CRS Report: 98-619 - Risk Analysis: Background on Environmental Protection Agency Mandates

Linda-Jo Schierow
Specialist in Environmental Policy
Environment and Natural Resources Policy Division

Abstract

Debates about regulatory reform proposals often center on the adequacy of existing legal mandates to conduct risk analysis or to compare risks and costs of regulatory alternatives. This report describes provisions of environmental statutes, President Clinton's Executive Order 12866 on regulatory Planning and review, and the Unfunded Mandates reform Act(Public Law 104-4) that authorize, mandate, or constrain use of risk analysis by the U.S. Environmental Protection Agency (EPA), especially in cost-benefit analysis, in the development of regulations. It also examines the impact these mandated have had on EPA rulemaking. This report will be updated as events warrant. For information on the current status of risk-related legislation, see CRS Issue Brief 94036, The Role of Risk Analysis and Risk Management in Environmental Protection. For more discussion of the value and limitations of risk analysis for environmental management, see CRS Report 98-618, Environmental Risk Analysis: A Review of Public Policy Issues. For analysis of issues related to cost-benefit analysis, se CRS Report 95-760, Cost-Benefit Analysis: Regulatory Issues.

In recent years, Congress has been considering whether a legislative mandate to analyze and compare risks and costs would lead to more efficient and effective environmental regulations. Debate off en centers on the adequacy of existing legal mandates for risk and economic analysis of regulations. These include provisions of environmental statutes, President Clinton's Executive Order 12866 on Regulatory Planning and Review, and the Unfunded Mandates Reform Act (Public Law 104-4) that authorize, mandate, or constrain EPA's use of risk analysis, especially for cost-benefit comparisons, in developing environmental regulations. Debate also focuses on the impact these mandates have had on EPA's use of risk analysis.

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 President's Office of Management and Budget (OMB). 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 Unfunded Mandates Reform Act (P.L. 104-4), Title II, requires all federal agencies to quantitatively assess benefits, including the effect of the 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 105th Congress may consider proposals to add similar requirements to the Comprehensive Emergency Response, Compensation, and Liability Act (Superfund); also it has before it proposals for an overriding statute to establish broad risk and cost analysis requirements.

In recent years, Congress has been considering whether a legislative mandate to analyze risks would foster more efficient and effective environmental regulations. Debate often centers on the adequacy of existing mandates. One argument heard is that President Clinton's executive orders as well as the Unfunded Mandates Reform Act enacted by the 104th Congress already require risk analysis for major environmental regulations. To the extent that this is true, congressional oversight may be the appropriate response to perceived failure by the U.S. Environmental Protection Agency (EPA) to promulgate efficient and effective regulations. Others contend that existing provisions of environmental laws limit EPA's flexibility in developing regulations, and thereby impede selection of more efficient or effective options. Those holding this view who favor risk analysis of proposed regulations tend to argue for an overriding statute to establish a direct role for risk analysis in every rulemaking or for amendments to incorporate risk assessment provisions into individual environmental statutes. Still others oppose increased use of risk analysis in environmental rulemaking. They argue that analysis simply delays development of new regulations and ultimately forces EPA to conform its decisions to the analytic results, regardless of the quality of underlying data and methods.

The 104th Congress added mandates to consider risks to key environmental statutes authorizing EPA's regulatory activities, the Federal Insecticide, Fungicide, and Rodenticide Act and the Safe Drinking Water Act. The 105th Congress may consider proposals (e.g., S.8, H.R. 2727, or H.R. 3000) to add similar requirements to the Comprehensive Emergency Response, Compensation, and Liability Act (Superfund); also it has before it a proposal (S. 981) for an overriding statute to establish broad risk and cost analysis requirements.

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 significance of risks or the relationship between costs and reductions in risks expected to be achieved. Some laws authorize or even require consideration of economic factors, but others do not. A few have provisions that prohibit EPA from considering costs. Selected relevant provisions of key environmental statutes are described below and are summarized in Table 1.

Section 109 of the Clean Air Act (CAA; 42 U.S.C. 7401-7626) mandates the establishment of national primary ambient air quality standards for 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" [§ 1 08(a)( 1)]. Under this provision, EPA is required to set standards such that their attainment and maintenance "are requisite to protect the public health" in the judgement 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 [Section 1 08(a)(2)]. This statutory provision only authorizes consideration of environmental and human health risks, and was interpreted by the Court of Appeals for the District of Columbia Circuit in 1980 as prohibiting consideration of costs (Lead Industries Association v. EPA, 647 F.2d at 1 149).1

In the control of emissions of air pollutants from major new stationary sources, the Act does allow for considering costs. The CAA Section 11 1(a)(1) requires EPA to consider available technologies and costs (including non-air quality health and environmental impacts and energy requirements) in setting performance standards for emissions of pollutants by new stationary sources.

Statute	Authorized Consideration*	Degree of Protection
Clean Air Act
§109 (national primary ambient air quality standards)	Risk	Requisite to protect public health with and adequate margin of safety


§111(emission performance standards for new stationary sources)	Risk, technology, and cost	"The maximum degree of reduction in emissions...achievable through application of the best[technological]system...which(taking into account the cost... and any non-air quality health and environmental impacts and energy requirements has been adequately demonstrated"


§112(d)(emission standards for hazardous air pollutants from stationary sources)	Risk, technology,and cost	"The maximum degree of reduction in emissions..achievable" taking into account costs as 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"


§112(f)(emission standards for residual risks of hazardous air pollutants from stationary sources)	Risk(human health); risk and cost(environmental protection)	Provide an ample margin of safety to protect the public health; provide an ample margin of safety to prevent an adverse environmental effect(taking into consideration costs, energy, safety and other relevant factors)


§202 (emission standards for new motor vehicles)	Risk, technology, and cost	Standards which reflect the greatest degree of emission reduction achievable through technology available, taking into consideration cost, energy, and safety factors; technology must not present an unreasonable risk to health, welfare, or safety


Clean Water Act § 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 all pollutants," and to " provide an ample margin of safety" taking into consideration "the toxicity of the pollutants, 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."

Safe Drinking Water Act § 1412 (b)(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 close to health-based goal"as is feasible, " given the best technology available (taking costs into consideration)

Resource conservation and Recovery Act § 3004(a)	Risk 2	"That necessary to protect human health and the environment"

Federal Food, Drug and Cosmetic Act § 408(b)(2)(B)(pesticide residues in or on food)	Risk and some costs(in a few special cases)	Assure that "the tolerance is safe," that is, "there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information." But, for a few eligible pesticides with no known "safe" levels of exposure, and "unsafe" tolerance may be left in effect, either to protect consumers from greater risks of adverse effects or "to avoid a significant disruption in domestic production of an adequate, wholesome, and economical food supply, " but only if the tolerance does not result in a risk greater than ten times the annual risk that is "safe" or twice the lifetime risk that is "safe".

Federal Insecticide, Fungicide, and Rodenticide Act § 3(b)(5) and § 2(bb)	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;" or " a human dietary risk from residues... inconsistent with the standard under section 408 of the Federal Food, Drug, and Cosmetic Act"(see immediately above)

Toxic Substances control Act § 4(to require testing)§ 6(to regulate)	Risk and cost Risk and cost	Prevent unreasonable risk of injury to health or the environment" "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 Environmental response, Compensation, and Liability Act § 121	Risk, Technology and cost	"At a minimum which assures protection of human health and the environment;' at 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 least attains Maximum Contaminant Level Goals established 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 an engineering perspective, compliance would result in greater risk, the state has not consistently applied its standard, federal funds are inadequate, or other conditions are met.

* Based on the paraphrased or quoted statutory language under the heading"Degree of Protection." Other interpretations of the cited statutory provisions are possible and may have legal precedence.

The CAA Section 112 addresses emissions of 188 hazardous air pollutants(HAPs). CAA 112(d) requires EPA to consider risks, available technologies, ad costs in promulgating regulations to control emissions of HAPs from major industrial sources.3 It directs EPA to require source facilities to apply the "maximum achievable control technology," taking into account costs and other factors. However, subsection (f) of this section also requires EPA to evaluate and report to Congress on the need for health-based (i.e., based on risk alone)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 provide.4 Subsection (f) 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 section 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 2 years 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.5

3 Prior to enactment of the Clean Air Act Amendments of 1990, Section 112 was widely known as the "cost-blind" statutory provision that required EPA to base decisions on risk alone, that is , without regard to cost. However, the extremely slow pace at which EPA established risk-based regulations led Congress to amend the law.

4 The statute requires provision of " an ample margin of safety to protect public health in accordance with this section(as in effect before the date 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 at this stage of the analysis" under the Act(Natural Resources Defense Council v. EPA, 824F.2d at 1164-1165). However, the Court stated that costs and technological feasibility could be considered in promulgating an emissions standard below the "safe" level to provide an "ample margin" and to " take into account the inherent limitations of risk assessment and the limited scientific knowledge of the effects of exposure to carcinogens at various levels."

5 EPA issued the first report, The Benefits and Costs of the Clean Air Act, 1970-1990, in October 1997.

Redistributed as a Service of the National Library for the Environment*