SB 0953 - Fiscal Note

Fiscal Note - SB 0953 - DNR to perform risk/benefit analysis with rules

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 4004-01

BILL NO. SB 953

SUBJECT: DNR Rules

TYPE: Original

DATE: March 9, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	(Unknown)	(Unknown)	(Unknown)
Total Estimated Net Effect on All State Funds *	(Unknown)	(Unknown)	(Unknown)

* Assumed to exceed $100,000 annually

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None	$0	$0	$0
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 6 pages.

FISCAL ANALYSIS

ASSUMPTION

The Office of the Secretary of State (SOS) assumes the Department of Natural Resources would be required to perform risk benefits analysis with rules and to file its analysis with the SOS for publication in the Missouri Register. The SOS assumes this proposal also appears to require the SOS to publish the analysis prepared by DNR in the Missouri Register. The SOS assumes this new requirement may increase the number of pages in the Missouri Register. The estimated cost of a page in the Missouri Register is $22.00. The SOS assumes in 1996, the DNR filed approximately 191 rulemakings for publication in the Missouri Register. If future rulemakings are comparable, 191 additional pages at $22.00 or costs of $4,202 are estimated. The SOS assumes the actual cost could be rather more or less than the estimate. The impact of this proposal in future years is unknown and depends upon the frequency and length of rules filed, amended, or withdrawn.

The SOS assumes this bill alone does not require the SOS to hire additional persons, but the cumulative effect of other bills that require rulemaking activity may, in the aggregate, necessitate additional resources.

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 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 $100,000,000.

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.

ASSUMPTION (continued)

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 data was 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 adopts between 60 to 100 rules annually; in 1996 the DNR adopted approximately 75 rules. If all 75 rules were subject to the requirements of this legislation the annual cost would be almost $9 million per year, or the equivalent of 170 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.

ASSUMPTION (continued)

The DNR assumes it they were to bring on this level of staff, they would need to request additional resources for administrative purposes, such as, personnel, accounting and computer support.

The Department of Health (DOH) assumes the DNR does not conduct risk assessments. The DNR operates under the premise that the DOH conducts risk assessments, and the DNR conducts risk management. Section 260.445 RSMo requires the DNR to use the DOH to conduct risk assessments. Section 260.480 RSMo establishes parameters for reimbursement to the DOH for time and efforts in risk assessments.

The DOH assumes that DNR proposes approximately 60 rules per year. Each rule would require an ecological and human health risk assessment which creates the need for 120 risk assessments per year. Based on past experience, it takes approximately 40 working days to conduct a risk assessment , thus 1 FTE could produce approximately six documents a year. This legislation will require 18 Environmental Specialist II each conducting six risk assessments yearly to complete the required 120 risk assessments. Because risk assessments are highly complicated technical documents, they require substantial review. The DOH assumes they would need four Environmental Specialist III to spend approximately half of their time reviewing risk assessments and two an Environmental Specialist IV to provide program management and final review of risk assessments. Four clerical positions would be necessary, one for every six professional FTE. The costs in this fiscal note cover only the need for DOH to produce risk assessment documents for DNR.

The DOH assumes the Environmental Specialist II would be responsible for conducting and preparing all risk assessments. As risk assessment includes an evaluation of existing data for each chemical covered by a proposed rule, conducting a dose/response evaluation for each chemical, assessing the toxicity of each chemical, and qualifying and characterizing the risk posed to human health or the environment by each chemical in the proposed rule. They would also be responsible for writing the Risk Assessment documents.

The DOH assumes the Environmental Specialist III would supervise the Environmental Specialist IIs and review all risk assessments produced.

The Environmental Specialist IV would be the program managers, responsible for administrative and fiscal duties related to the program.

Oversight assumes that primacy would not be jeopardized if funding were made available to DNR to promulgate rules in a timely fashion.

ASSUMPTION (continued)

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 1999	FY 2000	FY 2001
	(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)
	* Assumed to exceed $100,000 annually
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
	$0	$0	$0
FISCAL IMPACT - Small Business

This proposal is not expected to have a direct fiscal impact on small businesses.

DESCRIPTION

The act requires the Department of Natural Resources, and boards and commissions within the Department, to provide an analysis of risks and benefits when proposing a rule.

DESCRIPTION (continued)

The agency shall provide an estimate of the risk addressed by the rule in comparison to other risks and shall 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, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Office of the Secretary of State

Department of Natural Resources

Department of Health

Jeanne Jarrett, CPA

Director

March 9, 1998