“orders will incorporate administrative requirements (Le., record-keeping, monitoring) similar to those mandated by other environmental programs. When an administrative order or consent decree Is con- templated at a site where a removal action is indicated, the public participation process may be compressed or modified to allow timely response action by the responsible party or the government. This policy is effective immediately and the NCP will be amended to reflect this policy. H you have any questions on this policy or its implementation, contact Douglas Cohen (FTS-475-8112) or Bruce Clemens (FTS-382-2201) of OERR, Libby Scopino (FTS-382-2270) of OWPE,or Terry Grogan (FTS-382-2224) of OSW. cc: Assistant Administrators Superfund Community Relations Coordinators, Regions I-X Office of Public Affairs, Regions 1-X Regional] Counsels Superfund Coordinators OMB POSITION ON USE OF RISK ASSESSMENT, COST-EFFECTIVENESS ANALYSIS, BENEFIT-COST REVIEW IN SETTING STANDARDS FOR TOXIC AIR POLLUTANTS (Dated Dec.9’ 1983) Mr. Milton Russell Assistant Administrator for Policy, Planning _ and Evaluation Environmental Protection Agency 401 MStreet, SW Washington, DC 20460 Dear Milt: . oO a . ete “har The Environmental Protection Agency’s proposed standards for sources emitting two hazardous air pollutants, radionuclides and inorganic arsenic, raise several regula- sy tery policy issues of great importance. EPA has solicited comments on, among other issues, the appropriate role of risk assessment, cost-effectiveness analysis, and benefit-cost analysis in setting emission standards. The enclosed paper discusses these issues in some detail. Our main conclusions are summarizedin this letter.EPA’s proposed standards for these two pollutants would reduce the expected incidence of cancer by an estimated 4.96 cases per year at an annual total cost of $27.1 million. An alternative regulatory strategy would be to apply EPA’s proposed control requriements only to those plants where the effectiveness of such controls would be relatively high: this alternative would lessen cancer incidence by 3.92 cases. annually (96 percent of the expected reduction under EPA's proposal) at a cost of $7.4 million per year (27 percent of the expected cost of EPA’s proposal). Going beyond the alternative strategy and extending controls to the remaining plants covered by EPA’s proposed standards would achieve an estimated further reduction in cancer incidence of only 0.13 expected cases per year at an additional cost of $19.7 million per year. Most of the public health gains from reducing these emissions can be achieved, in other words, by regulating a particuiar subset of the plants covered by EPA’s proposed rules. This is because plants vary substantially in the nature of their production processes, the level of control already in place, and the population density in their immediate vicinity. As a result, the likely effectiveness in terms of public health gains of further control of these emissions varies across plants by several orders of magnitude. The environmental policy advantages of greater attention to risk reduction in relation to control costs are clearly evident in the case of EPA’s proposed standards for sources emitting inorganic arsenic. The proposed individual source controls have not been set with much regard to joint consid- evation of public health gains and control costs. As a result, the range across plants of compliance cost per cancer avoided is extremely wide: $7 million to $1.3 billion. Greater emphasis on likely reductions in exposure and health risks in the standard-setting process would lessen such extreme variation and improve the standards. The following recommendations to that end are discussed more fully in our paper: — Risk assessment informationiis not now used by EPA at all stages of its Standard-setting Process, we believeit can and should be. — Not considering risk data in setting “Best Available Technology” standards has unfortunate consequnces. The likely public health gains per dollar of expenditure resulting fgrom EPA's regulatory decisions appear to vary across sources by a factor of more than 2009. The expected reduction in cancer incidence ranges from fess than 0.001 to 2.000 expected cases avoided per million dollars of compliance expenditure. At some plants, EPA expects compliance with the proposed stardards to yield public health improvements that are exceedingly small. We recommend consideration of the alternative regulatory strategy referred to above which, through greater attention to relative effectiveness, could achieve mest of the expected public hea)th gains at one-third of the cost or Jezs. — EPA's initia! step in standard-setting identifies source categories posing a “significant” public health risk. We question the usefulness of this step as EPA has employed it in the past and see no clear pattern in its application (such as a common de minimis cutoff risk level). If EPA decides to retain this step, we recommend selection of numerical criteria for de minimis risk levels. ~— To the extent that risk information is considered in setting standards, EPA has asked for comment on how individual risk should be measured. In our judgment annual individual risk is a far better measure for these purposes than maximum lifetime risk. ~ EPA also has requested comment on howit should take into account aggregate population risk as distinct from individual risk. We believe population risk is the better measure of the likely public health gains of regulation. Separate consideration of individual risks is necessary only where such risks are unusually high. Sincerely, Christopher DeMuth Administrator for Information and Regulatory Affairs Enclosure Environment Reporter . od peewee. ee eee