Environmental Risk Analysis: A Review of Public Policy Issues III

98-618 ENR

CONTENTS FOR THIS SECTION

Analysis of Regulations at EPA
Recommendations for Expanded Use of Risk Analysis

List of Figures

Figure 1. How People Evaluate Hazards
Figure 2. Framework for Risk Management

Figure 1. How People Evaluate Hazards

At the request of Administrator Browner, the SAB is reviewing and updating the 1990 Reducing Risk report. A two-part final report is expected to be released in October 1998. An April 1998 draft of the report indicates that the SAB may be ready to move beyond the type of simple risk ranking that it did in 1990. Reportedly, the SAB draft describes an Integrated Environmental Decision-Making (IED) framework and demonstrates how EPA might assess and manage risks to maximize risk reduction in an integrated way (i.e., reduce total aggregate risks) rather than simply targeting the "worst" risks.20 The framework has five phases:

· Risk comparisons;
· Options analysis;
· Decision making;
· Implementation; and
· Evaluation.

To improve the value of risk comparisons, the draft SAB report recommends that EPA:

· apply and encourage broader use of relative risk methodologies show how science and judgment affect comparisons, and
· make greater use of scientific methods to characterize public incorporate those values into goal-setting and decision-making.21

In addition, SAB developed methods for comparing human health risks and ecological risks, but it did not rank human health hazards. The ecological risks subcommittee relied on consensus within a group of scientists and a "scientifically sound weighting system" to evaluate national ecological risks. It found high or moderate risks associated with:

· changes to the distribution and movement of surface water;
· harvesting of marine life;
· habitat conservation;
· climate change;
· introduction of exotic species;
· sedimentation;
· habitat fragmentation; and
· pesticides.

Endocrine disrupters and genetically engineered organisms were judged to be potentially important but unknown ecological risks.22

Analysis of Regulations at EPA. EPA performs risk analyses primarily to inform regulatory decisions. In developing regulations, EPA has used the results of risk analysis to set standards, to compare the effectiveness of various control measures, and to evaluate risks relative to costs. Risks avoided (i.e., the difference between risks before and risks after a regulation is implemented) are the usual measure of benefits for environmental or health and safety regulations. They may be expressed qualitatively or quantitatively. Risk estimated quantitatively may be expressed as, for example, numbers of lives saved or critical ecosystems protected.

In many cases, EPA characterizes the risks quantitatively, calculates the monetary value of reducing risks (expected benefit), and then compares that value to the cost of taking action (i.e., regulating or otherwise ensuring risk reduction). To permit mathematical calculations of"net benefits" or a benefit-cost ratio, analysts use various methods to translate the measures of avoided risk into dollars.23

According to a 1994 EPA memorandum, EPA conducted approximately 7,595 risk analyses during FY 1993, of which about 6,166 were quick "screens" requiring less than two days of staff work. Screening analyses generally are used to determine whether additional data and analysis are needed to make a decision. They may be qualitative or rough quantitative estimates. In contrast, about 249 major projects during FY 1993 required at least 4 weeks of staff time for analysis. The remaining 1,180 estimated analyses required a moderate level of analysis, between the level for screening and major projects. About two-thirds of these risk analyses were conducted by the Office of Prevention, Pesticides, and Toxic Substances, including more than 5,000 quick analyses for new and existing commercial chemicals subject to EPA review under the Toxic Substances Control Act and a few dozen very intensive analyses to support pesticide registrations. The Office of Research and Development, Office of Health and Environmental Assessment also conducted many risk analyses, including a few very detailed, long-term efforts that would last 2 to 4 years.24 Some of EPA's risk analyses were iterative-that is, they began as screens but progressed to more detailed analyses and finally to major ones.

According to EPA, statutory requirements or resource constraints often determined the scope and depth of analysis.25 This is because many of EPA's regulatory decisions are driven by provisions of environmental statutes dictating the degree of environmental protection to be achieved, the actions to be taken, and the criteria to be considered. For example, the Clean Air Act Section 109 requires ambient air quality standards that protect public health with an adequate margin of safety. Environmental laws differ greatly in the discretion they grant EPA to consider the significance of risks or the relationship between costs and reductions in risks expected to be achieved. Some recent amendments explicitly require EPA to balance risks of different kinds in selecting among regulatory options.

Presidents have attempted to encourage more consistent use of risk and economic analysis by federal agencies through executive orders. Compared to executive orders by previous Presidents, President Clinton's Executive Order 12866 appears to require EPA to analyze more risks for more rules. On the other hand, fewer EPA analyses will be subject to oversight by the Office of Management and Budget (0MB). According to a U.S. General Accounting Office (GAO) analysis of EPA compliance with President Clinton's executive order, EPA economic analyses vary widely in type, form, and format.

Congress also has issued general mandates to federal agencies to encourage greater use of risk and cost-benefit analysis. The Unftinded Mandates Reform Act (P.L. 104-4), Title II, requires all federal agencies to quantitatively assess benefits, including the effect of a federal mandate on health, safety, and the natural environment, and to compare benefits to costs for all rules with an expected cost of $100 million or more in a year. However, of 110 economically significant rules promulgated in the first 2 years since enactment, 78 did not require assessments due to specific exemptions allowed by the Act, according to the GAO.

The 104th Congress added mandates for considering risks to two environmental statutes authorizing EPA's regulatory activities, the Federal Insecticide, Fungicide, and Rodenticide Act and the Safe Drinking Water Act. The 1 05th Congress may consider proposals to add similar requirements to the Comprehensive Emergency Response, Compensation, and Liability Act (Superftind); also it has before it proposals for an overriding statute to establish broad risk and cost analysis requirements.

Recommendations for Expanded Use of Risk Analysis. Although many environmentalists and others oppose an expanded use of risk analysis in environmental risk management, two recent reports by experts in environmental regulation recommend increased use of risk analysis by EPA.

A provision in EPA's FY 1994 appropnations legislation (Public Law 103 - 124) mandated a study by NAPA "to address whether the Agency's resources [were] 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). In its 1995 report, Setting Priorities, Getting Results: A New Direction for EPA, NAPA concluded, in part, that EPA should redesign and improve its management operations by establishing specific environmental goals and strategies and using comparative risk analyses to inform the selection of priorities and the development of specific program strategies. NAPA also advised that EPA refine and expand its use of cost-benefit analysis in making decisions.

The Presidential/Congressional Commission on Risk Assessment and Risk Management described the current risk management approach of federal agencies often to be "cumbersome" and "fragmented."26 The Commission recommended, therefore, that the federal government adopt a consistent framework for considering risks, costs, and benefits in regulatory decisions. It defined six iterative steps for risk management, which are depicted in Figure 2 (11k)..

Figure 2. Framework for Risk Management

1. Formulate the problem in broad context.
2. Analyze the risks.
3. Define the options.
4. Make sound decisions.
5. Take actions to implement the decisions.
6. Perform an evaluation of the effectiveness of the actions taken.

The Commission also identified eight "principles for risk management decisionmaking." According to the Commission, a good risk management decision:

· Addresses a clearly articulated problem in its public health and ecological context.· Emerges from a decision-making process that elicits the views of those affected by the decision, so that differing technical assessments, public values, knowledge, and perceptions are considered.
· Is based on a careflil analysis of the weight of scientific evidence that supports conclusions about a problem's potential risks to human health and the environment.
· Is made after examining a range of regulatory and nonregulatory risk management options.
· Reduces or eliminates risks in ways that: are based on the best available scientific, economic, and other technical information; account for their multi source, multimedia, multi chenucal, and multi risk contexts; are feasible, with benefits reasonably related to their costs; give priority to preventing risks, not just controlling them; use alternatives to command-and-control regulation, where applicable; are sensitive to political, social, legal, and cultural considerations; and include incentives for innovation, evaluation, and research.
· Can be implemented effectively, expeditiously, flexibly, and with stakeholder support.
· Can be shown to have a significant impact on the risks of concern.
· Can be revised and changed when significant new information becomes available, while avoiding ''paralysis by analysis." 27

In addition, the Commission provided six far-reaching recommendations to Congress to implement the framework. According to the Commission,

· "Congress should coordinate the activities of committees and subcommittees with overlapping or related jurisdictional responsibilities for environmental issues, starting with joint oversight hearings."
· "The regulatory agencies should flilly use their existing discretionary authority to propose and implement actions that address the most significant sources of total exposure to hazards under review."
· "The regulatory agencies should ifilly use their existing discretionary authonty to expand stakeholder involvement in the development and implementation of solutions to environmental problems."
· "Congress should reinforce implementation of the Commission's Risk Management Framework legislatively, statute-by-statute."
· "The Council on Environmental Quality (CEQ) should consider issuing guidance or regulations for implementing additional provisions of the existing National Environmental Policy Act (NEPA)."
· "State and local regulatory and public health agencies should use the Risk Management Framework ... to address watershed, airshed, community, worksite, and indoor and outdoor environmental problems using an integrated, multimedia process with stakeholders. "28

The central importance placed by the Commission on stakeholder involvement in risk management is consistent with the theme of a 1996 report by the National Research Council.29 Not all experts agree, however. Some are concerned that the value of scientific testing and evaluation will be overwhelmed by value judgments. The executive director of the American Industrial Health Council, Gaylen M. Camera, believes that "once you start melding nontechnical people into the debate, technical values will lose every time."30

Recent reports by NAPA, Resources for the Future, and the Commission on Risk Assessment and Risk Management provide consistent advice to risk managers in federal agencies. According to these experts, federal risk managers increasingly should-

· conduct risk analysis and cost-benefit analysis to inform regulatory decisions;
· consider qualitative as well as quantitative aspects of risks and risk management options;
· characterize risks for sensitive subpopulations as well as the general population exposed to a hazard;
· balance risks of different kinds in selecting among regulatory options;
· elicit the views of those affected by the decision, so that differing technical assessments, public values, knowledge, and perceptions are considered;
· propose nonregulatory risk management options;
· consider multiple sources, multiple environmental media, and multiple chemicals; and
· provide flexibility to the regulated community as well as state and local officials.

ENDNOTES

20 "SAB Draft Report Calling on EPA to Integrate Decision-Making Set For April Release," Daily Environment Report, Jan. 14, 1998, p. A-8-A-9

21 "Science Panel Calls for Shift to Integrated, Goals-Based Approach for EPA Regulation," Daily Environment Report, Apr.16, 1998, p. A-i 1-A-i 4.

22 Ibid. p. A-12. "Endoenne disruptors" refer to synthetic chemicals that mimic or otherwise interfere with natural hormones, such as thyroid stimulating hormone or testosterone, and the bedy frinctions they affect. Some scientists believe that many chemicals released into the environment are potential endocrine disruptors.

23 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.

24 NAPA, ibid. p.38.

25 Ibid. p. 39.

26 Presidential/Congressional Commission on Risk Assessment and Risk Management. Risk Assessment and Risk Management in Regulatory Decision-Making. Final Report, Vol.2.1997. p.ii

27 The PresidentiallCongressional Commission on Risk Assessment and Risk Management. Framework for Environmental Health Risk Management. Final Report, Vol.1. 1997. p.4.

28 Ibid. p.49-53

29 Stern, Paul C., and Harvey V. Fineberg (Eds.) Understanding RISK: Informing Decisions in a Democratic Society. Washington, DC: National Academy Press. 1996.249 p.

30 Hanson, David. "Risk Assessment: New Guidelines Stress Broader Input," Chemical &