This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0528 - DNR to Perform Risk/Benefit Analysis With Rules
L.R. NO. 2269-01
BILL NO. SB 528
SUBJECT: Requires DNR publish risk/benefit of Rules
TYPE: Original
DATE: January 29, 1996
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
General Revenue (Unknown) (Unknown) (Unknown)
Total Estimated
Net Effect on All
State Funds *(Unknown) *(Unknown) *(Unknown)
*Assumed to be over $100,000 annually
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Local Government
FISCAL ANALYSIS
ASSUMPTIONS
The Office of the Secretary of State (SOS) assumed the DNR averaged
approximately 90 proposed rulemakings for calendar years 1995 and 1995. The
SOS assumed these analyses would average 10 pages each. The SOS assumed they
would request a composing operator, a clerk typist and an editor with a
background in economics as a result of this proposal.
Officials of the Department of Health (DOH) assumed that the Department of
Natural Resources would propose approximately 60 rules per year in the
Hazardous Waste Program. Each rule would require both an ecological and a
human health risk assessment which would result in 120 risk assessments per
year.
DOH staff assumed, based on past experience, it would take approximately
forty working days to conduct a risk assessment. Therefore, one FTE could
produce approximately six documents per year. DOH officials assume their
department would request twenty-four Environmental and four Clerk Typist to
implement this proposal. DOH officials noted that their estimates of staff
needed would not include costs for a comparative risk analysis.
DOH assumed comparative risk would be a different discipline which would
require separate staff. DOH officials stated that those FTE would follow a
different scientific methodology than a strict risk assessment. DOH
contacted several private consultants to determine costs for comparisons and
estimated costs ranging between $60,000 and $200,000 to conduct ecological
and human health risk assessments.
The Department of Natural Resources (DNR) assume that this proposal could
result in a long-range fiscal impact. According to DNR officials, most DNR
rules are required under federal or state statute as enacted by Congress or
the state General Assembly. Those rules must be implemented regardless of
whether a rule-specific cost/benefit risk analysis has been conducted. This
proposal would require rule-specific cost/benefit risk analysis which would
significantly increase the cost to develop and adopt rules.
DNR assumed that to the extent the completion of the cost-benefit risk
analysis would delay promulgation of rules with federal deadlines, EPA
authorization could be withdrawn resulting in a loss to the DNR federal fund
exceeding $10,000,000.
The DNR assumes to be complete, a risk assessment should account not only for
human cancer risk, but also for mutalogical effects, immune system defects,
developmental disabilities, organ damage and other impacts of human exposure
to environmental pollutants. However, the non-cancer health impacts are very
poorly understood and reliable data is scarce.
It is very difficult to convert risks to welfare and the environment into
economic terms. Placing a dollar value on human life and health is even more
problematic. However, in order to compare the regulatory costs with the risk
reduction benefits, this would be required.
Because risks are cumulative, DNR assumes it would be very difficult to
estimate the risk or the risk reduction benefits of one rule in isolation
Further, there is very little data available on the combined risk of exposure
to a number of contaminants, such as atmospheric ozone and a pesticide
contaminated water system might have if an individual had those combined
exposures.
Generally, the department has relied upon the EPA, the Department of Health
and the Agency for Toxic Substances and Disease Registry to conduct risk
assessment when needed. In addition, even when the federal statute does not
explicitly set a risk-based standard, EPA frequently engages in some sort of
risk analysis at the national level prior to promulgating a federal rule.
The cost to complete a rule-specific cost/benefit risk analysis would vary
widely from rule to rule, depending upon the number of pollutants to be
regulated, the number of affected facilities, the extent to which data
already exists, etc. The DOH has spent $81,680 to conduct a site specific
human health and ecological risk assessment on lead exposure in Jasper
County, and this study is not yet complete. In addition, EPA officials
stated contractor costs for the risk assessment for Times Beach, Missouri
were approximately $500,000.
In 1980-83, EPA spent $150,000 to assess the risk of human inhalation
exposure to arsenic emissions from an ASARCO plant in Tacoma, Washington.
This cost does not include risk characterization, indirect exposure or
ecological risk assessment which would conservatively add another $188,000.
EPA also spent $35,000 on a site specific inhalation risk assessment for a
large chemical plant where almost all the necessary data was already
available. This study evaluated only one chemical, and did not include risk
characterization, indirect exposure or ecological risk assessment which would
have added another $40,000 to the total cost.
Many of the department's rules are administrative in nature. They require
facilities to keep records, submit reports or apply for permits. While these
rules indirectly lead to environmental improvements, they do not lend
themselves to a risk cost/benefit analysis as this bill would require.
Combining the DOH and EPA risk assessment cost data, it is estimated that the
average costs to comply with this legislation would be about $117,000 per
rule. The DNR adopted approximately 102 rules in 1994. If all 102 rules
were subject to the requirements of this legislation the annual cost would be
almost $12 million per year, or the equivalent of 230 new FTEs (assuming
$52,000 annual expenditures, including personal service, fringe benefits, and
expense and equipment.) The FTE would be the staff required to establish a
toxicological/economic /financial analysis unit, dedicated to continuous
research and evaluation activities. DNR assumed General Revenue funding
would be required to support this activity.
The 230 FTE would be the FTE required for the department to establish a
toxicological, economic, and financial analysis unit, dedicated to continuous
research and evaluation activities.
Oversight assumes that primacy would not be jeopardized if funding were made
available to DNR to promulgate rules in a timely fashion.
Oversight assumes for purposes of this fiscal note not all instances of
promulgation of rules would require this type of in-depth study, the total
number of rules promulgated per year could decrease, and the studies would be
long-term in some cases, thus delaying the rule- making process. Oversight
cannot estimate the fiscal impact of this proposal.
FISCAL IMPACT - State Government FY 1996 FY 1997 FY 1998
(10 Mo.)
GENERAL REVENUE FUND
Cost-Department of
Natural Resources (DNR)
Risk/Benefit Analysis (Unknown) (Unknown) (Unknown)
Cost-Department of Health (DOH)
Risk/Benefit Analysis (Unknown) (Unknown) (Unknown)
Cost-Secretary of State (SOS)
Risk/Benefit Analysis (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND *(Unknown) *(Unknown) *(Unknown)
*expected to exceed $100,000 per fiscal year
FISCAL IMPACT - Local Government FY 1996 FY 1997 FY 1998
(10 Mo.)
0 0 0
DESCRIPTION
The act requires the Department of Natural Resources, or, any board or
commission within the department to provide an analysis of risks and benefits
when proposing a rule. The agency shall provide an estimate of the risk
addressed by the rule in comparison to other risks and provide certification
that the rule will substantially advance the purpose of protecting public
health and safety and the environment.
If the agency promulgating the rule cannot provide the analysis of risks and
benefits, the reasons for this failure shall be published with the rule and
reported to the General Assembly.
This legislation is not federally mandated and would not duplicate any other
program. This legislation may require additional capital improvements or
rental space.
SOURCES OF INFORMATION
Department of Natural Resources
Department of Health
Office of the Secretary of State