Cost-Risk Analysis: An Opening or a Wall?

THE House of Representatives recently passed that part of the Contract With America relating to risk assessment and cost/benefit analyses for new regulations, with one-fourth of the Democrats voting for it.

Some have characterized the bill as an attempt to gut environmental and health regulations, but that view is mistaken. The bill should be seen as an opportunity to improve the way we legislate and regulate in the environmental and health arenas, as well as an attempt to find a bipartisan way of dealing with some contentious issues.

Even the environmental community should view this legislation as an opportunity to achieve more cost-effective programs that maximize our national investment in environmental protection.

Let's look at the facts. While the current command-and-control approach has succeeded in achieving environmental improvements, like removing lead from the air and curtailing sewage dumping in our waterways, additional gains are more and more marginal -- and accomplished at greater and greater costs.

In addition, command and control stifles innovation and voluntary action, whether by businesses or communities. Pollution prevention, though positive, is hard to mandate.

The Clinton administration has stated that the House bill will cause regulatory gridlock. But in the case of the Environmental Protection Agency (EPA), it only requires that agency to do what every other agency has to do under the National Environmental Policy Act, which is to balance the costs and benefits of proposed actions. (EPA was written out of NEPA.) Why shouldn't EPA do what the rest of the government has been doing for the last 25 years? Besides, the bill will not impact current environmental regulations, but only seeks to make new ones more rational.

Analysis vs. fearful reactions

Risk and cost/benefit analyses are essential tools for the public (and Congress) to understand environmental issues and how they can be addressed cost effectively. Too much environmental regulation has been driven by fear and inadequate knowledge.

We probably didn't need to ban the apple preservative alar, do away with Times Beach at a $100 million cost to taxpayers, overreact on radon, and spend $50 million on asbestos removal. Risk assessment and cost/benefit analyses will help to avoid similar fiascos in the future.

The legislation would also encourage states and localities to prioritize risks and focus limited resources on addressing them. EPA's comparative risk assessment programs, now working in over 30 states, can help. In fact, to make the legislation work effectively, these programs (along with environmentalists, industry, and others) must be directly involved in giving guidance to the various federal agencies. Such involvement can help to ensure that risk assessment does not become a new regulatory straitjacket, but is implemented flexibly.

Demystify environmental risks

The bill in fact gives environmental advocates an opportunity to better inform the public about threats. And a better understanding of environmental problems and opportunities is needed if we are to achieve a truly bipartisan, less contentious approach to addressing these issues. If substantial savings are achieved through the legislation, a portion of them could be placed in an environmental reinvestment trust. The National Environmental Policy Institute is working out the details of just such a fund.

The peer review in the legislation helps ensure the risk assessment process is ''transparent'' so that Congress, agency decisionmakers, and the public can more easily understand risks. It's time to demystify and democratize the entire process.

Credible risk assessment and cost/benefit analyses are critical to all this. The opposition to the bill that the House passed reflects a reluctance to change the way Congress and government agencies do environmental business.

But the EPA already has begun to make real strides in this area, and more needs to be done. EPA administrator Carol Browner says she believes in the goals of the bill; now she needs to come forward with specific recommendations to address what she and others perceive as problems.

It's time for all parties to view the bill as an opportunity to do a better job in dealing with environmental issues.