Environmental Risk Analysis:
A Review of Public Policy Issues

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

July 15,1998

98-618 ENR

CONTENTS

Summary
Introduction
Background

Risk Analysis at EPA

Origin of Environmental Risk Analysis
Influence of Interagency Guidelines on EPA Risk Analysis
State of the Art of Risk Analysis at EPA

Risk Management at EPA

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

Analysis

Issues in Environmental Risk Management

How Valuable Is the Information Provided?
Is It a Scientific Basis for Environmental Decisions?
Should It Be Used to Quantity 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 Activities

Legislation

Conclusion
Selected References
Appendix

Definitions

List of Figures

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

Summary

Concerns about the economic effects of EPA's regulatory process have led Congress to consider requiring analysis of risks, costs, and benefits of regulations. Proponents of such analysis want analytic results used to design more efficient management strategies and to prioritize environmental problems for federal attention. Opponents argue that mandated analysis would delay new regulations and ultimately force EPA to conform decisions to analytic results, regardless of the quality of data.

EPA functions under a number of environmental statutes, which differ greatly in the discretion they grant to consider risks and costs, and general mandates issued by Presidents and Congress to federal agencies to increase their use of risk and cost-benefit analysis. For more information on this subject, see CRS Report 98-619, Risk Analysis: Background on Environmental Protection Agency Mandates.

Debates about the value of risk analysis for environmental policy making revolve around five questions: 1) How valuable is the information provided by risk analysis for policymakers? 2) Is risk analysis an objective basis for environmental decisions? 3) Should risk analysis be used to quantify environmental and health costs and benefits? 4) Should spending 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? Answers depend in part on the quality of available data, which vanes.

Some general legislative approaches to increasing EPA's reliance on risk analysis include: 1) authorizing or requiring analysis of management strategies, 2) authorizing or requiring consideration of costs and/or risks in making decisions, 3) requiring reports to Congress on the analytic results, 4) authorizing funding for analysis, 5) requiring research and development of analytic methods, databases, or guidelines for risk assessment, 6) establishing guidelines for risk assessment or presentation of results, 7) mandating additional oversight of agency analyses, and 8) requiring peer review. Notably, many environmentalists and others oppose any efforts to increase the role of economic analysis in making environmental policy.

In the 105th Congress, S. 981, as reported, would require analysis of costs, benefits, and risks for environmental rules expected to have an impact of at least $100 million a year in costs on the national economy. Less comprehensive H.R. 2451/S. 599 would require risks analysis to consider vulnerable subpopulations. H.R. 1704, as reported, and S. 1675, as introduced, would establish a Congressional Office of Regulatory Analysis to conduct regulatory impact assessment on major rules. For more information on proposals in the 105th Congress, see the CRS Issue Brief The Role of Risk Analysis and Risk Management in Environmental Protection (IB 94036).

An appendix defines environmental risk analysis as the process of summarizing available scientific information about hazardous activities, chemicals, or technologies and their potential effects on exposed animals or people under various conditions.

Introduction

Many Governors, Mayors, Members of Congress, and others are concerned about the high cost of compliance with environmental regulations. Some stress that federal regulations often require large investments by the regulated community for the sake of producing small improvements in environmental quality and human health protection. Others argue that federal agencies seem to devote too few resources to relatively large risks and too many to minor threats. The 105th Congress is considering legislation that would address these concerns by requiring risk analysis of environmental problems or analysis of risks, benefits, and relative costs of regulations promulgated by the U.S. Environmental Protection Agency (EPA).1 Proponents of the legislation argue that mandated risk analysis, despite its limitations, would provide useful information for decision makers. Opponents argue that mandated analysis would consume scarce agency resources, delay rulemaking and make it less democratic, and ultimately force decisions to conform to the analytic results, regardless of the quality of underlying data and models.

This report describes and analyzes the issues and legislative options related to the conduct and use of risk analysis at EPA and considers the potential impact of proposed mandates on EPA's rule-making process and final regulations. The report begins by describing EPA's historical use of risk analysis. Some key terms used in the discussion are defined in an appendix. Additional information about mandates affecting EPA's use of risk analysis in rulemaking is provided by CRS Report 98-619, Risk Analysis: Background on Environmental Protection Agency Mandates. For more information about the content and status of legislation in the 105th Congress, see CRS Issue Brief 94036, The Role of Risk Analysis and Risk Management in Environmental Protection.)

Reference is made throughout the report to an advanced workshop on risk analysis and cost-benefit analysis of proposed EPA regulations that the Environment and Natural Resources Policy Division of CRS conducted on July 19, 1993. The 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.2 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 analysis of EPA regulations. Drs. Graham and Wilson spoke in favor of, and Mr. Olson spoke against, an increased role for cost-benefit analysis at EPA. Dr. Finkel provided arguments both for and against an increased role for cost-benefit analysis at EPA. Dr. Morgenstem discussed the legal, fiscal, and practical considerations that affect EPA's use of cost-benefit 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

Risk Analysis at EPA

Origin of Environmental Risk Analysis. 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 risk analysis and helped to found the Society for Risk Analysis.3 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.

Environmental risk analysis is the set of procedures that have evolved over time to describe environmental hazards; potential adverse effects of being exposed to hazards; the likelihood (i.e., risk) of each effect, event, or condition that may lead to or modify adverse effects; populations or environments that influence or experience adverse effects; and uncertainties with regard to any of these factors. For more detailed explanation of key terms as they are used in this report, see the Appendix.

ENDNOTES

1 For the definitions of key terms like"risk" and " risk analysis," see the Appendix to this report.

2 Three of the speakers have moved on to other challenges in their careers: Dr. Finkel is now Assistant Director of Health Standards Programs at the Occupational Safety and Health Administration, Department of Labor, while Drs. Wilson and Morgenstern are Senior Fellows at Resources for the Future.

3 The Society for Risk Analysis is an international organization of professionals with a strong interest in risk analysis. The membership is multidisciplinary including toxicologists, epidemiologists, statisticians, chemists, physicists, political scientists, economists, psychologists, journalists, sociologists, policy analysts, public affairs specialists, and educators. Researchers, practitioners, and users of risk analysis attend the annual meeting to present papers and learn about the latest risk research.