Risk analysis is the systematic evaluation of hazards and their
possible effects. Views on the potential uses of risk analysis
differ. Although, most experts and policy-makers agree that risk
analysis is a valuable tool to inform decision makers, they disagree
about the extent to which risk estimates are biased and should
be allowed to influence public policies to protect health and
the environment. This is reviewed in the Congressional Research
Service (CRS) Issue Brief for Congress:
The Role of Risk Analysis and Risk Management in Environmental
Protection (January 7, 1999).
A discussion of the implications of cost-benefit analysis and risk assessment in the context of congressional and administrative decision-making structures can be found in the CRS Report: Environmental, Health, and Safety Tradeoffs: A Discussion of Policymaking Opportunities and Constraints (February 1, 1999). It identifies constraints on flexible decision-making and some implications of trying to overcome them.
The next two CRS Reports are examples of current environmental issues.
CRS Report: MTBE in Gasoline: Clean Air and Drinking Water Issues (July 7, 1998) illustrates the controversy surrounding methyl tertiary butyl ether (MTBE). MTBE is credited with producing marked reductions in emissions of carbon monoxide and of the volatile organic compounds that react with other pollutants to produce smog. Research has found many reasons to believe that MTBE use has lowered the negative health effects of breathing gasoline fumes. Yet, incidents of ground water contamination by MTBE, particularly in California, have renewed concerns over the additive and led new voices to call for restrictions on its use.
CRS Report Methane Hydrates: Energy Prospect or Natural Hazard? (February 8, 1999) explains that methane hydrate is a methane-bearing, ice-like material that occurs in marine sediments and in permafrost regions. Hydrate deposits are estimated to contain a much greater amount of natural gas than conventional accumulations, however, there is today no practical and environmentally safe way to produce the gas. Destabilization of the hydrates with uncontrolled release of large volumes of methane is a significant hazard to the sea floor and the earth's atmosphere.
The 105th Congress considered but did not enact comprehensive regulatory reform legislation or other provisions that would have increased use of risk analysis by the U.S. Environmental Protection Agency (EPA). It is not clear whether related legislation will be introduced and considered in the 106th Congress: while some believe there is a gathering momentum for a legislative mandate, others see waning interest.
Risk analysis is the systematic evaluation of hazards and their possible effects. Views on the potential uses of risk analysis differ. Although, most experts and policy-makers agree that risk analysis is a valuable tool to inform decisions, they disagree about the extent to which risk estimates are biased and should be allowed to influence public policies to protect health and the environment.
Some Members, many academics, and regulated industries argue that risk analysis is objective and reflects sound science. They argue it should be used to target federal programs to address the worst risks to health and the environment first, to achieve risk reduction in more cost-effective and flexible ways that minimize overall economic impacts, and to ensure that risk reduction achieved by regulations is worth the cost.
Other Members, some academics, and many environmentalists argue that excessive
reliance on risk analysis, especially quantitative analysis, to
evaluate problems and solutions ignores other important facets
of policy deci sions, such as timeliness, fairness, effects on
democratic rights and liberties, practicality, morality, reversibility
of effects, regulatory stability, flexibility, or aesthetic values.
Critics charge that quantitative methods cannot assess very
long-term or newly discovered threats. They also believe that
quantitative cost-benefit analyses undervalue environmental and
health benefits, exaggerate costs, and focus on relatively widespread
but individually small costs and risks rather than on much larger
costs and risks to smaller, and often more vulnerable, groups.
The quality of risk analysis depends on adequacy of data and validity of method. For environmental hazards and most health and ecological effects, there are few data, and methods are controversial.
In the 105th Congress, the Senate Committee on Governmental Affairs reported the Regulatory Improvement Act of 1998 (S. 981), amended, on May 11, 1998, but the bill received no floor action. As reported, it would have affected all risk analyses that the Office of Management and Budget determined had a potentially significant policy impact, as well as risk and economic analyses of proposed and final environmental rules with an expected annual cost of at least $100 million. Senator Lott introduced a risk-only version of the bill, S. 1728, on March 6, 1998. The 105th Congress also considered risk-based provisions in proposals to reauthorize Superfund. For more on risk-based Superfund legislation, see CRS Report 98-257, Superfund: A Brief Comparison of the Chairmen's Bills.
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Cost-benefit analyses and risk assessments suggest that federal environmental, health, and safety programs vary widely in cost-effectiveness. Some analysts see this as the justification and basis for significant reallocation of effort. Making proposed tradeoffs has proved difficult, however, as the actual tradeoffs faced by a legislator or other policymaker at a particular time and place is constrained by institutional structure and rules, and by the fact that most decisions are up-or-down on a given program or regulatory option, not among diverse alternatives. This report discusses the implications of cost-benefit analysis and risk assessment in the context of congressional and administrative decisionmaking structures. It identifies constraints on flexible decisionmaking and some implications of trying to overcome them. For additional information, see L. Schierow, The Role of Risk Analysis and Risk Management in Environmental Protection, CRS Issue Brief 94036. This report will not be updated.
A policymaker making a decision on approving a program
faces the question, What are the tradeoffs? What alternatives
are foregone by the commitment of resources to that program? This
issue has been sharpened in environmental, health, and safety
policy because studies indicate that some programs are more cost-effective
than others, suggesting that redirecting resources from less efficient
to more effective programs would increase overall national economic
Accomplishing proposed tradeoffs has proved difficult, however. One reason is continuing controversy over methods for evaluating the risks, costs, and benefits of alternative programs leaving uncertainty about exactly what would be gained and lost in a tradeoff. Other constraints affecting tradeoffs include variations in regulatory standards among environmental, health, and safety statutes and political responses to nonquantifiable values such as equity. Legislative efforts to revise the statutes or to establish more comprehensive reviews of tradeoffs have moved slowly.
Two factors affecting a legislator's (or other decisionmaker's) ability to make a tradeoff at a particular time and in a particular institutional context are treated here. One arises from procedures and jurisdictional boundaries affecting congressional subcommittees and committees and floor action. For example, an appropriations subcommittee typically can weigh spending tradeoffs only among programs within its jurisdiction, but not tradeoffs with programs in the jurisdiction of other subcommittees even if the programs are related. Jurisdictional constraints similarly contribute to variable standards in statutes authorizing environmental, health, and safety regulations, leading to variations in their cost-effectiveness for protecting the public health and environment. Congress is considering risk assessment and cost-benefit analysis requirements as a way of overcoming these inconsistencies.
A second complicating factor occurs when a program's alternative(s) would require a shift in who can decide on the use of the resources involved, as when a regulatory program is considered in lieu of a tax-supported program. Deciding to regulate industrial air pollutants mandates spending by industry and consumers; choosing not to regulate leaves those monies available to the industry's executives and consumers, who can invest/spend them according to their own preferences. Having little control over alternative expenditures, a decisionmaker is led to focus on each program as self-contained, not to compare options except insofar as one is sensitive to the relative merits of public investments to achieve societal needs versus leaving resources in the private sector.
The actual tradeoff faced by a legislator or policymaker at a particular time and place is constrained by institutional structure and rules, and by the fact that most decisions are up-or-down, not between program options. Many putative tradeoffs exist only in a theoretical sense: they are tradeoffs not then and there available to that policymaker. Making environmental, health, and safety tradeoffs on the basis of cost-benefit analyses implies restructuring decisionmaking processes, but such restructuring is very difficult in itself, and it is unclear whether the results would more accurately reflect the informed preferences of the Congress or the citizenry.
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Concern over ground water contamination caused by the gasoline additive methyl tertiary butyl ether (MTBE) and recent announcements by two petroleum refiners have raised new questions concerning the desirability of using the additive as a means of producing cleaner burning fuel. MTBE is used by most refiners to produce the oxygenated or reformulated gasoline required in 27 states and the District of Columbia. It is credited with producing marked reductions in emissions of carbon monoxide and of the volatile organic compounds that react with other pollutants to produce smog. When it was introduced to new areas in 1992 and 1994, questions were raised concerning the health effects of breathing air containing MTBE/gasoline exhaust fumes. While research continues on this subject, analyses to date have found little scientific support for the expressed concerns and many reasons to believe that MTBE use has lowered the negative health effects of breathing gasoline fumes. More recently, incidents of ground water contamination by MTBE, particularly in California, have renewed concerns over the additive and led new voices to call for restrictions on its use.
EPA has authority under Section 211 of the Clean Air Act to regulate fuel and fuel additives, and under Section 303 of the Act to take emergency action to protect public health, welfare, or the environment. If the Agency determined that MTBE posed a significant threat, it could take action without new legislative authority. It does not appear likely that the Agency will take such action in the short term. In EPA's view, MTBE poses some risk, although no greater risk than that posed by other gasoline components. As a result, the Agency has chosen to respond by providing information, intensifying research, and focusing on the need to minimize leaks from underground fuel storage tanks.
Concern for potential impacts of MTBE have led some to discuss the availability of alternatives that might replace it. The major potential alternatives to MTBE are other forms of ether, such as ethyl tertiary butyl ether (ETBE), and alcohol fuels such as ethanol. These other oxygenates may themselves pose health and environmental impacts, although inadequate data leave EPA and other agencies unable to reach definite conclusions. In general, however, they cost more to produce than MTBE; in the case of ethanol and other alcohols, they pose challenges to the distribution system, requiring blending close to the market in which they will be sold; and, short term, none is likely to be available in sufficient quantity to replace MTBE. In recent months, two California refiners have discussed the possibility of making gasoline that meets the performance requirements for reformulated gasoline without using oxygenates, but the cost and feasibility of doing so have not been demonstrated, and current law would prohibit them from doing so.
The issue for Congress is whether Clean Air Act provisions concerning reformulated gasoline should be modified to allow refiners to discontinue their use of the substance. Legislation to permit California refiners to do so (H.R. 630 / S. 1576) has substantial support among that state's congressional delegation. The legislation would provide additional flexibility to refiners and marketers of reformulated gasoline in California only - not in other states.
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Methane hydrate is a methane-bearing, ice-like material that occurs in marine sediments and in permafrost regions. The amount of methane contained in hydrae deposits is enormous, although it is likely that much of the hydrate occurs in low concentrations an would have no commercial potential. Hydrate deposits are estimated to contain a much greater amount of natural as than conventional accumulations, however, that is today no practical and environmentally safe way to produce the gas. Destabilization of the hydrates with uncontrolled release of large volumes of methane is a significant hazard. The bill passed in the Senate and hearings were held in the House before Congress adjourned. The measure is expected to be reintroduced. This report will track further legislative activity.
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