Analyzing Risks

To make an effective risk management decision, risk managers and other stakeholders need to know what potential harm a situation poses and how likely it is that people or the environment will be harmed. Gathering and analyzing this information is referred to as risk assessment. The nature, extent, and focus of a risk assessment should be guided by the risk management goals. The results of a risk assessment—along with information about public values, statutory requirements, court decisions, equity considerations, benefits, and costs—are used to decide whether and how to manage the risks. Risk assessment can be controversial, reflecting the important role that both science and judgment play in drawing conclusions about the likelihood of effects on human health and the environment. Often, the controversy arises from what we don’t know and from what risk assessments can’t tell us, because our knowledge of human vulnerability and of environmental impacts is incomplete, especially at the relatively low levels of chemical exposure commonly encountered in the general community. Sometimes action is necessary even when information is lacking.

How Should Risk Be Characterized?

Risk results from a combination of hazard and exposure. Hazard is an intrinsic property of a substance or situation: for example, benzene can cause leukemia but not lung cancer; DDT can prevent eagles from reproducing in the wild, but does not affect prairie dogs; a rattlesnake bite can kill, but a garter snake bite does not. Exposure means contact between the hazardous substance and a person, population, or ecosystem. The more exposure, the greater the risk. When there is no current or potential exposure, there is no risk.

Risk assessment is performed by considering intrinsic hazards, the extent of exposure to the hazards, and information about the relationship between exposures and responses. Unfortunately, we seldom have enough information to accurately determine those factors, so risk assessors must use a combination of scientific information and their best judgment to characterize risks. Making judgments about risk on the basis of scientific information is called "evaluating the weight of the evidence." For example, considerations involved in analyzing the weight of the evidence associated with identifying a hazard using toxicity studies in rodents include the:

• Quality of the toxicity study.

• Appropriateness of the toxicity study methods.

• Consistency of results across studies.

• Biological plausibility of statistical associations.

• Similarity of results to responses and effects in humans.

It is important that risk assessors respect the objective, scientific basis of risks and procedures for making inferences in the absence of adequate data. Risk assessors should provide risk managers and other stakeholders with plausible conclusions about risk made on the basis of the available information, along with evaluations of the scientific weight of evidence supporting those conclusions and descriptions of major sources of uncertainty and alternative views.

The outcome of a risk assessment is called a risk characterization. Typically a risk characterization addresses the following:

• Considering the hazard and the exposure, what is the nature and likelihood of the health risk?

• Which individuals or groups are at risk? Are some people more likely to be at risk than others?

• How severe are the anticipated adverse impacts or effects?

• Are the effects reversible?

• What scientific evidence supports the conclusions about risk? How strong is the evidence?

• What is uncertain about the nature or magnitude of the risk?

• What is the range of informed views about the nature and probability of the risk?

• How confident are the risk analysts about their predictions of risk?

• What other sources cause the same type of effects or risks?

• What contribution does the particular source make to the overall risk of this kind of effect in the affected community? To the overall health of the community?

• How is the risk distributed in relation to other risks to the community?

• Does the risk have impacts besides those on health or the environment, such as social or cultural consequences?

The level of detail considered in a risk assessment and included in a risk chacterization should be commensurate with the problem’s importance, expected health or environmental impact, expected economic or social impact, urgency, and level of controversy, as well as with the expected impact and cost of protective measures.

Stakeholders’ perception of a risk can vary substantially depending on such factors as the extent to which they are directly affected, whether they have voluntarily assumed the risk (as in choosing not to wear a seatbelt) or had the risk imposed on them (as in exposure to air pollutants), and whether they are connected with the cause of the risk. For this reason, the Commission recommends that a risk assessment characterize the scientific aspects of a risk and note its subjective, cultural, and comparative dimensions (see How Should Risks Be Analyzed? below). While they expand risk assessment beyond its traditional, more narrowly scientific scope, these additional dimensions will help educate all stakeholders about key factors affecting the perception of risk. Such education is likely to reduce controversy and litigation and to improve communication during the risk management process.

Risk characterization should form a common basis for the understanding of a problem among stakeholders. Stakeholder involvement within the Risk Management Framework should enhance the integrity of the risk assessment. Stakeholders play an important role in providing information that should be used in risk assessments and in identifying specific health and ecological concerns they would like to see addressed. For example, community stakeholders consulted at this stage can help identify groups with high exposures so that appropriate exposure assessments can be designed. Industry stakeholders can provide important information about a substance’s toxicity and lifecycle.

The integrity of a risk assessment is best assured if it is undertaken or peer-reviewed independently (e.g. by unaffected scientists at regulatory agencies, universities, or research institutions). To relieve some of the burden on regulatory agencies and other public institutions, however, certification, auditing, and oversight programs should be considered, so that companies, industry organizations, and other organizations or individuals can provide risk assessments that are considered credible by all stakeholders. For example, to place greater responsibility on the private sector for cleaning up contaminated sites, the state of Massachusetts has instituted a successful program for certifying Licensed Site Professionals to oversee or perform site assessments or cleanups.

The Need for More Data

Lack of data is a major barrier to reliable risk assessments. For example, we lack data on the hazards that chemicals and other stressors pose, largely because of the ethical barriers to deliberately exposing humans, the limitations of tests in laboratory animals and cell systems, the technical uncertainties involved in extrapolating data from laboratory animals or cell systems to humans, the difficulties associated with determining differences in susceptibility among people, and the expense involved in studying hazards. As a result, many chemicals are never properly tested. We also lack data on actual human and ecological exposures to agents of concern, largely due to the privacy issues involved in studying humans directly and the substantial cost of the environmental monitoring needed to gather the data. The difficulties involved in studying chemical hazards and exposures mean that risk assessors cannot always accurately determine the health risks of an exposed population or the ecologic risks of an exposed ecosystem, the contribution of each individual source of exposure to the overall risk, or the success of risk management actions in reducing the risk from existing sources of exposure.

Some programs have been designed successfully to stimulate the production of data. For example, industry can avoid the labeling requirements of California’s Proposition 65 by demonstrating that their product has a cancer risk of less than 1 in 100,000.

Risk assessment will be greatly improved if risk assessors and other members of the scientific and risk management communities can work to develop and validate new toxicity tests in laboratory animals, investigate similarities and differences between laboratory animals and humans, obtain data on exposures, and develop and validate models to help fill toxicity and exposure data gaps. When data are scarce and uncertainties are large, however, the precautionary principle should guide decision-making.

The Importance of Comprehensive, Multimedia Risk Analysis

Risk assessment provides the scientific foundation for risk management decision-making. Traditionally, risk assessments, like risk management, have largely focused on assessing the risks of a single chemical in a single medium. To achieve comprehensive, multimedia risk management, however, the risk assessment paradigm must be expanded.

A number of EPA offices are conducting more comprehensive risk assessments. When establishing a standard for exposure to a chemical in drinking water, EPA accounts for nondrinking water sources of exposure to that chemical. When considering whether to reregister a pesticide, EPA now considers other sources of exposure to that pesticide and to similar pesticides. In addition, EPA has perfomed some total exposure and cumulative exposure studies. Few other regulatory agencies consider exposures or risks this comprehensively, however, and EPA often does not do so because of resource or statutory limitations. Failure to account for multiple and cumulative exposures is one of the primary flaws of current risk assessment and risk management.

To the greatest extent possible, EPA and other regulatory agencies must work to develop and refine techniques for comprehensive risk assessment. One technique for assessing aggregate or cumulative risks from multiple pollutants and multiple sources is the method for regional risk assessment of air pollution developed by the Air and Waste Management Association. It was used in San Diego as part of California’s "hot spots" program, which examines the potential for cumulative pollution from multiple facilities to affect neighborhoods in a county. The method generates a contour map of estimates of the maximum cancer risks associated with industrial facilities throughout the county, using meteorological data and information on contaminants, emission rates, and risks from individual facilities. The results can be used to estimate the relative contribution of individual industrial facilities to the overall regional risk associated with industrial facilities, to estimate the relative contribution industrial facilities make to background risks, and to compare risks from industrial facilities to risks associated with other sources of air pollution, such as motor vehicles.

Examining Options

This stage of the risk management process involves identifying potential risk management options and evaluating their effectiveness, feasibility, costs, benefits, unintended consequences, and cultural or social impacts. This process can begin whenever appropriate after defining the problem and considering the context. It does not have to wait until the risk analysis is completed, although a risk analysis often will provide important information for identifying and evaluating risk management options. In some cases, examining the options may help refine a risk analysis. Risk management goals may be redefined after risk managers and stakeholders gain some appreciation for the options and what they entail.

Stakeholders can play an important role in all facets of identifying and analyzing options. They can help risk managers:

• Develop methods for identifying risk-reduction options.

• Develop and analyze options.

• Evaluate the ability of each option to reduce or eliminate risk, along with its feasibility, costs, benefits, and legal, social, and cultural impacts.

The two components of this stage of the Risk Management Framework—identifying options and analyzing options—are described below. Creativity, imagination, and openness are key to success during this stage.

Identify Options

There are many different regulatory and nonregulatory approaches to reducing risk. These include:

• Encouraging pollution prevention either by reducing or eliminating the use of hazardous agents or by improving technology to reduce the likelihood that they will be released to the environment.

• Limiting pollutant emissions by requiring operating permits for industrial facilities, incinerators, and wastewater treatment plants.

• Taxing industries on the basis of the pollutants they release.

• Enforcing compliance by the Department of Agriculture when foods are found to be contaminated with microorganisms and by the Occupational Safety and Health Administration (OSHA) when workplace exposure limits are exceeded.

• Recycling and encouraging the use of recycled materials.

• Educating/informing affected communities about steps they can take to reduce their risks, such as posting signs warning about contaminated fish, showing workers which workplace practices lead to fewer chemical exposures, and encouraging people to reduce the fat and increase the fruits and vegetables in their diets.

• Establishing market or other incentives for voluntary behavior changes that will reduce risk, such as allowing companies to trade among themselves the amount of pollutants they are permitted to release and requiring facilities that emit pollutants to publicly report the amounts they release.

• Removing the source of risk, such as cleaning up a hazardous waste site, banning a pesticide that prevents birds from reproducing, or removing contaminated food from the marketplace.

During this stage of the Framework, risk managers and stakeholders consider which of these and other types of options may be appropriate. Sometimes only one of these options will seem appropriate; however, a combination of options often will be most effective in reducing risk. The section Risk Management Options: Alternatives to Command and Control on page 49 provides more information on options.

Analyze Options

Once risk managers and stakeholders have identified potential options, they must assess the effectiveness, feasibility, benefits, and costs of each option, along with their potential legal, social, cultural, and political implications, to select an option. Key questions to ask include:

• What are the option’s expected benefits?

• What are the option’s expected costs?

• Who gains the benefits and who bears the costs?

• What are the equity or environmental justice implications?

• How feasible is the option, given the available time and resources as well as legal, political, statutory, and technology limitations?

• Does the option increase any risks?

 

Expected Benefits/Effectiveness

It is important to determine what the specific intended benefits will be because they will be evaluated at a later stage in the Framework. The most obvious benefit from risk management is risk reduction or elimination. This may take a number of forms, including improved health, habitat protection, or increased biodiversity. Other important potential benefits include savings in health care costs, technology development, the economic benefits of exporting new technologies, and the employment opportunities that new technology development and its application can bring. (Technology development can also be considered a cost; see Expected Costs on page 25.)

Because it is often difficult to detect risk reduction in the rates of disease, death, or habitat destruction, indirect methods of evaluating effectiveness and identifying reductions in risk may be necessary. Indirect indicators of risk reduction include reductions in:

• Pollution-generating activities, such as fewer vehicle miles traveled.

• Contaminant emissions from their sources, such as a facility’s wastewater discharge point or stack emissions.

• Contaminant concentrations in environmental media, such as lower ozone, radon, or particulate levels in air; lower concentrations of industrial solvents in ground water; or lower concentrations of heavy metals in soil.

• Contaminant concentrations in other sources of exposure, such as less mercury in swordfish, fewer microorganisms in meat, or pesticide residues on fruit that are below detectable levels.

• The occurrence of particular biological markers of exposure or disease, such as chromium levels in hair, lead levels in blood, or changes in the components of the immune system.

All potential forms of risk reduction should be examined. The generation of other benefits, such as the identification or development of new technologies or approaches for controlling or reducing risks should be considered as well. Indirect measures of risk reduction or elimination are not the real objectives, however; they are only surrogates and are not always reliable. Direct measures of risk reduction or elimination should be used whenever possible and when indirect measures are used, the uncertainties surrounding their use should be discussed. When the stakes are high, investment in developing and validating direct measures should be considered. The box Measuring the Effectiveness of a Risk Management Action on page 33 provides more detail on the challenges of measuring the effectiveness of actions to reduce risk.

Expected Costs

The costs of implementing an option may be monetary and nonmonetary. Monetary costs include the costs of:

• Technology development—researching and developing new engineering processes or equipment.

• Technology application—purchasing, installing, operating, and maintaining equipment needed to improve an industrial process or reduce emissions.

• Training needed to use new technology, carry out new procedures, or monitor effectiveness.

• Cleanup—hiring contractors and engineers to implement a remedy at a contaminated site.

• Transportation and infrastructure—removing hazardous materials and trucking them to a disposal site and, sometimes, improving roadways to accommodate the increase in heavy vehicle traffic.

• Health care, such as that needed for workers responsible for implementing an option that puts them at risk.

• Diversion of investments, or opportunity costs—such as having to spend money on environmental controls instead of using those resources to build a school or reduce taxes.

Nonmonetary costs include the costs of:

• Valued environmental assets lost, such as recreation areas, endangered species, visual range, open space, and wetlands.

• Flexibility and choice for consumers and businesses lost because certain products, practices, or processes are no longer available or permitted.

• Decreased sense of well-being or security.

Both types of costs should be considered when evaluating options. As with estimates of risks and benefits, however, cost estimates are uncertain. It is important to obtain independent and defensible cost estimates to the extent possible. See the section Uses and Limitations of Economic Analysis in Regulatory Decision-Making on page 93 for more about evaluating costs.

Distribution of Benefits and Costs

Critics contend that evaluations of costs and benefits are often blind to issues of environmental equity and fail to make explicit who bears the costs of a risk management decision and who gains the benefits. For example:

• If a new policy limits the application of a widely used pesticide, the cost of certain fruits and vegetables could increase significantly. Should this occur, those who still can afford to buy those fruits and vegetables may benefit by enjoying reduced health risks from pesticides. However, economists argue, others who can no longer afford those fruits and vegetables may suffer poorer nutrition and increased cancer risk associated with eating too few fruits and vegetables.

• A proposed freeway exit ramp in Boston would make commuting more convenient for office workers. Its location, however, would have exposed residents of Chinatown, a densely populated neighborhood, to substantially increased air pollutants.

As these examples illustrate, understanding and evaluating potentially inequitable costs and benefits are important for making risk management decisions.

Feasibility

A variety of technological, legal, political, economic, and other issues can constrain the feasib-ility of an option. The feasibility of actually imple- menting an option should be an important evaluation criterion. For example, the feasibility of implementing a technological option may be limited by the availability of the technology or by its cost; implementing administrative options such as setting up a recycling program or providing incentives may be constrained by political or legal barriers. Options that are infeasible today, however, frequently can, through technology development or policy change, become feasible in the future.

Potential Adverse Consequences

Analysis must consider whether an option may cause any adverse consequences and determine what the tradeoffs among the different risks may be. One of the most important effects to consider is the potential for an option to increase one type of risk while reducing the risk of concern:

• Reducing pollutant concentrations in one environmental medium may increase pollutants in another medium. For example, using aeration reduces pollutants in drinking water by releasing them to the air. (Of course, if exposure to air is considerably less than exposure to drinking water, this tradeoff may be worthwhile.)

• Reducing long-term health risks for community members may produce short-term health risks and injury for workers, as can happen during cleanup of sites contaminated with hazardous chemical and radioactive wastes.

• Banning one substance because it might cause one health risk may increase the use of another substance that is known to cause another health risk or whose health effects are not known.

Other adverse consequences may be cultural, ethical, political, social, or economic, such as:

• Economic impacts on a community, including reduced property values or loss of jobs.

• Environmental justice issues, such as inequitable distribution of costs and benefits as mentioned above; disregard for a particular population group’s dietary needs, preferences, or nutritional status; or giving priority to site cleanup efforts in more affluent areas.

• Harm to the social fabric of a town or tribe when relocating the people away from a highly contaminated area.

Linking Risk and Economics

In addition to considerations of risk, public values, and legal requirements, economic analysis can play an important role in the Risk Management Framework. For example, cost-effectiveness analysis can help identify the least costly risk management option for reaching a particular goal. And by clarifying who bears the costs and who gains the benefits, economic analysis can help identify inequities.

Economic analysis has strengths and limitations, and its role in regulatory decision-making is controversial. The section on Uses and Limitations of Economic Analysis for Regulatory Decision-Making on page 93 provides a detailed discussion of those issues.

Stakeholders and EPA Identify Risk Management Options for the Pulp and Paper Industry

In 1990, EPA assembled a team of experts in air and water pollution to formulate integrated rules to control water discharges and air emissions from the pulp, paper, and paperboard industry. A screening assessment of 104 mills that use chlorine as the bleaching agent for paper had found dioxins and furans in the mills’ water discharge, sludge, and pulp at levels that have the potential to harm fish and wildlife and to cause cancer and other health effects in humans.

Before deciding how best to reduce these discharges, EPA held meetings, conference calls, and a symposium to seek views and information from many stakeholders—including individual companies, an industry association, consultants, vendors, labor unions, and environmental organizations. EPA shared its data and thinking about various approaches with stakeholders before publishing proposed rules in the Federal Register. Even the preamble to the proposed limitations and standards was reviewed by stakeholders before being published. In all, five public meetings were held before the proposed rule was published in 1993.

During the many discussions of control options, environmentalists pressed for a "totally chlorine-free" option to eliminate the discharge of chlorinated pollutants. EPA proposed a technology option. Industry asked EPA to review a second option they considered more feasible. EPA assessed potential compliance costs, effluent reduction benefits, economic and environmental impacts, management practices, recovery systems, and equipment availability. The agency then proposed both technology options as well as a voluntary incentives program to encourage and reward individual mills that implement "totally chlorine-free" technologies. While the proposals did not satisfy everyone, stakeholder involvement improved the development of options.

Making Decisions

During this stage of the Framework, decision-makers review the information gathered during the analyses of risks and options to select the most appropriate solution. When the risk problem falls under the purview of a federal, state, or local regulatory authority, the regulatory agency makes the risk management decision. Consumers, manufacturers, and others responsible for wastes and pollution also can make socially important decisions to reduce or eliminate risks. A productive stakeholder involvement process can generate important guidance for decision-makers. Thus, decisions may reflect negotiation and compromise, as long as statutory requirements and intent are met. In some cases, win-win solutions are available that allow stakeholders with divergent views to achieve their primary goals.

Involving stakeholders and incorporating their recommendations where possible reorients the decision-making process from one dominated by regulators to one that includes those who must live with the consequences of the decision. This not only fosters successful implementation, but also can promote greater trust in government institutions.

What Is the Best Decision?

In most risk management situations, deci- sion-makers will have a number of options from which to choose. Which option is optimal depends on the particular situation. Seven criteria, discussed below, are fundamental characteristics of any sound risk management decision. These criteria echo the key themes of the early stages of the Framework because their goal is to produce the most relevant and useful information for sound risk management decision-making.

Base the decision on the best available scientific, economic, and other technical information.

Usually, the technical information that is available is incomplete. Decision-makers often must rely on:

• Predictions about human hazards based on experiments in laboratory animals.

• Predictions about how much exposure occurs in a lifetime based on few or no measurements of the actual levels of exposure.

• Predictions about the risks to entire ecosystems that are based on observations in only one or two species.

• Assumptions and models of exposure, exposure-response relationships, and estimates of the costs and benefits of different options.

Because so many judgments must be made based on limited information, it is critical to consider all reliable information. Risk assessors and economists are responsible for providing decision-makers with the best technical information available or reasonably attainable, including evaluations of the weight of the evidence that supports different assumptions and conclusions.

Be sure the decision accounts for the problem's multisource, multimedia, multichemical, and multirisk contexts.

Considering a risk in isolation cannot provide decision-makers or the public with any sense of how important the risk is, compared with other risks, or of the impact that reducing or eliminating it might have on overall human and ecosystem health. Considering risks in context can help direct resources toward the risk management actions that will do the most good. As described in the Problem/Context section earlier in this report, decision-makers must develop a more comprehensive and holistic appreciation of problems and their contexts so that meaningful, practicable goals can be defined and attained.

Choose risk management options that are feasible, with benefits reasonably related to their costs.

Many risk management options may be infeasible for social, political, cultural, legal, or economic reasons (see the Examining Options section of this report) or because they do not reduce risks to the extent needed. For example, ground water reme- diation using pump-and-treat technology may be infeasible because, for a variety of technical and hydrogeologic reasons, it will not sufficiently reduce contaminant concentrations in the ground water. Removing all the soil from an entire valley that is heavily contaminated with mining waste is infeasible. Expecting everyone to stop driving automobiles is infeasible. On the other hand, the costs of reducing acid rain by controlling power plant emissions are considered justified by their benefits—protecting streams and lakes and reducing damage to automobile finishes and construction materials. Of course, the feasibility and cost-effec-tiveness of an option may change in the future as technology is improved or as society’s values change.

Give priority to preventing risks, not just controlling them.

If pollutants are not released into the environment, exposure cannot occur. If exposure does not and will not occur, risks will not result. Where feasible, preventing contaminant releases is preferable to removing them or cleaning them up later, since preventing releases can avoid the costs of remediation and health care. Many industries have found that eliminating pollutants can substantially reduce the cost of producing a product.

Use alternatives to command-and-control regulation, where applicable.

Command-and-control risk management strategies have significantly improved human health and environmental protection. Alternative strategies will enable even greater levels of protection by encouraging industries, municipalities, and other stakeholders to tailor remedies to reflect the circumstances of individual sources and locations. Encouraging flexibility can result in risk management options that meet or exceed expectations and that are cost-effective. Various alternatives to command-and-control strategies are described in the Examining Options section of this report.

Be sensitive to political, social, legal, and cultural considerations.

The least costly risk management option is not always the most desirable. An option is more likely to be implemented successfully if it takes into account important cultural needs or social impacts (see the discussion of stakeholder involvement in the Problem/Context section of this report).

Include incentives for innovation, evaluation, and research.

Command-and-control risk management strategies that specify technology that must be used or actions that must be taken can fail to stimulate better, cleaner, and more cost-effective approaches. Without evaluation, the success (or failure) of a risk management action and its unintended consequences may not be determined (see the Evaluating Results section of this report). Incentives for research are needed to generate knowledge about hazards, exposures, options, and actions.

What Happens If There Isn't Enough Information To Make a Decision?

Decision-makers must balance the value of obtaining additional information against the need for a decision, however uncertain. Sometimes a decision must be made under the precautionary principle. Every effort should be made to avoid "paralysis by analysis" where the need for additional information is used as an excuse to avoid or postpone decision-making. When sufficient information is available to make a risk management decision or when additional information or analysis would not contribute significantly to the quality of the decision, the decision should not be postponed. "Value-of-information" techniques can be used to provide perspective on the next steps to be taken. (See Value of Obtaining Additional Information on page 91 for elaboration.)

Making Decisions: Steel Industry

The Clean Air Act Amendments of 1990 required EPA to cut toxic air pollution from iron and steel plant coke ovens, which produce the material used in blast furnaces to convert iron ore to iron. Coke oven air emissions were already regulated by OSHA, by the states, and by EPA under the hazardous substance notification requirements of Superfund. The issue of how best to reduce coke oven emissions was contentious and had been deadlocked for 20 years.

To break this logjam, EPA initiated a negotiated rulemaking process with extensive stakeholder involvement. Over two years, the Agency met with representatives of industry and industry associations, labor unions, states, and environmental groups in workshops and informal and formal meetings. Negotiators worked with stakeholders to develop a regulation that all parties could support. By exchanging concessions in areas of differing importance to various stakeholders, the parties resolved such major issues as what emissions data would be used, monitoring methods, numerical emission limits, costs and economics, and work practices. They also identified and discussed emission sources, enforcement and implementation needs, future research, and integrating the proposed regulation with EPA’s new permitting system. The resulting regulation reduces hazardous air pollution by 1,500 tons per year.

Taking Action

Traditionally, implementation has been driven by regulatory agencies’ requirements. Businesses and municipalities are generally the implementers. The chances of success are significantly improved, however, when other stakeholders also play key roles. Depending on the situation, protagonists may include:

• Public health agencies.

• Other public agencies.

• Community groups.

• Citizens.

• Businesses.

• Industries.

• Unions/workers.

• Technical experts.

These groups can help develop and implement a plan for taking action; explain to affected communities what decision was made, and why, and what actions will be taken; and monitor progress. The box Examples of Risk Management Actions on page 30 provides specific examples of risk management activities that stakeholders can perform or support.

Involving stakeholders in the decision-making process, not only produces a better risk management decision but also lays a foundation for stakeholder involvement in implementation. Involved stakeholders are more likely to understand and support the decision and to have developed the relationships, knowledge, communication channels, and administrative mechanisms to work together on implementing the decision.

Taking Action: San Francisco Bay

The San Francisco Bay is vulnerable to many sources of pollution. In 1978, the Association of Bay Area Governments developed a regional environmental management plan to control pollution in the bay. The plan was prepared through an extensive collaborative process that involved a broad spectrum of stakeholders—federal, state, and local regulatory agencies; business, labor, and environmental groups; ethnic minorities; and city and county governments. During the decision-making process, stakeholders raised important issues about federal-state-local relationships, the social and economic impact of land-use controls, and the extent of air-quality improvement likely to be obtained.

Stakeholders who were involved in analyzing problems and solutions and in making decisions supported the final plan and its implementation. While some aspects of the plan might have been developed and implemented without the help of stakeholders, most of the actions were implemented more expeditiously as a direct result of stakeholder involvement.

Many actions recommended by the plan were implemented by public agencies, businesses, industries, and private citizens. For example:

• A state implementation plan for regional air quality resulted in designation under the federal Clean Air Act as an attainment area for ozone in 1995.

• Almost all the industrial and municipal wastewater treatment facilities have been upgraded.

• Erosion-control measures to reduce nonpoint-source pollution have been in place for many years.

• A council of water-supply agencies was formed and has engaged in cooperative efforts, such as developing a regional drought-response strategy.

• Hazardous-material spill response teams have become available at the city and county levels.

• Technical assistance was provided to local agencies to initiate recycling programs.

The plan has served as a blueprint for environmental management activities in the Bay Area.

Evaluating Results

At this stage of risk management, decision-makers and other stakeholders review what risk management actions have been implemented and how effective they have been. Evaluating effectiveness involves monitoring and measuring, as well as comparing the actual benefits and costs to estimates made in the decision-making stage. The effectiveness of the process leading to implementation should also be evaluated at this stage.

Evaluation provides important information about:

• Whether the actions accomplished what was intended and whether the predicted benefits and costs were accurate.

• Whether any modifications are needed to the risk management plan to improve success.

• Whether any critical information gaps hindered success.

• Whether any new information has emerged that indicates a decision or a stage of the Framework should be revisited.

• Whether the Framework process was effective and how stakeholder involvement contributed to the outcome.

• What lessons can be learned to guide future risk management decisions or to improve the decision-making process.

Tools for evaluation include environmental and health monitoring, research, disease surveillance, analyses of costs and benefits, and discussions with stakeholders.

Evaluation is critical to accountability and to ensure wise use of scarce resources. As part of its effort to impose accountability on agencies, Congress adopted the Government Performance and Results Act of 1993, which requires federal agencies to establish performance goals and measurements of achievement. Too often, past risk management actions have had little or no evaluation or follow-up after implementation, even when evaluation was mandated.

Planning for Evaluation

The overall implementation plan should specify when evaluation will be conducted, who will conduct it, and what will be evaluated. In most situations, periodic evaluation will be important. The focus of evaluation may shift with the stage of implementation, because it often may take time before the full impact of risk reduction can be measured. Evaluation might first focus more on progress and success in implementing the risk management plan. Later evaluations may focus on the success of the risk management actions in reducing risk. In comments to the Commission, Dave Sigman, representing the Chemical Manufacturers Association, strongly supported the need to document whether risks are reduced and costs reasonably estimated with feedback to appropriate risk managers and decision-makers.

In the past, evaluation, when conducted, has been performed by the regulatory authority itself. As with other stages of the risk management process, evaluation will benefit if stakeholders are involved, helping to:

• Establish criteria for evaluation, including the definition of "success."

• Assure the credibility of the evaluation and the evaluators.

• Determine whether an action was successful.

• Identify what lessons can be learned.

• Identify information gaps.

• Determine whether cost and benefit estimates made when evaluating the risk management options were reasonable.

The Importance of Iteration

New information may emerge during evaluation that is of sufficient importance to warrant repeating parts of the Framework. For example, it might be necessary to revisit a decision if a more effective risk management option or a less costly option of equal effectiveness is developed. Public comment, negotiation, information-gathering, research, or analysis of risks and options could clarify or redefine the problem, change the focus to a different problem, or identify other risks in a broader context. In such cases, the risk management process will not be sequential, but rather flexible and iterative as important new information, ideas, and perspectives come to light.

While an iterative process is important for incorporating new information, it should not become an excuse for taking no action. Decisions must be made, even when information is imperfect.

Evaluating Results: Integrating Regulatory Activities at the State Level

Environmental agencies in Massachusetts, New York, and New Jersey have made significant efforts to integrate their regulatory activities and to incorporate pollution prevention into these activities. Massachusetts has adopted a single, integrated inspection to assess a facility’s compliance with environmental statutes, instead of conducting separate medium-specific inspections. New York is using a facility-management strategy in which a team directed by a state-employed facility manager is assigned to targeted plants to coordinate medium-specific environmental programs. New Jersey is testing the use of a single, integrated permit for industrial facilities instead of separate permits for releases of pollution to each environmental medium.

On behalf of Congress, the General Accounting Office (GAO) evaluated the states’ experiences with integrated programs, primarily through interviews. The evaluation is preliminary because the data needed to fully evaluate the states’ experiences are not yet available.

GAO reported that Massachusetts and New York believe that their integrated approaches have been sufficiently successful to implement them statewide. Permits have only recently been issued as part of New Jersey’s program. Industry officials in those states believe that the integrated approaches are beneficial to the environment, achieve regulatory efficiencies, and reduce costs. The states noted, however, that obtaining funding from EPA and meeting EPA’s medium-specific reporting requirements were difficult and burdensome. In response, and to encourage other states to integrate environmental management, EPA proposed a new grant program designed to provide states with easier access to funding for multimedia programs and to facilitate easier reporting of multimedia activities.

Evaluating Results: Reducing the Use of Leaded Gasoline

One of the best documented evaluations of the impact of a risk management action on pollutant emission levels concerns leaded gasoline. The burning of gasoline was the single largest source (90 percent) of lead in the atmosphere beginning in the 1920s. Significantly less of the lead monitored in the air today comes from gasoline because EPA phased out the use of lead in gasoline. In 1984, the average lead content of gasoline was 0.44 grams per gallon; in 1991-1992, it was less than 0.0003 grams per gallon. EPA estimated that before the regulations to control lead in gasoline, the total amount of lead released to the air from motor vehicles was about 95 metric tons in 1979. In 1989, after the controls were fully implemented, only 2 metric tons were emitted from motor vehicles, with less than 35 percent of the lead in air attributable to gasoline. Today, the emission of lead from motor vehicles should be nearly zero, as required by the 1990 Clean Air Act.

Implementing the Framework

The Commission’s Risk Management Framework is designed to address complex, real-world issues. Yet environmental agencies may encounter legal and administrative hurdles when implementing the Framework because most programs, regulations, and procedures developed under current statutes often preclude an integrated approach. The Commission makes six recommendations, described below, to overcome these impediments.

Recommendation 1: Congress should coordinate the activities of committees and subcommittees with overlapping or related jurisdictional responsibilities for environmental issues, starting with joint oversight hearings.

Many different Congressional committees and subcommittees have overlapping and conflicting responsibilities for sources of and solutions to pollution. For example, the Transportation and Infrastructure Committee and the Commerce Committee in the House of Representatives both oversee EPA’s implementation of Superfund and the Safe Drinking Water Act. In the Senate, the Agriculture Committee has jurisdiction over pesticides, while the Environment and Public Works Committee oversees other toxic substances. These competing responsibilities make it difficult to implement integrated strategies. We recognize the practical and political constraints that make coordination difficult.

Joint Congressional hearings could:

• Help put problems into public health or ecological context.

• Encourage EPA and other agencies to use their discretionary authority to implement the Commission’s Risk Management Framework and comprehensive risk assessment reforms.

• Reinforce integrated approaches to reducing risks in industrial sectors and geographic areas.

• Evaluate experimental alternatives to command-and-control regulations.

For example, the Agriculture Committee and the Resources Committee in the House could stimulate coordinated approaches to integrating chemical and microbial risk assessment and benefit-cost practices throughout the U.S. Department of Agriculture. They could also promote the use of the Commission’s Risk Management Framework by the Natural Resources Conservation Service in addressing erosion and water pollution from agricultural lands. Other committees should look at industrial sectors, such as iron and steel mills or oil refineries, to address sector-specific pollution and manufacturing processes on a multimedia basis.

Some committees address the environmental status of geographic areas, such as the House Resources Committee’s jurisdiction over parks, wild and scenic rivers, and national forests, but no committee is charged with responsibility for the status of urban pollution or of watersheds. In the House, joint hearings involving the Resources Committee, the Agriculture Committee, and the Transportation and Infrastructure Committee, which has jurisdiction over the Clean Water Act, could better address the myriad stresses on a watershed. Similarly, the House Commerce Committee and the Transportation and Infrastructure Committee could hold joint hearings to encourage the use of the Commission’s Risk Management Framework to comprehensively deal with Superfund sites.

Recommendation 2: The regulatory agencies should fully use their existing discretionary authority to propose and implement actions that address the most significant sources of the community's total exposure to hazards under review.

Many agencies have improved their risk assessment practices, used risk assessment in more programs, and begun to engage stakeholders in decision-making processes. In many cases, adoption of the Commission’s Risk Management Framework by federal, state, and local agencies will not require changes in statutes so much as changes in the decision-making process to identify all the sources that account for total exposure and estimate the risks attributable to each source.

California’s air toxics program provides a good model of an integrated regulatory strategy that is being achieved administratively. Rather than first assessing risks from individual sources, the program est- imates the overall risk attributable to a particular chemical. Upon deciding that the risk is sufficiently high to warrant action, the program examines all identified stationary, mobile, and area sources of the chemicals to determine the most cost-effective reductions in emissions and exposure. The EPA has launched a similar cumulative exposure approach for hazardous air pollutants (see below).

Recommendation 3: The regulatory agencies should fully use their existing discretionary authority to expand stakeholder involvement in the development and implementation of solutions to environmental problems.

Successful integrated approaches depend on trust among agencies and stakeholders. Public notice and comment procedures are inadequate for building the level of trust and cooperation necessary for integrated approaches. Stakeholder involvement processes such as those used in the Common Sense Initiative and Project XL are a good beginning. As the participants have learned, however, unexpected challenges—such as disagreements about the composition of stakeholder groups and difficulties arriving at consensus—have slowed the completion of projects. We believe that implementation of our Guidelines for Stakeholder Involvement (see page 17) can increase prospects for productive stakeholder involvement.

Recommendation 4: Congress should reinforce implementation of the Commission's Risk Management Framework legislatively, statute-by-statute.

For several years, Congress has considered bills that would prescribe government-wide risk assessment and economic analysis practices and make them judicially enforceable. Also, an "organic act" has been proposed that would integrate the operations of EPA’s program offices. The 104th Congress, however, found common ground for bipartisan action by reauthorizing specific statutes instead. For example, the Safe Drinking Water Act and the Food Quality Protection Act were modified in ways that provide flexible direction to consider risks, costs, benefits, population subgroups, and public values in decision-making. The 1996 Safe Drinking Water Act includes important provisions on the roles of risk assessment and economic analysis in setting standards and priorities for regulation without dictating the specific steps in the analysis or requiring one to outweigh another. It is a good example of how statutes can be modified to promote more flexible risk management strategies. Congress should consider legislative changes that:

• Address geographic areas such as urban areas and watersheds. Under the Clean Air Act Amendments of 1990, EPA is developing an integrated urban air toxics strategy that considers different types of pollutants and multiple sources of pollutants together, so that risk management actions in urban areas can address air pollution in context. In the case of watersheds, EPA already is working with states and localities to develop ecological risk assessments and integrated approaches to pollution problems. The Clean Water Act should be amended to establish a comprehensive, integrated watershed management approach.

• Mandate authority for EPA to consider sources of significant indoor air pollution when evaluating the risks attributable to multiple sources of air pollution. EPA should collaborate with other agencies to reduce significant risk from indoor air exposures. Numerous studies have shown that the concentrations of many contaminants in air are higher in homes than outdoors. While outdoor air pollution is extensively regulated, problems in offices, public buildings, and homes remain relatively unrecognized and unaddressed. Efforts by EPA, the Consumer Product Safety Commission (CPSC), and OSHA to regulate indoor air have been thwarted by lack of statutory authority and by lack of agreement on the nature of the problems and the solutions. EPA’s regulatory authority appears to be limited to outdoor air. OSHA is responsible for industrial environments. CPSC has authority over products, such as carpets and insulating materials. A coordinated approach by EPA, OSHA, and CPSC will not emerge without a mandate from Congress and cooperation from stakeholders.

• Increase flexibility for meeting environmental protection goals. Integrated approaches to compliance can provide greater cost-effectiveness and increased flexibility for facilities that go beyond current levels of environmental protection. EPA is currently experimenting with such approaches in its Common Sense Initiative and Project XL programs. However, EPA and participants must still meet the original regulatory requirements, even when more effective solutions are being implemented. For these projects to succeed, EPA needs the legal authority to provide flexibility in deciding how the regulated community can improve its environmental performance. Congress should explicitly authorize EPA and state agencies to enter into compliance agreements that waive certain current regulatory requirements if alternative controls can credibly achieve equal or, whenever feasible, greater environmental protection.

Recommendation 5: The Council on Environmental Quality (CEQ) should consider issuing guidance or regulations for implementing additional provisions of the existing National Environmental Policy Act (NEPA).

The National Environmental Policy Act offers some opportunities for implementing the Framework. Instead of aiming to protect specific places, activities, or environmental media, as do most environmental statutes, NEPA seeks to balance a broad range of environmental factors with "other essential considerations of national policy." The act states that its policies and goals are supplementary to those in agencies’ existing statutory authorizations. NEPA regulations, which were issued in 1978, focus on procedural provisions to ensure that decisions about federal actions are made only after the environmental consequences of the actions are fully considered and that the public benefits of the actions outweigh their environmental costs. These regulations are generally consistent with the focus of the Framework.

In addition to procedural requirements, NEPA established six objectives for all federal programs: responsibility for the future; environmental equity; beneficial use; historical, cultural, and biological diversity and individual liberty; widespread prosperity; and management for quality and conservation. The act requires all federal agencies to use a "systematic, interdisciplinary approach" to planning and decision-making that incorporates the "natural and social sciences and the environmental design arts." An analysis by the Environmental Law Institute concluded that these provisions have not been implemented. Agencies could use these objectives to approach problems in the integrated, contextual manner envisioned in the Commission’s Risk Management Framework. CEQ should work with other executive offices and the relevant federal agencies to craft guidance for implementing these NEPA provisions.

Recommendation 6: 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.

We have given several examples of state and local actions that have been taken to address problems in a broad context with stakeholder involvement, such as California’s toxics air program and efforts in Massachusetts, New York, and New Jersey to integrate regulatory actions. As in other areas of government endeavor, states and localites engaged in successful integrated risk management projects can serve as catalysts for federal initiatives. State and local agencies often rely on federal models of regulation; however, as a result, they too focus primarily on single pollutants in single environmental media and on command-and-control approaches to regulation. State and local agencies should increase their ability both administratively and legislatively to implement the Commission’s Risk Management Framework.

Looking Ahead

The Commission’s Risk Management Framework is not a panacea. It can require substantial time to implement and, in some cases, it might lengthen the risk management process. The ability to implement the Framework will undoubtedly improve over time as parties gain more experience with its various aspects and as more relevant information becomes available. For example, more experience with and guidance for including stakeholders is needed. Both agencies and stakeholders need training to better understand and discuss health and environmental risk issues. Agencies and academic institutions must cooperate to generate more and better exposure and toxicity data and methods for assessing multiple and cumulative risks.

As illustrated in this report, some aspects of the Framework—such as stakeholder involvement and multimedia analysis—already are in use to some extent, although no risk management effort to date has employed all aspects of the Framework. Many of the questions and concerns associated with implementing the Framework will be clarified as it is applied and evaluated; however, gaining experience with the Framework can best be achieved if Congress and the Administration work together to overcome the statutory and administrative barriers described above.

In using this Framework, risk scientists and decision-makers will be embarking on an important new era in risk management designed to make wise use of limited risk management resources. As described throughout this report, the Framework’s advantages include:

• Use of an integrated, holistic approach to make risk management more efficient and effective compared with the traditional chemical-by-chemical, medium-by-medium approach to characterizing individual risks.

• Identification and targeting of the most important sources of risk by putting individual problems into larger public health and environmental contexts and addressing multiple and cumulative risks.

• Emphasis on collaboration, communication, and negotiation in an open and inclusive process among stakeholders so that public values can inform and influence the shaping of risk management strategies. Stakeholder involvement can help generate decisions that are more pragmatic and more readily implemented than decisions that are made without considering the diversity of interests, knowledge, and technical expertise represented among stakeholders.

• Capacity for iteration. As with the scientific process itself, at any stage of the Framework, the discovery of critical new information can change conclusions and decisions and lead to reformulation and reevaluation of the problem at hand.

The Commission envisions the Framework to be far more useful and effective than traditional regulatory approaches to solving common multimedia risk problems.

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