based "solely upon the risk to health," and that EPA "could not under any circumstances
consider cost and technological feasibility a t this stage of the analysis" under the Act (Natural
Resources Defense Council v. EPA, 824F.2d at 1164-1165). However, the Court stated t h a t costs
and technolog.lca1feasibility could be considered in promulgating an emissions standard below the
"safe" level to provide a n "ample margin'' and to "take into account the inherent limitations of risk
assessment and the limited scientific knowledge of t h e effects of exposure to carcinogens a t various
levels."
on the results. It requires consideration of the costs, benefits, and other effects
associated with compliance. Specific instructions are given for assessment of
costs and benefits of regulations.
Section 307 of the Clean Water Act (33 U.S.C. 1251 et seq.) requires EPA
to set emuent limitations for discharges of toxic pollutants to surface waters
achievable by applying the best available technology that is economically
achievable and "will result in reasonable further progress toward the national
goal of eliminating the discharge of all pollutants" [§ 301(b)(2)(A).] In addition,
the Act requires effluent standards to provide an ample margin of safety, taking
into account "the toxicity of the pollutant, its persistence, degradability, the
usual or potential presence of the affected organisms in any waters, the
importance of the affected organisms and the nature and extent of the effect of
the toxic pollutant on such organisms, and the extent to which effective control
is being or may be achieved under other regulatory authority." The Act does not
instruct the Agency in how it should balance these considerations relative to one
another.
The Safe Drinking Water Act does not directly delineate how EPA is to
balance risks and costs in setting drinking water standards, but rather has
several provisions that, when taken together, inform the Agency on this matter.
The Act requires EPA to set drinking water quality goals at levels believed to
be safe: and directs the Agency to issue regulations that will reduce levels of
contaminants to as close to the goals as is "feasible". In 1986, Congress revised
the definition of "feasible" to mean feasible with the use of the "best available
technology" that the EPA Administrator determines is available (taking costs
into consideration). The law previously used the term 'best generally available
technology.' Since 1986, the Administrator has been authorized to adopt
regulations that may be achieved by use of technologies that are available,
although they may not be as widely available or appropriate for controlling
water quality in small-scale systems as technologies.that are generally available.
The legislative history states that the Administrator's determination of
what technologies are available (taking costs into account) in setting drinking
water standards should be based on what may reasonably be afforded by large
metropolitan or regional public water system^.^' EPA considers systems
serving 50,000 persons or more to be large systems. Only five percent of all
public water systems are this large; consequently some smaller public water
systems may experience financial hardship meeting regulations. Although
legislative history is not necessarily binding on the Agency: EPA has relied an
it for guidance in determining congressional intent.
The Resource Conservation and Recovery Act (42 U.S.C. 6901-6991i) aims
to assure that hazardous waste management practices "are conducted in a
manner which protects human health and the environment" (§ 6902.) It further
U.S. Senate. Committee on Environment and Public Works. A Legislatiue History ofthe
Sufi Drinking Water Act. 97th Cong. 2d. Sess. Serial No. 97-9. Feb. 1982. p. 550.
See also 132 Cong. Rec. S6287 (daily ed. May 21, 1986).
states that it is the national policy of the United States "that, wherever feasible,
the generation of hazardous waste is to be reduced or eliminated as
expeditiously as possible. Waste that is nevertheless generated should be
treated, stored, or disposed of so as to minimize the present and future threat
to human health and the environment" (5 6902.) The Act requires EPA to
establish standards "as may be necessary to protect human health and the
environment" (5 6922 - 6924.) The Act does not specify that consideration of
costs is permitted, required, or prohibited.
The Federal Food, Drug. and Cosmetic Act, as amended, (FFDCA,21 U.S.C.
301-394) contains a t least two different requirements for evaluating risks and
benefits of standards for pesticide residues on food, depending on whether a food
is a raw agricultural commodity (e.g., fresh fruit) or a processed food (e.g.,jelly)
and whether the pesticide has been shown to produce cancer in people or
animals. For raw agricultural commodities, section 346a (better known as
section 408 of the Act) allows EPA to consider the risks and benefits of pesticide
use in setting standards for pesticide residues "to the extent necessary to protect
the public health." This section applies equally to carcinogenic and noncarcinogenic pesticides.
In contrast, section 348 (section 409 of the Act), which regulates food
additives, treats carcinogens and non-carcinogens differently. Pesticide residues
on raw foods that concentrate during processing (for example, canning, drying,
or freezing) are treated as food additives. The Act requires EPA to regulate all
food additives to assure that "the proposed use ... will be safe." According to the
legislative history, "the test which should determine whether or not a particular
additive may be used ... should be that of reasonable certainty in the minds of
competent scientists that the additive is not harmful to man or animal" (S. Rept.
2422, 85th Cong., 2nd Sess., Aug. 18, 1958, p. 2-3.) The Senate Committee
report also stated that the use of food additives "may benefit our people and our
economy when the proposed usages of such additives are in amounts accepted
... as safe." This seems to indicate that Congress expects EPA to weigh risks of
additives against the benefits they provide when the Agency considers whether
a particular pesticide use is "safe" or "not harmful". EPA has interpreted the
legislative history to allow risk-benefit balancing (53 Federal Register 41106,
October 19, 1988.
However, the "Delaney clause" in the same section of the Act prohibits any
use of a food additive (including pesticides residues that concentrate during
processing) that is shown to be carcinogenic, regardless of the level of risk posed.
This interpretation of Delaney as a zero-risk provision for carcinogens that
concentrate in processed food was recently supported by the U.S. Court of
Appeals for the Ninth Circuit (Les et al. vs. Reilly, July 8, 1992.)
The Federal Insecticide: Fungicide, and Rodenticide Act (7 U.S.C. 136 136y) directs EPA to limit the sale or use of pesticides "to the extent necessary
to prevent unreasonable adverse effects on the environment." The statute
further defines this to mean "any unreasonable risk to man or the environment,
taking into account the economic, social, and environmental costs and benefits
of the use of any pesticide."
The Toxic Substances Control Act, as amended, (15 U.S.C. 2601-2671)
mandates the screening of new and existing chemicals in commerce to determine
whether their production, distribution, use, or disposal might pose an
unreasonable risk of injury to health or the environment. To that end, EPA is
authorized to require companies manufacturing such chemicals to provide data
on the chemical's characteristics and use. If the Administrator determines that
a chemical poses a "significant risk of serious or widespread harm to human
beings from cancer, gene mutations, or birth defects," the Act requires EPA to
promulgate regulations to prevent or reduce "to a sufficient extent such risks or
publish in the Federal Register a finding that such risk is not unreasonable."
The Act requires EPA in promulgating a regulation to consider and publish a
statement concerning the potential health and environmental effects of the
chemical, the magnitude of exposure to the chemical, the benefits of the
chemical for various uses and the availability of substitutes, and "the reasonably
ascertainable economic consequences of the regulation, after consideration of the
effect on the national economy, small business, technological innovation, the
environment, and public health. The Act directs the Administrator to regulate
"to protect adequately against such risk using the least burdensome
requirement," but to regulate only if it is in the public interest. In determining
whether regulation is in the public interest, EPA is directed to consider all
relevant aspects of the risk, a comparison of the estimated costs of compliance
and the relative efficiency in protecting against risk.
The Comprehensive Emergency Response, Compensation,and Liability Act,
as amended, (CERCLA, 42 U.S.C. 9601-9675 and 26 U.S.C. 4611, 4612, 4661,
4662, 4681. and 4682) requires choice of cost-effective remedial actions for
contaminated sites, but also requires that the degree of cleanup "at a minimum
assures protection of human health and the environment." In effect, CERCLA's
standard of risk protection varies from site to site, because for cleanup purposes,
the numerical standards, criteria, and goals of all other applicable Federal and
State environmental statutes are applied to the conditions at the site. The
statute specifically states that where remedial action is taken to protect
groundwater, it must a t least attain the water quality goals established under
the Safe Drinking Water Act, a level of protection greater than is provided by
the national primary drinking water standards. CERCLA also specifically
requires attainment of the water quality criteria developed by EPA for surface
water under the authority of the Clean Water Act; water quality criteria are set
a t a level that is expected to protect human health and aquatic plant and animal
species.
In summary,
" . each environmental statute approaches the problem of
controlling risk from a different vantage point and authorizes consideration of
different factors by EPA. Some statutes authorize several different approaches
for controlling different kinds of risk. One statute, CERCLA, incorporates all
of the other statutory approaches to risk, a t least in effect. These diverse
statutes, however, seem to conform to a few general rules: they generally allow
A
consideration of the costs of regulation a t some stage of risk management, either
explicitly or by reference to feasible, practical, or available technology (the
Delaney clause is an exception to this rule); they tend to exclude costs from
consideration in the development of scientific documents (e.g., water quality
criteria,) safety goals (e.g., safe drinking water goals,) or health-based standards
of ambient environmental quality (e.g., primary air quality standards,) all of
which clearly are meant to be protective of health and the environment; and
they require consideration of costs when EPA directly regulates commerce, that
is, the production, distribution, and use of commercial products.
Statutes Requiring Analysis of Federal Regulations
Three Acts of Congress, the Regulatory Flexibility Act (5 U.S.C. 601 et seq.),
the Paperwork Reduction Act, as amended, (44 U.S.C. 3501 et seq.) and the
National Environmental Policy Act (42 U.S.C. 4321-4347) impose additional
requirements on Federal agencies for analysis of proposed and existing
regulations. The Regulatory Flexibility Act requires agencies to review proposed
regulations to describe the impact of proposed rules on: or certify that they will
not have a significant economic impact on a substantial number of, small
entities which include small businesses, small governmental jurisdictions, and
small not-for-profit organizations. It also requires consideration of possible
alternatives to the regulatory proposal that will accomplish the objectives while
minimizing the impact on small entities. Agencies are required to project
reporting, recordkeeping, and other compliance requirements of proposed
regulations. EPA's Small Business Ombudsman provides guidelines for analysis
of economic impacts on small businesses. The Paperwork Reduction Act, as
amended, requires agencies to assess the paperwork and reportingburden placed
on the Agency and industry by proposed regulations. In addition, the National
Environmental Policy Act (NEPA) requires agencies (other than EPA) to
prepare an environmental impact statement for each major regulation [15
U.S.C. 793(c)(l); 33 U.S.C. 1371fc)l. The Code of Federal Regulations defines
a major regulation under NEPA as a regulation that individually or together
with other regulations, may have a major impact on the human environment (40
CFR 5 1505,18.) "Impact"is defined as synonymous with "effects"which may be
ecological, aesthetic, historic, cultural, economic, social, or health, whether
direct, indirect, long-term, short-term, or cumulative (40 CFR 3 1508.8.) The
regulations further state, "Major reinforces but does not have a meaning
independent of significantly." "Significantly,"in turn, is defined with reference
to the geographic and social context (for example, an impact is significant to
society as a whole if it affects all humans or the Nation, while a local impact
may be significant for a smaller project), and the severity of impact ("intensity").
Because they are statutory, provisions of these Acts supersede the
provisions of all executive orders, discussed below, but they generally
complement, rather than contradict, the provisions of the executive orders issued
by President Reagan and President Clinton. The statutes do not preempt
provisions of other statutes authorizing regulatory activity, however.
President Reagan's Executive Orders (Now Reuoked)
Federal agencies also have conducted economic analyses in response to
directives from the Chief Executive. To the extent permitted by enabling
statutes, the President's Office of Management and Budget IOMB) has required
all regulatory agencies to conduct increasingly detailed and quantitative analyses
of costs and benefits ever since "Quality of Life" reviews were required under
President Nixon. Prior to 1981, EPA's quantitative analyses of regulations
aimed at pollution control (as opposed to control ofcommerce in toxic chemicals)
emphasized costs and "aff0rdabilit~".2~
After February 1981, however, when
President Reagan issued Executive Order 12291 (revoked in 1993) requiring
agencies to perform Regulatory Impact analysis (RIA), cost-benefit analysis was
required for all proposed and final "major" rules (46 Federal Register 13193, Feb.
19, 1981.) The executive orders defined "major rules" to mean any regulation
likely to have an effect on the national economy of $100 million or more. Rules
with a smaller economic impact were also "major" if they were likely to result in:
a major increase in costs or prices for consumers, individual industries, Federal,
State, or local government, or geographic regions; or a significant adverse effect
on competition, employment, investment, productivity, innovation, or the ability
of US.-based enterprises to compete with foreign-based enterprises in domestic
or export markets. Proposed legislation in the 103rd Congress and the House
Republican's 1994 Contract with America would codify this executive order.
The Reagan order reflected that Administration's commitment to provide
"regulatory relief," by providing that "to the extent permitted by law,"
"regulatory action shall not be undertaken unless the potential benefits to
society from the regulation outweigh the potential costs." The order required
selection of regulatory objectives to maximize net benefits and of the least cost
option for attaining objectives, unless existing laws prevented this approach.
In general. under the Reagan and Bush Administrations, an RIA required an
evaluation of all potential costs and benefits that would accompany
implementation of a rule, including effects that could not be quantified in
monetary terms. Agencies were required to compare the costs and benefits of
the proposed rule to the alternative of no regulation as well as to other
approaches that could achieve the same objective at lower costs. OMB
guidelines for agencies explicitly required analysis of all major alternatives to
the proposed r ~ l e . 2 ~
A requirement for risk analysis was not explicit in President Reagan's 1981
order but implied by the mandate to assess net benefits of environmental and
health and safety regulations. Most benefits of such regulations are the risks
avoided due to Federal action. In January 1985, a second executive order made
22 Fraas, Arthur. The Role of Economic Analysis in Shaping Environmental Policy. Law and
Contemporary Problems, Assessing the Environmental Protection Agency After Twenty Years:
Law. Politics, and Economics. Durham, N.C., Duke University Press, 1991, p. 118.
23 U.S. Office of Management and Budget, Executive Office of the President.
Regulatoly Impact Analysis Guidance. Washington, U.S. Govt. Print. Off., 1981.
Interim
the requirement for risk analysis (to the extent permitted by law) explicit.
President Reagan's Executive Order 12498 (now revoked) on the Regulatory
Planning Process (50 Federal Register 1036) required agencies to adopt
principles contained in an August 11,1983 report by the President's Task Force
for Regulatory Relief. One principle states that "regulations that seek to reduce
health or safety risks should be based upon scientific risk assessment
procedures, and should address risks that are real and significant rather than
hypothetical or remote."
EPA's Response to the Reagan Orders
EPA published its interpretation of the first Reagan Administration
executive order in a 1983 report Guidelines for Performing Regulatory Impact
AnaEysis.2"hese
Guidelines describe how the Reagan Administration expected
the directives applicable to all Federal regulatory agencies to be applied in
analyses of environmental regulations controlling individual pollutants or
particular waste stream^.^ The introduction to the Guidelines summarizes the
requirements for Regulatory Impact Analysis (RL4) as follows:
Benefits and costs should be quantified and monetized in the RIA to
the extent possible. The RIA should discuss fully benefits and costs
that cannot be quantified and should assess their importance relative
to those that are quantified or monetized. When many benefits cannot
easily be monetized, or when law requires a specific regulatory
objective, cost-effectiveness analysis may be used to evaluate
regulatory alternative^.^^
It further states that "[tlhe goal of regulatory impact analysis is to develop and
organize information on benefits, costs, and economic impacts so as to clarify
trade-offs among alternative regulatory options." The Guidelines clearly indicate
'*
U.S. EPA, Office of Policy Analysis. Guidelines for Performing Regulatory Impact Analysis.
EPA-230-01-84-003. (December 1983).
''
The introduction to the Guidelines notes that "[tlhey are not readily applicable to
re~.:lsrion~
for :ei-.eric tr.fornia:!ot: ~ a r I - e r : n gresrl:~g
,
a n d procccur; 1.u.c~ in rht.;c ;irujr:ons.
nromani
off~ccsshould ,,onrjcr L P X s OFicc o!'P~.irv., k'lanni:i-~.
"
", and Evs.iiarivn and O3IU ::I rhe
early stages about procedures, extent of detail, and degree of quantification appropriate for the
.
RU."
''
The cost-effectivenessof a regulation is generally defined as the annual cost divided by a
measure of progress toward the objective. There is no single definition of the "most cost-effective
regulation", but an alternative usually is selected in one of three ways: 1) by choosing the most
efficient (least cost) way of achieving the objective; 2) by choosing the alternative that maximizes
benefits for a particular cost; or 3) by comparing the relationship between costs and benefits for
increasingly stringent regulatory alternatives, and then choosing the regulation that, relative tn
more and less stringent regulations, provides a significant increase in benefits for a reasonable
increase in costs. (This method does not point to a single best choice but can identify regulations
that obtain relatively tiny increments of protection for human health or the environment at
relatively high costs) (U.S. EPA. Guidelines, p. M14.)
that compliance with Executive Order 12291 required risk analysis to quantify
health effects.
The Guidelines permitted RIAs t o vary in level of detail provided, extent to
which costs and benefits were quantified, and level of precision of the
information assessed. Variation also was allowed to accommodate the nature
and quantity of data, available analytic techniques, resource or time constraints,
or the difficulty of analyzing some environmental problems or regulatory
approaches.
In quantifying potential health effects, EPA's Guidelines specified that
chemical substances should be evaluated individually based on a weight-ofevidence scientific evaluation. In addition, the guidelines required discussion of
particularly sensitive populations, the duration, reversibility, and nature of
adverse effects and whether effects resulted from single or repeated exposures
to the substance. They required estimation of the risk reduction that would be
achieved by a rule, expressed as, for example, numbers of lives saved or illnesses
prevented. To permit mathematical calculations of "netbenefits," the Guidelines
directed analysts to estimate the monetary value of the quantified health
benefits based on studies of willingness to pay to avoid illness or cost savings
such as health care costs or lost earning^.'^ The monetary value of lives saved
by a regulation was required to be estimated statistically for populations?8
The Reagan Administration also required some economic analysis for
regulations that were not major rules, and all rules were sent to OMB for
review. EPA Guidelines state, "sufficient analysis must be performed to
demonstrate that the rule meets the objectives of the Executive Order. At a
minimum, this should include costs and economic impact (distributional effects)
analyses" (p. 343.1 However, OMB routinely waived review of certain categories
of rules, such as certain rules granting pesticide tolerance exemptions; OMB did
not usually require cost-benefit analysis for regulations that revoked
requirements (or otherwise "dereg~~lated")?~
Between 1981 and 1992, EPA issued 1,594 proposed rules and 1,686 final
rules, including 92 major proposed rules (5.9 5%) and 60 major final rules (3.6
%).30Formal cost-benefit analyses were prepared for approximately 80 percent
27 As defined above, "net benefit" is the value of the benefit less the cost, that is, the
difference of costs subtracted from benefits. The benefit-cost ratio is the quotient of benefits
divided by costs.
A more detailed discussion of these guidelines may be found in CRS Report 89-161 ENR,
Health Benefits ofAir Pollution Control, in the chapter by Morris A. (Bud) Ward, p. 295-378.
''U.S. EPA. Guidelines. p. 3 (footnote)
30 Luken, Ralph A,, and Arthur G.Fraas. The U.S. Regulatory Analysis Framework: A
Review. Oxford Review of Economic Policy v. 9, n. 4, 1993. p. 100.
U.S. Office of Management and Budget, Executive OEce of the President. Regulatory
Progranl of the U.S. Government. Washington, U.S. Govt. Print. Off., various years.
of the major final rules. The number of cost-benefit analyses prepared for final
non-major and all proposed rules is unknown. Several final major rules without
comprehensive cost-benefit analyses had court-imposeddeadlines for publication
(which may have allowed too little time for a comprehensive analysis), and some
other rules without analyses were withdrawn or returned to EPA by OMB for
further analysis.31
The quality of EPA's cost-benefit analyses for final, major rules was
inconsistent according to reviews by EPA's Office of Policy, Planning and
Evaluation, by Arthur Fraas, a career official in OMB, and by Morris A. (Bud)
Ward, Executive Director of the Environmental Health Center, National Safety
Council.32 According to EPA, incomplete analyses in most cases were due to
the inadequacy or unavailability of the necessary scientific andlor economic data.
In other cases, reviewers have hypothesized that analysis may have suffered due
to time constraints imposed by statutory and judicial deadlines, lack of resources
to hire additional analysts, and the difficulty of quantifying such benefits as safe
drinking water or clean air and of determining their worth in monetary
terms.33 Moreover, in February 1994 testimony before the Subcommittee on
Environment, Energy, and Natural Resources of the House Committee on
Government Operations, EPA's Assistant Administrator for Prevention,
Pesticides and Toxic Substances testified that EPA has routinely adjusted the
amount of analysis to the relative importance of the potential impact of a
rule.34
Despite the uneven quality of EPA's cost-benefit analyses, the Agency's
study concluded that "EPA's benefit-cost analyses have resulted in several cases
of increased net benefits to society from environmental regulations" and
"analyses yielded a return on investment of 1,000 to
Between February
1981 and February 1986, EPA's investment (estimated cost of preparing a
formal analysis) for a major rule ranged from $210,000 to $2,380,000 and
31 Fraas. The Role of Economic Analysis in Shaping Environmental Policy. p. 118.
32 Ward, Morris A. "Evaluating Health Benefits in Clean Air Act Regulatory Impact
Analyses." In: Blodgett, John (ed.1 Health Benefits ofAirPolEution Control: A Discussion, p. 295378, Washington, U.S. Congress~onalResearch Service, 89-161 ENR, February 27, 1989. 378 p.
Fraas. The Role of Economic Analysis in Shaping Environmental Policy. p. 118.
U.S. EPA, Economic Studies Branch, Office of Policy Analysis. EPA's Use of Benefit-Cost
Analysis 1981-1986. August 1987.
3%raas. The Role of Economic Analysis in Shaping Environmental Policy. p. 120.
U.S. Office of Management and Budget, Executive Office of the President. Report on
Executive Order No. 12866. May 1, 1994. p. 34, 46.
34 Goldman, Lynn Statement before the Subcommittee on Environment, Energy and
Natural Resources and the Subcommittee on Legislation and National Security Committee on
Government Operations, House of Representatives. February 1, 1994.
'' U.S. EPA. EPA's Use of Benefit-Cost Analysis 1981-1986. p. 1and 2.
averaged $675,000.36 There are no figures available for more recent years or
for the preparation of less comprehensive analyses for rules that were not
"major" rules.
In many cases, EPA performed cost-benefit analyses but statutory
provisions limited their use. According to EPA, it "was able to consider the full
implications of its benefit-cost analyses when setting only 6 of the 15 regulations
studied between 1981 and 1986.37
Regulatory Planning and Review in the CZinton Administration
Executive Order 12866. On September 30, 1993, President Clinton signed
Executive Order 12866 on Regulatory Planning and Review (58 Federal Register
51735, Oct. 4,1993) which revoked and replaced the two Reagan Administration
executive orders, Executive Order 12291 requiring RIAs and Executive Order
12498 establishing the regulatory planning process. OMB issued guidance on
implementing President Clinton's order October 12, 1993.
On October 26, 1993, President Clinton issued Executive Order 12875,
Enhancing the Intergovernmental Partnership, which supplements but does not
supersede the requirements contained in Executive Order 12866.
The Reagan and Clinton orders are similar in many ways, but several
differences exist that are likely to affect regulatory decisions where the agencies
have discretionary authority to consider cost-benefit and risk analyses. Table
2 compares some key provisions relating to cost-benefit and risk analyses in the
executive orders issued by Presidents Reagan and Clinton.
The expressed purpose of President Clinton's executive order is to improve
the development process for Federal regulations, making it more visible to the
public and more efficient and ensuring the primacy of agencies in making
decisions and the integrity and legitimacy of oversight. In remarks prior to the
signing of Executive Order 12866 on September 30. 1993. the President
highlighted unprecedented provisions that, he said, open the regulatory process
to public scrutiny while limiting involvement by the President and Vice
President in the regulatory process. He directed all Federal agencies to confer
with OMB and the public during the early stages of deliberations about whether
and how to regulate, to record the basis for regulatory decisions, and to make
the records available to the public. Another stated goal of the Clinton
Administration is to expedite regulatory action. The early involvement of OMB
and others in regulatorgiplanning is intended to serve this purpose. In contrast,
President Reagan's orders were intended to improve the quality but also to
reduce the number of regulations, and he sought to ensure Presidential
oversight of the regulatory process.
36 bid. p. 6-5.
37 bid. p. 2.
Table 2.
Key provisions of President Reagan's Executive Orders 12291 and 12498,
now revoked, and President Clinton's Exeeutive Orders 12866 and 12875
Now Revoked Executive Orders
12291 and 12498
Executive Orders 12866
and 12875
Whether to regulate
Only when the potential benefits to
society exceed the potential costs to
society, to the extent permitted by law
Only when required by law, necessary
to interpret the law, or necessary due
to compelling public need; only upon a
reasoned determination that the
benefits justify costs; and only if i t
would not create a mandate upon a
State, local, or tribal government,
unless funds are provided by the
Federal Government to pay direct costs
incurred by that government or the
agency provides to OMB a description
oE 1) the extent of prior consultation
with that government; 2) the nature of
that government's concerns, 3) m i t t e n
communications submitted by such
government, and 4) the agency's
position supporting the need to issue
the regulation
Which regulations to
analyze
"Major" rules designated by the agency
or OMB, both existing and proposed
(See Table 3.)38
"Significant rules," existing and
proposed (See Table 3.)
How priorities are to
be established
Maximize aggregate net benefits to
society, taking into account t h e
condition of the particular industries
affected, the condition of t h e national
economy, and other regulatory actions
contemplated; target risks that are
real and significant rather than
hypothetical or remote
After consideration of degree and
nature of risk
How to choose a
regulatory objective
To extent permitted by law, to
maximize net benefits
To implement law; to address
significant problems, including the
failure of private markets or public
institutions; or to address compelling
public need such a s material failures of
private markets to protect or improve
the health and safety of the public, the
environment, or the well-being of
Americans
Decision Point
-
3S All rules were analyzed and sent to OMB, but only to determine whether they are likely to result in an
annual effect on the economy of $100 million or more.
Decision Point
Now Revoked Executive Orders
12291 a n d 12498
Executive Orders 12866
a n d 12875
Which regulatory
approach to choose
To the extent permitted by law, the
alternative with the least net cost;
address ends rather than means3'
To extent permitted by law, maximize
net benefits; minimize burden for
society (including individuals, businesses of differing sizes, and other entities
(including small communities and
governmental entities), taking into
account the costs of cumulative regulations; and designed in the most costeffective manner. Requires consideration of incentives for innovation,
consistency, predictability, enforcement
and compliance costs, flexibility, distributive impacts, and equity. Requires
specification of performance objectives.
What to analyze,
generally
Potential benefits, costs, and net
benefits, including effects that cannot
be quantified in monetary terms, of
the proposed regulation relative to the
alternative of no regulation;
alternative approaches that could
substantially achieve the same
objective a t lower cost4'
All costs and benefits (including
quantitative and qualitative) of the
proposed regulation and alternatives,
including the alternative of no regulation and alternatives that do not
regulate directly (e.g., by providing
economic incentives or information);
explore use of regulatory negotiation
and other consensual processes
What to analyze,
specifically
Costs to consuniers, individual
industries, Federal, State, or local
government agencies, or geographic
regions; effects on competition,
employment, investment, productivity,
innovation, or on the ability of U.S..
based enterprises to compete with
foreign-based enterprises in domestic
or export markets; and who is likely to
receive the benefits and bear the costs
Effects on the efficient functioning of
the economy and private markets (productivity, employment, and competitiveness); health and safety; the
natural environment; implementation
and compliance costs; costs of cumulative regulations; effects on State,
local, and tribal governments, including
availability of resources to carry out
mandates; and discrinlination or bias
39 Additional criteria are specified in guidelines provided by OMB (Circular Number A-94, October 29, 1992,
and the Regulatory Program of the U.S. Government for April 1 1991 to March 31, 1992, Appendix V) and EPA
(cited above),but these are not included in Table 1. OMB staff have indicated that their guidelines are not expected
to change as a result of the Clinton order, and EPA has not issued guidance since it reprinted its 1983 Guidelines
with revised appendices in 1991. With regard to choice of a regulatory approach, OMB guidelines state that: entry
into private markets should be regulated only where necessary to protect health or safety or to manage public
resources efficiently; uniform quality standards for private goods or services should not be prescribed except where
products are needlessly unsafe or product variations are wasteful, and voluntary private standards have failed to
correct the problem; qualifications for receiving government licenses should be the minimum necessary; encourage
unrestricted exchange of rights or obligations created by regulation; and the terms or conditions of Federal grants,
contracts, or financial assistance should be limited to the minimum necessary to achieve the purposesfor which the
funds were authorized and appropriated.
According to page 5 of EPA's 1983 Guidelines, the benefits and costs of proposed regulations and important
alternatives were to be compared to the benefits and costs i n the absence of regulation, referred to as the "baseline".
In addition, the Guidelines required consideration of alternatives to Federal regulation such as "negotiated voluntary
actions, and market, judicial, or State or local regulatory mechanisms" and "market-oriented regulatory
alternatives."
Now Revoked Executive Orders
12291 and 12498
Decision Point
il
Executive Orders 12866
and 12875
Comparative risk
analysis
No prolision
Requires agencies to include in their
annual Regulatory Plan comparisons of
the magnitude of the risk addressed by
each regulatory activity to other risks
within the amncv's iurisdiction
Basls for analysis
Adequate information; scientific risk
assessment procedures
Best reasonably obtainable scientific,
technical, economic, and other
information
Should not preempt State laws or
regulations except to guarantee rights
of nat~onalc~tizensh~p
or to avold
s~gtuficantburdens on Interstate
commerce41
Develop a process to permit meaningful
and timely input by State, local, and
tribal governments in the development
of regulatory proposals containing
significant unfunded mandates; in all
cases, seek views of State, local, and
tribal officials; assess effects on State,
local, and tribal governments; minimize
burdens on State, local, and tribal
governmentsl harmonize Federal
regulations with State, local, and tribal
functions; streamline process for
waiver application by State, local, or
tribal governments, attempt to increase
opportunities for use of flexible policy
approaches in jurisdictions of
applicants where appropriate, render a
decision to applicants within 120 days,
and notify applicant and explain
decisions to deny such applications in
writing; OMB to consult with State,
local, and tribal government
representatives quarterly
Regulations should be substantially
supported by the full record, with full
consideration to public comments
Seek stakeholder views before
publishing a Notice of Proposed Rule
Making periodically consult with
representatives of businesses,
noneovernmental oreanizations. and
the public
How to treat State,
local, and tribal
governments
How to treat the
prlvate sector
!
-
-
President Reagan's Executive Order 12612 on Federalism Considerations in Policy Formulation and
Implementation is still in effect. In general, it aims to "restore the division of governmental responsibilities between
the national government and the States that was intended by the Framers of the Constitution and to ensure that
the principles of federalism established by the Framers guide the Executive departments and agencies in the
formulation and implementation of policies" (52 Federal Register 41685, Oct. 26,1987). Section 6(c)(3)of the order
required agencies preparing Federalism Assessments for policies "[ildentify the extent to which the policy imposes
additional costs or burdens on the States, including the likely source of funding for the States and the ability of the
States to fulrdl the purposes of the policy."
I
The order of the Clinton Administration drrects Federal agencies to promulgate regulations
onlv when necessarv due to "com~eliine
" oublic n e e d and after a reasoned determination that the
benefits justify costs, or when required by law. The Reagan order, as menzioned above, permitted
regulation only when benefits exceeded costs, unless thls approach was prevented by law.
L
The Clinton order directs agencies to conduct cost-benefit analysis for all
"significant regulatory actions." The definition of "significant regulatory action"
appears to be more inclusive than the "major rule" definition of Executive Order
12291, indicating that more regulations may be subject to cost-benefit and risk
analysis under the Clinton order. (However, OMB will not review rules that are
not found to be significant and may not require cost assessments for such rules,
as discussed below.) The Clinton Administration also defines advanced notices
of proposed rulemaking as regulatory actions; such notices were not defined as
rules under the Reagan Administration. The two categories of regulations are
compared in Table 3.
President Clinton directs each agency to determine the significance of
proposed regulatory activities initially, but authorizes OMB to designate
additional rules as significant (within ten days of receiving the agency's list of
planned regulatory actions). OMB also is permitted to waive review of an
agency's significant regulatory actions. Under the two previous Administrations
OMB had similar authority. that is, to designate rules as major and to waive
review of particular major rules.
President Clinton requires each agency to "consider the degree and nature
of the risks poacd % vzrivcs substances or activities within its jurisdiction" in
setting priorities. I n contrast, President Reagan required agencies to maximize
net economic benefits in setting priorities.
The executive orders of Presidents Reagan and Clinton direct agencies to
use different criteria in choosing regulatory objectives. Under the Reagan
orders, agencies were required to pursue regulatory objectives that would
"maximize net benefits", that is, achieve the greatest possible economic gain for
society, to the extent permitted by law. Under the Clinton order, agencies will
select regulatory objectives that address significant problems or compelling
public need. Economic impacts are not considered in the choice of objectives
(although prior to promulgating a regulation, agencies must determine that
benefits justify costs: unless the regulation is required by law).
Having determined the targets of regulations, the Reagan Administration
directed agencies to choose the regulatory alternative with the "least net cost".
The Clinton Administration established three criteria for choosing a regulatory
approach: maximize net benefits, minimize the overall regulatory burden for
various segments of society, and design the most cost-effective regulation or
alternative to achieve the objective. The philosophy of the Clinton order
emphasizes the importance of net benefits. It states:
Further, in choosing among alternative regulatory approaches,
agencies should select those approaches that maximize net
CRS-32
Table 3. Characteristicsof "MajorRules"and "SigniiXcantRegulatory Actions"
Sectors of the
or lo& government agencies, or
geographic regions; or significant
adverse effects on competition,
employment, investment,
May adversely affect the
environment or public health or
May alter the budgetaiy impact of
May raise novel legal or policy
issues arising out of legal
mandates, the President's
benefits (including potential economic, environmental, public health
and safety, and other advantages; distributive impacts; and equity),
unless a statute requires another regulatory approach [section l(a)l.
*'
OMB has notified agencies that regulatory actions containing an unfunded mandate should
be submitted for review under Executive Order 12866. Since OMB only reviews significant
regulatory actions, presumably the presence of an unfunded mandate qualifies a rule as
significant.
43 Effects on the environment, public health or safety, actions of other agencies, budget, or
novel legal or policy issues may be considered in a cost-benefit-risk analysis conducted in accord
with E.O. 12291, but these effects alone are not sufficient to trigger the requirement to conduct
an analysis.
Both the Clinton order and Guidelines for the Reagan orders require
consideration of alternatives to Federal regulation such as those that rely on
negotiation or economic incentives.
The Reagan orders required analysis of potential benefits, costs, and net
benefits of the proposed regulation and alternatives that cost less. Costs,
benefits, and net benefits for each alternative were compared to those for the
alternative of no regulation. The Clinton order similarly requires analysis of all
costs and benefits of the proposed regulation and alternatives, including the
alternative of no regulation. It also requires analysis of net benefits (in order
to choose an approach that maximizes net benefits) and cost-effectiveness of
regulatory alternatives. Thus, the Clinton order appears to have a more
comprehensive set of analytic requirements.
More specifically, the Reagan orders required analysts to focus on
economic, adverse impacts of regulations (that is, costs) for consumers,
individual industries, Federal, State, and local governments, and geographic
regions. The orders required measurement of effects on competition,
employment, investment, productivity, innovation, and international
competitiveness. They also required consideration of the distribution of costs
and benefits, that is, who pays and who gains. The Clinton order also requires
analysis of the costs of enforcement and compliance to governments, regulated
entities, and the public; impacts on innovation; and consideration of who pays
and who gains. In addition, the Clinton Administration specifically requires
analysis of benefits to the environment and public health and safety. The
consistency, predictability, and flexibility of regulations must also be considered.
Finally, the Clinton order explicitly requires consideration of whether the
impacts are fair.
The Clinton order directs agencies to prepare and submit to OMB an
annual Regulatory Plan, in which they identify their planned significant
regulatory activities, including a description of how each action will reduce risks.
Agencies must compare the magnitude of the risk addressed by each activity to
the magnitudes of other risks within the jurisdiction of the agency. The Reagan
Administration also required agencies to submit information about regulatory
actions underway or planned, hut no requirement existed to compare risks
addressed by regulations. Instead, the Reagan order focused agency attention
on regulatory action to revise or rescind existing rules.
President Clinton's Executive Order 12866 established a Regulatory
Working Group to serve as a forum for interagency discussions. Topics to be
addressed include comparative risk assessment, innovative regulatory
techniques, and streamlined approaches for small businesses and other entities
to facilitate their compliance with regulations. Interagency groups also were
established under previous Administrations, often to promote coordination of
regulatory activity and harmonization of risk assessment practices.
The executive orders of Presidents Reagan and Clinton require analysis to
be based on scientific information. In addition, the Clinton Administration
requires agencies to use the "best reasonably obtainable scientific information."
President Reagan required analysis "based on adequate information" and risk
assessment.
The Reagan orders prohibited Federal agencies from preempting State laws
or regulations except to protect civil rights or interstate commerce. Under the
Clinton order: OMB is required to meet four times per year with representatives
of State, local, and tribal governments to identify planned and existing
regulatory activities with potentially significant impacts. Several meetings
already have taken place. Representatives of businesses, nongovernmental
organizations, and the public also must be consulted about the significance of
planned regulatory actions. OMB and the Small Business Administration
sponsored two meetings in 1994. The Clinton order requires Federal agencies
to develop a process to permit meaningful and timely input by State, local, and
tribal governments in the development of regulatory proposals containing
significant unfunded mandates. It prohibits the promulgation of regulations
that would create a mandate upon a State, local, or tribal government, unless
funds are provided by the Federal Government to pay direct costs incurred by
that government or the agency provides to OMB a description of: 1)the extent
of prior consultation with that government; 2) the nature of that government's
concerns, 3) written communications submitted by such government, and 4) the
agency's position supporting the need to issue the regulation. The order also
directs Federal agencies: to review and streamline processes for waiver
applications by State, local, or tribal governments, to attempt to increase
opportunities for use of flexible policy approaches in jurisdictions of applicants
where appropriate; and to render decisions to applicants within 120 days,
notifying and explaining decisions to deny such applications in writing.
EPA's Implementation ofExecutive Order 12866. An interagency analytical
work group is developing principles of analysis for use by all agencies and OMB
under Executive Order 12866. This group will decide such technical issues as
the rate that future costs and benefits will be discounted to estimate their
present value." Technical principles also were developed under the Reagan
executive orders. Agencies also are developing implementation guidelines. The
final draft of EPA's guidelines is expected to be completed by late 1994,
according to EPA's Regulatory Management Division. These internal EPA
guidelines will be reviewed by EPA's Science Advisory Board (SAB) and revised,
if necessary. The final report may be released in mid-1995.
Since guidelines are still being developed, it is probably premature to draw
conclusions about the effect of President Clinton's order. However, an OMB
report on agencies' implementation of the order in the first 6 months after
publication of the executive order indicates that OMB completed reviews for 42
significant EPA rules, including 21 proposed and 21 final significant rules. For
comparison, between 1981 and 1992, EPA issued 60 major final rules and 92
44 The discount rate was 10% under President Reagan and 7%under President Bush. A 10%
discount rate means that the present value of an asset or loss to be realized one year in the future
is 90% of its future value.
major proposed rules. However, because these figures are not truly comparable
they should be interpreted with caution. More comparable figures were not
available from OMB or EPA.
OMB issued guidance for agencies April 5: 1994, on how to develop the
regulatory plan. Draft regulatory plans are due at OMB June 1each year and
a unified plan for the Federal Government will be issued each fall with the semiannual regulatory agenda (the list of regulations agencies expect to issue in the
next 6 months.) The Clinton Administration issued its first regulatory agenda
on November 14, 1994 (59 Federal Register 57003).45
EPA submitted its first plan for review of existing significant regulations
on December 29, 1993. The plan describes a broad, bottom-up process by which
Agency managers and the Administrator will receive nominations for regulations
that should be reviewed and outlines the procedure the Agency will follow to
designate significant regulations for the final list to be included in the annual
Regulatory Plan. According to EPA's plan, EPA program offices will be more
directly involved in planning with less intercession by the EPA Office of Policy,
Planning and Evaluation than occurred during previous Administrations.
In a separate September 30, 1993 memorandum to heads of departments
and agencies on agency rulemaking procedures, President Clinton directed
agencies to examine their internal review procedures for regulations to
determine whether and how they might be improved and streamlined. All
agencies were required to report the review results to the President. EPA
announced June 15, 1994 that it had developed a rule-making process which
places regulations in one of three tiers based on the political sensitivity of the
rule and the number of media-specific program offices and statutes that would
be affected by the rule.46 The Tier 1 rules are most politically sensitive or
controversial and affect major stakeholders and several differentprograms in the
Agency. Tier 1rules require the most complex and detailed analysis and review
processes. According to Assistant Administrator for Policy, Planning, and
Evaluation David Gardiner, Tier 3 rules are not necessarily unimportant or
inexpensive, but they are less complicated to address and need less review by
senior Agency officials. The new process is meant to focus EPAresources where
they are most needed, to produce better Tier 1and Tier 2 rules with a stronger
basis in science, and to expedite the development of rules in Tier 3. Of the 352
regulations EPA will be working on through 1995, the Agency designated 27
Tier 1 rules, 158 Tier 2 rules, and 167 Tier 3 rules.
45
The Government did not publish a unified plan in 1993.
46 Bureau of National Affairs. Daily Environment Reporter, no. 118, June 22, 1994, p. AA-1.
For the complete text of EPA's Action DeuelopmatProcess: Regulatory and Policy Deuelopment.
Guidelines for Implementation, see Section E.
ANALYSIS
ISSUES IN ENVIRONMENTAL RISK MANAGEMENT
According to panelists in the 1993 CRS workshop on cost-benefit-risk
analysis, several developments have spurred congressional interest in the
potential utility of environmental risk analysis for informing risk management
decisions, including: complaints about inflexible, unprioritized, and "unfunded
Federal mandates" imposed on State and local governments, the growing cost of
compliance with environmental requirements to regulated industries, the need
to reduce the budget deficit while reauthorizing several of the major
environmental statutes, and consideration of proposals to elevate EPA to
departmental (that is, cabinet) status amidst allegations of inefficient and
ineffective EPA programs. Such developments led many to conclude that
Federal managers respons~blefor environmental protection were not doing
enough to control costs and should be held accountable; they should be required
to use risk analysis and economic analysis to demonstrate that proposed
regulations will efficiently reduce serious risks to human health or the
environment.
These proponents of risk analysis suggested that it could serve risk
management in two general ways: 1) as a basis for comparing and ranking
environmental hazards, permitting assignment of priorities for regulatory action,
and 2) as a basis for evaluating the effectiveness of specific regulations in
reducing risks relative to the costs of compliance and implementation. Debates
about these general approaches and more specific legislative proposals promoting
risk analysis revolved around five general issues: 1) How valuable is the
information provided by risk analysis for policymakers? 2) Is risk analysis a
scientific basis for environmental decisions? 3) Should risk analysis be used to
be based
quantify environmental and health benefits? 4) Should EPA
on relative risks and risk reduction opportunities? and 5) Given that EPA
already does risk analysis and economic analysis, would additional requirements
for analysis improve risk management?
How Valuable Is the Information Provided?
Most people seem to agree that risk analysis is a potentially valuable tool
for summarizing scientific information about the potential human health effects
of exposure to an environmental hazard.47 EPA Administrator Browner and
Dr. Lynn Goldman, Assistant Administrator for Pollution Prevention, Pesticides
and Toxic Substances, have testified repeatedly that they believe risk analysis
is a useful tool. Former Administrator Reilly and EPA's Science Advisory Board
(SAB), a group of independent scientists appointed by the Administrator who
review the scientific bases for EPA's decisions, also have praised risk analysis.
47 The information summarized in risk analysis generally is obtained from animal
experiments, studies of the effects on humans who have been exposed to hazards, short-term tests
on bacteria or living tissues of people or animals, and knowledge and theories about the structure
and behavior of chemicals.
The National Academy of Sciences, U.S. General Accounting Office, several State
and local government associations, regulated industries, and many academics
support the use of risk analysis by Federal agencies.
The apparently widespread agreement regarding the value of risk analysis
breaks down, however, when questions arise about how risk analysis should be
used and how much influence it should have on Federal regulatory decisions.
Opinions range along a continuum. At one end is the belief that risk analysis
and economic analysis should be conducted to inform every regulatory decision;
EPA should first regulate hazards found to pose the greatest risks, and the
reduction in risk due to the regulation should be large enough to justify the cost
of implementation and compliance. At the other end of the continuum is the
view that EPA should regulate all environmental hazards posing risks
unacceptable to the public, unless those responsible for creating the risk (or
those profiting from it) demonstrate that it is insignificant or justified, for
example, by the benefits provided and a lack of safer alternatives. In this view,
chemical releases to the environment are presumed to be unacceptable and
should be eliminated and the "polluter should pay" for compliance as well as for
toxicity testing and risk analyses, regardless of cost.
Other opinions about the value of risk analysis fall between these two
extremes. For example, Presidents Reagan and Bush required, and President
Clinton requires analysis of risks and costs for Federal regulations likely to have
a "major" or "significant" effect, respectively, on the Nation. The Clinton
Administration's requirements govern the current level of risk analysis at EPA.
State and local governments and regulated industries generally support a
greater role for risk and economic analyses in EPA's risk management decisions
to control compliance costs. In contrast, environmentalists and environmental
justice activists generally oppose legislation promoting EPA analysis of risks,
costs, and benefits, because they fear increased attention to risks will reduce
consideration of other important information, for example: about pollution
prevention opportunities or potential ecological or aesthetic impacts of
management options. These groups prefer the current level of attention to risk,
or less.
The CRS workshop panelists generally agreed that decisionmakers need
better information about risks, costs, and other aspects of regulatory decisions,
including consequences of regulatory options that are not quantifiable, and
thought that risk analysis might provide some of that needed information: if it
is appropriately adapted to decisionmakers' needs. For example, they noted that
risk analysis is useful for such analytic purposes as clarifying trade-offs (that is,
choices among mutually exclusive options each of which has both good and bad
potential consequences.)
The CRS workshop panelists disagreed about whether risk analysis as
currently practiced should be promoted through legislation. Disagreements stem
in part from the fact that the information value of risk analysis is highly
variable, depending on factors discussed in detail in a later major section of this
report.
Is It a Scientific Basis for Environmental Decisions?
Some promote risk analysis because they believe it is an objective scientific
basis for environmental policies and management. In their opinion: risk analysis
should be used to inform Federal agencies, Congress, and the public, in the hope
that it will lead to rational decisions and environmental protection strategies,
and replace what these observers regard as a piecemeal environmental policy
that developed in response to real and imagined crises. They favor legislation
mandating risk analysis by EPA and reports to Congress.
Opponents of such legislation argue that a mandate for risk analysis will
not improve environmental decisions, because it is neither pure science nor
entirely objective and, they assert, it is easily manipulated for political or venal
purposes. The CRS workshop panelists agreed that the results of risk analyses
are always debateable, and therefore, reliance on the results of risk analyses in
regulating perpetuates debates over how to regulate. In addition, they noted
that when risk is managed by comparing risk estimates for different problems
or for regulatory options, value judgments are necessary. This issue is discussed
under the heading "Should Priorities Be Based on Relative Risks and Rish
Reduction Opportunities ?
Opponents of legislation mandating risk analysis by EPA also claim that
the science used in risk analysis is immature and only is validated for assessing
the risk of developing cancer. In addition, they maintain that, for most
chemicals, health effects, and ecological effects, data do not exist because
scientists have not done the necessary studies, and without data, risk analysis
is meaningless. Even when data are available, they argue that human data are
usually only from studies of adult white males with occupational exposures, and
animal studies are insensitive to risks affecting fewer than 1% of test animals.
CRS workshop panelists agreed that risk analysis focusses attention on the few
chemicals that have been tested for toxicity and currently ignores chemical
mixtures, possible synergistic effects: and the effects of exposure to multiple
emissions sources. The validity of this claim is further discussed in the section
of this report titled "The Information Value of Risk Analysis."
CRS workshop panelists agreed that there is cause for concern about the
quality of quantitative estimates of risk, costs, and benefits. They said this is
because the quality of underlying data is questionable, analyses are difficult to
do well and vulnerable to human error: and results are presented without
accompanying information about the range of possible estimates that might be
produced by different scientists. For example, one panelist claimed that
although it is generally thought that risk analyses are deliberately conservative
and therefore protective of human health, this is not always true; some risk
estimates probably underestimate risk.
Many who promote risk analysis acknowledge that it has limitations but
believe they can be overcome through research and development of improved
analytic methods or through the establishment of guidelines for the conduct of
analysis and presentation of results. Even the imperfect information produced
by risk analysis today is valuable, some argue, and should be considered by
decision makers. Clear explanations of the assumptions and uncertainties
associated with the risk estimates and standardized methods would reduce the
chance of misuse or misunderstanding, proponents of the legislation believe.
The consensus among CRS workshop panelists was that risk analysis is quite
sophisticated and constantly improving. Several proposals in the 103rd
Congress would have required development and use of guidelines for risk
analysis, comparative risk analysis, and risk communication, as well as research
to improve risk analysis methods.
Should It Be Used to Quantify Environmental and Health Benefits?
Many policymakers would like risk analysis to be used to quantify risk
reduction potential of environmental management strategies. Some also want
to quantify benefits to permit comparison with the costs ofmanagement options.
Such information, they argue, would help identify economically efficient choices,
that is, how to get the "biggest bang for the buck." Some of these policymakers
believe that spending for environmental protection should be managed more
efficiently because it is a considerable amount of money, too much to spend
wastefully. Others believe spending for environmental protection is excessive,
squandering too many public and private resources to produce small or
uncertain gains in environmental protection and public health. Legislation
addressing these concerns would require EPA to conduct risk assessment and
economic assessment (either net benefit or cost-effectiveness assessments) of
regulation^.^^ Two exemplary proposals were offered by Senator Johnston in
the 103rd Congress as amendments to S. 171, a bill to elevate EPA to
departmental status, and S. 2019, a bill to amend and reauthorize the Safe
Drinking Water Act. Both amendments were accepted and the bills passed the
Senate. The requirements of these amendments are summarized and compared
to those of the Reagan and Clinton Administrations' executive orders in the
appendix to this report.
EPA's most severe critics assert that environmental regulations adversely
impact the national economy and international competitiveness of American
businesses. (For an analysis of the economic consequences of environmental
regulations, see CRS Report 94-175, Economic and Environmental
Policymaking: Two-Stepping to a Waltz.)
Many environmentalists and others object to quantitative cost-benefit-risk
assessment of environmental or health and safety laws and regulations on moral
or ethical grounds, claiming that benefits such as life, health, and an
aesthetically pleasing environment should not be equated with commodities
bought and sold in the market and valued in monetary terms. They want
benefits described fully, in qualitative as well as quantitative terms.
Others criticize proposals to rely more heavily on quantitative risk
assessment for political reasons. They charge that the complexity of the analytic
4s Various forms of economic analysis are discussed on page 4 and in footnotes 16 and 25.
process allows analysts and interest groups to conceal important value
judgments and questionable assumptions. Thus, critics of risk analysis
legislation argue, the results of risk analysis may be misleading to policymakers,
who are the ones charged with the responsibility for making the decisions.
Moreover, complexity allows an intellectual elite and those wealthy enough to
hire their expertise to dominate discussions and decisions: according to these
opponents of legislation.
Scientific objections also have been raised to quantitative assessment of the
benefits of risk reduction by those who believe that the economic theories and
methods employed to express the value of benefits in dollars are inadequate and
unreliable. For example, they contend that surveys asking how much one is
willing to pay to obtain a hypothetical reduction in risk are irrelevant to
important decisions about real choices in daily life. They argue that for real
decisions many factors are considered in addition to the magnitude of risk
reduction. For example, people may
consider the quality bf the benefits
and costs, characteristics of those
who bear the costs and receive the
benefits, the degree of choice
available to those exposed, timing of
the decision a n d health or
e n v i r o n m e n t a l consequences,
economic and social status of
individuals who benefit or potentially
suffer prior to and following the
decision, certainty of the risk and
cost estimates, and the perceived
necessity of choosing among the
proffered options. Some believe the
only valid approach to quantifying
society's values is case-by-case.
EPA's Science Advisory Board
agrees with these critics, in part. It
has criticized EPA's methods for
assuming that the future value of an
ecological resource must be less than
its present value. It concluded in a
1990 report that this policy inevitably
leads to depletion of irreplaceable
natural resource^.^^
Moreover,
reliance on measures such as the
public's "willingness t o pay"
exacerbates this problem, accordingto
49 U.S. EPA, Science Advisory Board. Reducing Risk: Setting Priorities and Strategies for
Environmental Protection. Washington, U.S. Environmental Protection Agency, September 1990.
p. 8.
the Board. For example, although many members of the public may not care
about wetlands. these nonetheless contribute to the larger ecosystem and are
valuable now and in the future, for such purposes as waterfowl and fish habitat
and to filter pollutants from water. Therefore, the Board concluded, techniques
need to be developed to assess the real long-term value of ecosystems.
Critics of quantitative economic analysis also claim that the costs of
environmental and health and safety regulations may be exaggerated, because
data often are provided by regulated industries, and EPA ignores the "learning
curve"; the critics believe real costs tend to go down with time as companies gain
experience in complying. In contrast to monetary values, unquantifiable
benefits are excluded from analysis, according to critics who are particularly
concerned about the discounting of benefits to future generations. CRS
workshop panelists noted that EPA has been unable to quantify benefits such
as clean ground water and that the Agency claims it does not know how to
evaluate costs and benefits of some of its programs.
The insensitivity of quantitative analysis to the value of environmental and
health benefits to future generations is an example of the general inability of
economic methods to account for uneven distributions of environmental risks
and regulatory costs and benefits among people, according to this view.
Advocates for environmental justice who seek to eliminate alleged
disproport~onaterisks borne by low-income and minority communities argue
that those subgroups may be burdened and other groups may reap a
disproportionate share of the risk reduction, while taxpayers and consumers
bear the cost of implementation and compliance. Instead of, or in addition to,
weighing total costs against total benefits. they want EPA to describe
distributions of risks and benefits and to consider inequities in developing
environmental regulations. Existing statutes may limit EPA's authority to
address this concern in regulations, however. For example, statutes sometimes
direct States to design remedies for risks.
Many promoters and critics of environmental risk analysis agree that the
results of quantitative risk assessments should not be reported as a single
number known as a ''point estimate." Point estimates of risk often are used,
they believe, (as did CRS workshop panelists) to focus attention on relatively
small risks to large populations (for example, the U.S. population as a whole)
rather than on large risks to smaller groups, such as workers, the economically
d~sadvantaged,or ethnic minorities. EPA often assesses and reports risk
estimates for vulnerable individuals, so this concern may be overstated.
Nevertheless, CRS workshop panelists agreed that the results of risk analyses
too often are reported as single numbers (point estimates). They would prefer
analysts present a range of risk estimates that might be obtained by different
scientists with different values and deliberately discuss scientific uncertainty so
that decisionmakers are not misled. The quality of the data underlying the risk
assessments also should be revealed, they agreed. According to some panelists,
cost data and estimates often are uncertain and should be presented as a range
of plausible values.
Still others charge that if the goal is to reduce costs of regulations, then
Congress should revise the statutes, not just add requirements for quantitative
analysis of risks and economic impacts, because EPA cannot consider costs of
regulationsunder some major environmental statutes that dictate the degree of
protection to be achieved. In this view, a mandate to analyze i n itself is
inefficient, because analysis will consume scarce EPA resources, sometimes
without purpose. Statutes that impose the greatest regulatory compliance costs
(and therefore would be the preferred targets for analytic requirements meant
to increase efficiency) prohibit consideration of compliance costs or health,
human welfare, and environmental benefits, according to OMB analyst Arthur
Fraa~.~O
Finally, many argue that formal quantitative cost-benefit-risk analysis
would delay EPA's issuance of some regulations, and delays will mean that lives
or habitats might be lost that could have been saved had the regulation been in
effect. Delays may even increase the cost of analysis, for example, if the Agency
misses statutory or judicial deadlines and environmental groups respond by
filing lawsuits, critics argue. Thus, they claim the net benefit of environmental
regulation might be reduced. On the other hand, if analysis is cut short to meet
deadlines, industries may charge that EPA regulations are arbitrary and
capricious. Depending on the statutory requirements, this may also lead to legal
challenges. Some critics believe that regulating based on risk is too time
consuming, resulting in delayed implementation of statutes enacted to protect
human health and the environment. They cite rationale for the Clean Air Act
Amendments of 1990 (CAAA) as an example. Before enactment of the CAAA,
section 112 of the Clean Air Act required EPA to regulate emissions of
hazardous air pollutants based on risk. Only 6 pollutants were regulated in 13
years under that Act. Dissatisfied with the pace of regulation, Congress
amended the Act in 1990 to require EPA regulation of emissions of 189
hazardous pollutants based on available pollution control technology.'1
CRS panelists agreed that data collection and risk analysis can delay
regulatory action and consume resources that might otherwise be used to
prevent, reduce, or redress environmental pollution. They noted a tendency for
agencies to analyze more than is necessary to inform risk managers, and advised
that risk analysis should cease when the cost of conducting the analysis and of
delayed decisions outweighs the potential value of additional information to
decisionmakers.
Those who practice cost-benefit-risk analysis have responded to some of
these criticisms by developing new methods. Policymakers also have responded
by modifying proposals. For example, the original Johnston amendment that
was incorporated into S. 171, a bill to elevate EPA to cabinet status, applied to
50 Luken and Fraas.
The U.S. Regulatory Analysis Framework: A Review. p. 100.
U.S. L i b r a ~ yof Congress. Congressional Research Service. A Legislatiue History of the
Clean Air Act Amendments of 1990. Volume 1.Washington, U.S. Go*. Print. Off., Nov. 1993, p.
860-863.
all final rules. The revised version of the Johnston amendment which was
accepted as a floor amendment to Senate-passed S. 2019, a bill to reauthorize
the Safe Drinking Water Act, required risk and economic analyses only for rules
with an annual impact of $100 million or more. In recent years, approximately
3.5 percent of EPA's published rules were expected to have an economic impact
greater than $100 million. Thus, the revised provision would have consumed
fewer resources.
Critics of cost-benefit-risk assessment are not necessarily opposed to
designing efficient environmental protection strategies; many argue that costeffectiveness is an acceptable form of analysis of alternative management
strategies. Cost-effectiveness analysis begins after the health and safety or
environmental goal (that is, the level of risk reduction desired) has been
established; the analysis then identifies the least cost means of obtaining the
benefits. The revised Johnston amendment (section 18 in S. 2019) appeared to
require cost-effectiveness analysis.
Should Priorities Be Based on Relative Risks?
EPA's experiments with comparative risk analysis, and similar State
experiments that were encouraged and funded by EPA, have generated
considerable interest among legislators. Many would like scientists to provide
information on how environmental hazards rank based on risk estimates,
believing that this information would facilitate decisions about legislative and
regulatory priorities. Some have suggested that Federal, State, and local
governments should enact budgets and allocate resources that tie the greatest
expenditures to environmental hazards posing the greatest risks. Others have
proposed that EPA provide perspective for viewing environmental hazards
within the context of other Federal programs; they would require EPA to
compare the risks of regulated environmental hazards with risks of other
regulated and unregulated hazards.
Those who object to comparative risk proposals contend that comparative
risk analysis is an unscientific, ad hoe procedure that lends a false air of
objectivity to the subjective judgments of scientists. They question whether an
exercise that combines the diverse views of an unrepresentative sample of
Government scientists to produce a single prioritized list of hazards is more
informative than a thorough recitation of the points on which scientists with
diverse viewpoints agree and disagree, such as may occur in a hearing or an
advisory committee. Priority setting requires value judgments. they argue, and
should be made politically; scientists are no more qualified than others to decide
whether, for example, the risk of a small decrement in intelligence for 3 to 4
million children exposed to lead-based paint is more or less significant than the
risk of approximately 13,600 deaths annually from lung cancer due to indoor
levels of radon gas. Which is worse, one person dying or 10.000 people feeling
sick most of the time? Does it matter if the one dying is a child, or a smoker?
It is even more difficult and less scientific to compare ecological risks with risks
to human health, these critics contend. According to this view, scientists are
expert only a t determining probabilities, and the public or its representatives
should be asked to contribute their expertise to the process of priority setting.
EPA's Science Advisory Board agrees with this view. I n Reducing Risk it
stated:
... because they experience those risks first-hand, the public should
have a substantial voice in establishing risk-reduction priorities.
Thus EPA should include broad public participation in its efforts to
rank environmental risks. Such participation will help educate the
public about the technical aspects of environmental risks, and it will
help educate the government about the subjective values that the
public attaches to such risks. The result should be broader national
support for risk-reduction policies that necessarily must be predicated
on imperfect and evolving scientific understanding and subjective
public opinion."
Critics of risk management based on risk comparisons alone (that is,
relative risks) also argue that risk is only one aspect of the environmental
problems. Some argue that risk comparisons often focus on average national
rates of death or disease and ignore equally important factors. such as the
acceptability of available risk reduction strategies or the fairness of the result.
Priorities should he based on all relevant information about hazards and
available management options, not on risk alone. and should be made
democratically, they assert. They reason that all means of risk reduction are not
equally desirable, citing diverse examples such as the wearing of a gas mask or
modification of a production process to reduce use of toxic chemical^.'^
Benefits provided by hazards also vary and should be considered, according to
this view, because risk is not always undesirable, and many risks, such as
driving a car or skydiving, are taken voluntarily either for the benefits that may
be obtained or for the thrill of the experience. Panelists at the CRS workshop
agreed that risk analysis, especially quantitative assessment, tends to emphasize
the magnitude and severity of consequences over other aspects of the situation.
such as whether exposure to the hazard is necessary or voluntary or whether
the people who profit from a hazard are the same as the people who are a t risk
or the people who pay to reduce risk.
In 1989, the NAS published a report that summarized the state of
knowledge about how best to communicate about risks.'* This report is
noteworthy primarily because it was a consensus document prepared by the
''
U.S. EPA, Science Advisory Board. Reducing Risk: Setting Priorities and Strategies for
Envimnmental Pmtection. Washington, U.S. Environmental Protection Agency. (1990) p. 24.
53 In general, risk may be eliminated, avoided, or reduced by eliminating, controlling, or
isolating the hazard. Alternatively, risk may be reduced without affecting the hazard by
preventing or reducing exposure of people or other living things to the hazard. A population also
might be compensated for any adverse effects experienced in the event of exposure. The risks of
specific hazards niay or may not be easily controlled in any of these ways.
"
National Research Council. Improving Risk Communication. Washington, D.C., National
Academy Press, 1989. p. 97.
Committee on Risk Perception and Communication of the National Research
Council (NRC), a large group of scholars and practitioners with widely differing
political perspectives. One topic addressed by the report was how to employ risk
comparisons. According to the Committee: risks should only be compared when
risks are comparable; risks are comparable when they "exhibit qualitative
characteristics that are reasonably similar."" This means that the most
comparable risks generally are experienced in the same way by the same
population for the same reason. For example, the risks of riding a bicycle,
walking, or being driven to school may be easily compared. In contrast, the risk
of being struck by lightening is not comparable to the risk of traveling, because
although both are familiar, the former derives from a natural phenomenon
beyond human control; in addition, an individual's risk of being killed by
lightening is greatly reduced with little effort, for example by remaining indoors
during storms or employing devices to deflect electrical charges. Several
qualitative characteristics of hazards (risks) are particularly important. to
comparability, according to experts inchding: the magnitude and severity of the
potential harm, likelihood of harm, voluntariness of exposure, immediacy of
effect, trustworthiness of people managing the hazard (risk), population likely
to be exposed, concentration of effects in time and space, population likely to
benefit from the activity that creates the risk, and the degree of familiarity of
(or adaptation to) the hazard. In addition, the NRC committee cautioned
against appearing to select risks for comparison that "minimize or otherwise
trivialize the risk in question," for example, by comparing a hazard (risk) like
lightening that seems highly unlikely to inflict personal harm to one that is less
well understood by scientists and causes deep distress to some individuals, like
hazardous waste sites.j6
Many proponents as well as opponents of risk comparisons agree that if
hazards are compared based on risk estimates, risks to subpopulations should
be considered as well as risks to the population as a whole. In addition, some
propose that distinguishing characteristics of hazards that may affect the
acceptability of risks should be highlighted. Committees ofjurisdiction reported
several bills in the 103rd Congress that required risk comparisons as well as
identification of distinguishing characteristics of hazards and consideration of
risks to vulnerable subpopulations.
Would Additional Analysis Improve Risk Management?
Proponents of risk analysis, comparative risk analysis, or economic analysis
of the potential effects of environmental regulations have various options for
promoting the activity. This section examines selected potential impacts of
seven general approaches: 1) authorizing or requiring EPA to analyze
regulations, 2) authorizing or requiring EPA to consider costs, relative risks, or
the relationship between costs and benefits in making regulatory decisions, 3)
requiring EPA to reDort to Congress on the results of regulatory analysis: 4)
55
Ibid.
authorizing additional funding for analysis, 5) mandating research and
development of analytic methods, the database, or guidelines for risk assessment,
6) establishing guidelines for risk assessment or the presentation of analytic
results, or 7) requiring peer review.
In general, provision of statutory authority to conduct or to consider the
results of analyses probably would generate less controversy than a mandate,
which the Executive might oppose. Some argue that constraints on the
prerogatives of managers may violate tenets of good management by reducing
the flexibility needed to allocate resources efficiently and to adapt quickly to
changing circumstances.
The potential effect on EPA of legislation authorizing or requiring
economic or risk analysis or consideration of risks, relative risks, costs, andlor
benefits in developing regulations would depend largely on which regulations
were to be analyzed. Legislation affecting only "major" or "significant"
regulations might have relatively less impact, because EPA already is required,
to the extent permitted by law, to conduct and consider the results of costbenefit-risk analysis for all regulatory actions that are "significant." Statutory
requirements would apply even in the absence of an executive order,
Legislation requiring analysis of additional regulations could provide
information that now is not readily available. Information about alternative
regulatory strategies and their potential consequences (that is, implementation
and compliance costs? the risks avoided, and other benefits) could help
policymakers and the general public set priorities, allocate resources, and
evaluate existing Federal laws and programs.
On the other hand, additional requirements for analysis would require
additional resources. The Congressional Budget Office has estimated that it
would cost $20 million to analyze all "non-routine" EPA regulatory actions
(approximately 50 percent of all regulatoq actions.) In the absence of additional
resources, the increased number of required analyses might force EPA to reduce
the quality of analysis for "significant" regulations. If EPA were to sacrifice
analytic quality underpinning its regulations, it might be more vulnerable to
legal challenges from regulated entities.
Additional private expenditures also might result from new statutory
requirements, because EPA's analyses often use data provided by regulated
industries. To supply data for additional analyses, EPA might require additional
data collection and reporting by such industries.
Additional requirements for analysis might delay EPA implementing
provisions of major environmental statutes. Any such delays would likely anger
environmental groups, who might seek to judicially compel EPA action. Delays
could also affect regulated industries, for example, if the regulations delayed
were meant to clarify or reduce existing regulatory requirements.
Such delays or increases in the cost of regulating might be reduced,
however, if legislation authorized analyses that varied in detail in proportion to
the significance of regulations. CRS workshop panelists believed that Federal
agencies sometimes analyze more than is necessary to inform risk managers. To
the extent that this is true, EPA might be able to reduce the overall cost of
promulgating regulations, if Congress gave it the authority to vary the depth of
analyses.
A Federal mandate to conduct risk analysis to support regulations also
might affect data collection, according to CRS workshop panelists. They
cautioned that a mandate might discourage industries from doing research and
collecting data, because once data are produced, for example, on chemical
toxicity, EPA is perceived as being more likely to conduct risk analysis and to
regulate.
Requiring analysis or consideration of risks and costs would not necessarily
prevent regulation of very small risks. Nor would such a requirement prevent
promulgation of regulations that are costly for regulated industries or State or
local governments. Since 1981, EPA has almost invariably conducted risk and
economic analyses in developing its more costly regulations. Critics have
claimed that in come cases the costs appear high relative to the risks they
address. Many of EPA's critics believe the Agency is simply too protective of
health and the environment. However, an equally plausible explanation for
such regulations may be that authorizing statutes constrain EPA (or are
interpreted by EPA to constrain it) from considering costs or the magnitude of
risk when setting the standards or safety criteria.
If it is determined that some statutes require EPA to regulate insignificant
risks regardless of cost, Congress could choose to override existing statutory
authority by omitting the standard "saving"clause from legislation that requires
consideration of risks, costs, or cost-effectiveness of regulations. However, this
would likely require review of each potentially affected environmental statute:
an overriding statute might have unintended consequences that would be
difficult to predict. In addition, significant opposition might be expected to such
legislation because it might appear to reduce the overall level of protection of
the environment and public health. Alternatively, Congress might consider
amending the requirements for analysis in each environmental statute.
Instead of authorizing or requiring EPA analysis or consideration of risks,
costs, or relative risks, legislation could require periodic EPA reports on the
results of such analyses of environmental regulations; such reports might assist
Members with oversight responsibilities or alert Members on authorizing
committees to provisions in authorizing statutes in need of reexamination. Such
reports arguably would consume relatively less of EPA's resources and might
serve additional purposes, for example, to inform the general public about
Federal programs.
Given the historically high level of EPA involvement in risk and economic
analyses and the fact that EPA has conducted analyses of proposed regulations
for two decades. often on its own initiative, Congress might conclude that
inadequate funds help explain perceived regulatory failures. In this case,
Congress might choose to provide additional funding targeted to EPA's analytic
activities; more and better analyses and better regulatory decisions might be
obtained. A similar argument might be made for eliminating statutory deadlines
contained in authorizing statutes: by providing additional time for analysis
prior to promulgation of regulations, Congress might enable more
comprehensive analyses and more rational decision processes.
Because the NAS has concluded that the greatest improvement in risk
analysis might be obtained by improving the quality and comprehensiveness of
knowledge, Congress might choose to authorize or mandate EPA attention to
research and development.j7 Analytic methods, data collection, or guidelines
might be targeted for development. Such legislation would likely generate less
controversy.
Finally, those who believe that EPA is dominated by political rather than
scientific considerations might prefer to impose scientific guidelines or standards
for risk assessment or the presentation of analytic results. Such guidelines or
standards could be mandated by Congress: to be developed by EPA, another
agency, an interagency workgroup, or an outside body with the relevant
expertise. It is questionable, however, whether any group could develop detailed
guidance that would be applicable to the array of environmental problems and
accepted as "scientific"and unbiased. Many groups have tried to accomplish this
task and failed over the last 25 years. In addition, detailed guidance may be
difficult to update quickly enough to keep up with rapid changes in science.
Alternatively, Congress could encourage or require development of a system
for independent peer review of risk analyses and economic analyses that
underpin proposed regulations. Peer review is a familiar and well-established
practice among scientists and it generates little controversy. Scientists have
found no other means to be as effective for enforcing high standards of quality
for scientific publications. Only peer review has been found to be flexible
enough to respond quickly to changes in scientific knowledge and methods.
THE INFORMATION VALUE OF RISK ANALYSIS
There appears to be general agreement that policymakers need more
information to inform risk management decisions. Views diverge, however,
regarding the type of information needed and whether it is best provided by risk
analysis. The debate might benefit, therefore, from explicit consideration of
what information risk analysis provides.
57 NAS, National Research Council. Risk Assessment i n the Federal Gouenment: Managing
the Process. Washington, DC, National Academy Press, 1983. p.5-6.
Key Factors Determining the Quality of Information Provided
Under ideal conditions, a risk analysis might gather, organize, and
summarize all of the important information relevant to hazard management.
It would include qualitative as well as quantitative information about the
characteristics of the hazard, exposed population, potential effects, and potential
effects of available management strategies; describe scientific uncertainties; and
provide a range of forecasts based on alternative. scientifically plausible
assumptions about the relationship between exposure to the hazard and
potential health or environmental effects.
I n practice, however, the type of information provided by environmental
risk analysis varies from abundant (but often with critical gaps) to superficial,
from accurate to biased, because risk analysis is a field of inquiry rather than
a single method. Risk analysts study hazards using a variety of procedures
adapted from other fields of study. Sanitary and industrial engineering,
psychology, economics,sociology, statistics, and operations research, for example,
have provided models and procedures used by risk analysts. Because some of
these methods were developed for different purposes (for example, to determine
actuarially sound life insurance rates), they often have not been scientifically
validated for, and are difficult to apply to, environmental hazards. The defining
characteristic of methods used in risk analysis is a reliance on past experience
to predict future events. If there is no past experience, there are no data and
there can be no meaningful analysis.
A second consideration is that risk analysis is a tool for evaluating what
is known about things that cannot be known with certainty -- that is, it is only
used to describe the effects of hazards that are unpredictable due either to their
randomness or to lack of data or scientific understanding of the principles that
govern their occurrence. Its methods were developed to allow agencies to
implement legislation despite incomplete data and scientific understanding.
Risk analysis always produces an estimate, never an exact prediction, and
estimates vary in quality. (Weather forecasts, for example, are relatively wellinformed risk estimates.) Thus, risk analysts can only discuss the likelihood of
various outcomes and, at best, may present risks as statistical probabilities. If
there is no past experience with a hazard, there is no basis for any forecast,
much less a quantitative estimate (although risk estimates may be made based
on conceptual models or experiences with similar hazards.) If there is
experience but no record to ensure accurate recall, risk estimates are likely to
be unreliable.
Finally, there are times when risk analysis can provide no information at
all, because some environmental hazards and effects defy risk analysis, even
when data are abundant. Science cannot always explain complex or unusual
relationships between the exposures to hazards and the potential health and
ecological effects. For example, chemicals in the environment that suppress
immune systems may not be recognized as hazards, because their effects will be
seen as a variety of health problems, each of which may be attributed to a
different cause. In other cases, only people with certain innate characteristics
may be affected by exposure to a toxic substance.
Quality of the Database
The quality of available data largely determines the quality of information
that can be provided by a risk analysis. Thus, the NAS concluded in 1983 that
the most effective way to improve risk assessment in the Federal Government
is to improve the quality and comprehensiveness of knowledge." The current
data situation was summarized in a recent report by the Congressional Office
of Technology Assessment (OTA).55 It estimated that 62,512 chemicals are in
commerce in the United States today, and another 1500 new chemicals enter the
market annually. Environmental experts believe that "good data on health
effects exist for only 10%of commercial chemicals, according to OTA. Of course,
many of these new chemicals that have not been tested adequately may be
harmless, but according to NAS, data are also inadequate for many chemicals
that Congress has deemed "hazardous." NAS recently evaluated the availability
of data for risk analyses for 189 hazardous air pollutants and concluded EPA did
not have "sufficient data to assess fully the health risks ... within the time
permitted by the Clean Air Act Amendments of 1990."60 OTA reported that at
least 12 Federal agencies are currently conducting health risk assessment
research to fill the gaps in scientific understanding, but their efforts are poorly
coordinated and supported at a level that is less than 0.5 percent of the cost of
complying with EPA regulations. (This figure does not include research relevant
to the analysis of ecological risks.)
Risk Assessment Methods
Environmental risk analysis is a relatively new and immature field, and
this is evident in the state of development of its methods. The most developed
and well established analytic methods probably are those concerning acute
effects; for chronic effects, the most developed are those used to assess human
cancer risks of chemicals. These methods evaluate and model the results of
animal experiments and human studies to estimate the risk that people will
develop cancer following various levels of exposure to individual chemicals.
Many of EPA's environmental standards, emission limits, and quality criteria
are based on the results of cancer risk assessment. Other categories of risks,
such as mutagenicity and immunotoxicity are rarely assessed, representing a
substantial hole in risk assessment methodology.
5S NAS, National Research Council. Risk Assessment i n the Federal Gouernment: Managing
the Process. Washington, DC, National Academy Press, 1983. p.5-6.
55 U.S. Congress, Office of Technology Assessment. ResearchingHealth Risks; OTA-BBS-570.
Washington, U.S. Govt. Print. Off., Nov. 1993. 228 p.
60 NAS, National &search Council. Science and Judgment i n Risk Assessment. Washington,
National Academy Press. (1994)p. 8-13,
Even cancer risk assessment is beset by the absence of scientific data and
theories. The scientific judgments and inference choices that are used to fill
these gaps are controversial, because they are shaped by a scientist's values,
different scientists have different values, and different choices lead to different
risk estimates. Many social scientists who study technical controversies believe
that "ostensible disputes over the science are, in reality, over the values inherent
in the assumptions."61 The NAS has identified at least 50 inference choices
required in conducting a cancer risk assessment that cannot be made on a
scientific basis, and many of these decisions have strong implications for public
policy. For example, analysts must determine how much evidence is enough to
conclude that a chemical is a possible human carcinogen. Some want strong
evidence prior to classification; they prefer to err, if necessary, by withholding
judgment until they are sure a problem exists. Others would act on the first
available evidence; they prefer to err on the side of alerting public officials to a
possible risk.
To reduce the influence of values on individual risk estimates and to
ensure that the assumptions and inferences choices made by agencies are clearly
expressed, NAS has suggested that Federal agencies should develop and adopt
guidelines for risk assessment. EPA adopted the first guidelines for cancer risk
assessment in 1977. A revision was promulgated in 1986, and a second revision
is in progress.
EPA also established guidelines in 1986 for analyzing: the risk that a
chemical will cause mutations affecting future generations or damage to human
deveIopment; human exposure to a chemical; and human health risks of
chemical mixtures. The Agency revised its guidelines for developmental
toxicants in 1991 and for exposure in 1992. EPA's cancer risk assessment
guidelines currently are being revised, In addition, guidelines are being
developed for analyzing neurotoxicity and reproductive and for exposure
measurements. The Agency has proposed a rough framework for ecological risk
analysis based on recommendations of the NAS.6Z NO guidelines are
established for assessing the risk of a chemical's adverse effects on the nervous,
respiratory, or immune systems, or for other lethal and sublethal effects. There
is no established scientific procedure for assessing ecological risks or for
conducting comparative risk analysis.
Guidelines are necessary to ensure that risk assessments are conducted
consistently and, therefore, are more easily evaluated by independent experts.
Rushefsky, Mark E. "Assumingthe Conclusions: Risk Assessment in the Development of
Cancer Policy." Politics and the L i p Sciences, v. 4, (August), 1986. p. 31.
62 U.S. EPA, Risk Assessment Forum. Framework for Ecological RiskAssessment.EPAi63OiR921001. Washington, U.S. Environmental Protection Agency, February 1992. 41 p.
U.S. EPA, Risk Assessment Forum. Report on the Ecological Risk Assessment Guidelines
Strategic Planning Workshop. EPAf630iR-921002. U'ashington, U.S. Environmental Protection
Agency, Februaly 1992. 57 p.
U.S. EPA, Risk Assessment Forum. Drafi Ecological Risk Assessment: Issue Papers.
EPA/630/R-94/004A. September 1993. 544 p.
(Independent evaluations of risk assessment by qualified experts, or peer review.
is the traditional means by which scientists ensure adherence to professional
standards of quality in practice.) However, guidelines do not ensure that equally
competent scientists will agree with the risk estimates produced by the process.
In fact, some scientists criticize EPA's risk estimates for carcinogens because
they do not agree with the guidelines or think different rules should apply to
certain chemicals. Controversy surrounds risk assessment only partly because
the field is so young that its methods have not been studied thoroughly and
adequateIy validated. NAS concluded in its 1983 report:
Dissatisfaction with the actions of [Flederal regulatory agencies is
often expressed as criticism of the conduct and administration of the
risk assessment process. The Committee believes that the basic
problem in risk assessment is the sparseness and uncertainty of the
scientific knowledge of the health hazards addressed, and this
problem has no ready solution. The field has been developingrapidly,
and the greatest improvements in risk assessment result from the
acquisition of more and better data, which decreases the need to rely
on inference and informed judgment to bridge gaps in knowledge" (p.
Thus, controversy will not disappear when risk analysis matures, because it
grows inevitably from value judgments based on different ethical systems and
63 Ibid.
inference choices embodied in agencies' science policies which make risk
assessment possible as well as from the special interests that stakeholders have
in EPA's risk estimates.
LEGISLATIVE ACTMTIES
LEGISLATION IN THE 103RD CONGRESS
More than a dozen bills and amendments on environmental risk analysis
were introduced in the 103rd Congress. One was enacted, but it applied to the
Department of Agriculture, not EPA. Nine other bills were passed by one
chamber or reported by the committees of jurisdiction.
Arguably, the most influential risk proposals in the 103rd Congress were
offered by Senator Johnston. The two "Johnston amendments" would have
required EPA to analyze risks, costs, and benefits for proposed and final
regulations. The original "Johnston amendment" was the first risk legislation
debated on the Senate floor, and it was adopted on April 29,1993, by a vote of
95 to 3. The amendment was incorporated as section 123 in S. 171, a bill to
raise the U.S. Environmental Protection Agency (EPA) to department (cabinet)
status. A similar proposal that would have amended a House bill to elevate EPA
to the cabinet (H.R. 3425) was unsuccessful, however. The rule for
consideration of the reported bill was defeated on the House floor, reportedly in
part because the rule would have prevented introduction of non-germane
amendments, such as that on risk and cost-benefit analysis.
During the second session of the 103rd Congress, Senator Johnston
addressed some of the key concerns of House Members when he introduced a
revised version of his amendment. It was adopted by the Senate during the May
18,1994 floor debate on Senate-passed S. 2019, a bill to amend and reauthorize
the Safe Drinking Water Act. Both amendments are summarized in the
Appendix. The Appendix also compares the amendments' provisions with
requirements in President Clinton's executive orders, which some argue,
eliminate the need for legislation.
The Senate also passed S. 2019, amending and reauthorizing the Safe
Drinking Water Act, which included in 515 a revised version of a bill originally
introduced by Senator Moynihan (S. 110) that would have requiredEPA to rank
pollution sources based on risk. The Senate also adopted House-passed H.R.
820. the Kational Competitiveness Act of 1993, after amending it to require all
Federal agencies to prepare and publish an economic and employment impact
statement for each rule and notice published in the Federal Register. The House
passed H.R. 1994 reauthorizing EPA's environmental research program and
establishing a core research program on risk reduction, and H.R. 3870
promotingresearch, development and deployment of environmental technologies
and requiring OSTP to establish a protocol for conducting and reporting the
results of risk assessments which are conducted to inform efforts to prioritize
research projects. The House Committee on Science, Space and Technology
reported H.R. 4306, amended: Oct. 7, 1994 (H.Rept. 103-857). It would have
established a program in EPA to develop risk assessment guidelines, oversee
their implementation: provide for scientific peer review, identify and conduct
research on risk assessment methods, and develop risk characterization guidance
and oversee its implementation. A pilot program on comparative risk analysis
and an interagency coordinating process in OSTP also would have been
established by H.R. 4306.
For more detailed information on these and other proposals in the 103rd
Congress, see CRS Report 94-716, Comparison ofEnvironmenta1 Risk Provisions
in the lO3rd Congress.
OUTLOOK FOR THE 104TH CONGRESS
The House Republican Contract with America promises that within the
first 100 days of the 104th Congress risk legislation will be introduced, debated,
and voted upon in the House. Title 111 of the "Job Creation and Wage
Enhancement Act of 1 9 9 5 (JC'NEA), one of the draft bills distributed with the
House Republican contract, appears to integrate several of the proposals that
saw action in the 103rd Congress. For example, the JCWEA title I11 contains
a slightly modified version of the original Johnston amendment, with coverage
expanded beyond EPA to include all Federal agencies that promulgate
regulations concerning human health and safety or the environment.
In addition, some proposals that did not advance in the 103rd Congress
may have more vigor in the 104th; for example, almost all the provisions of H.R.
2910, the Risk Communication Act of 1993: are found in the JCWEA title III.
It would require Federal agencies to distinguish explicitly between scien
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