[Senate Report 104-87]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 116
104th Congress                                                   Report
                                 SENATE

 1st Session                                                     104-87
_______________________________________________________________________


 
            DEPARTMENT OF ENERGY RISK MANAGEMENT ACT OF 1995

                                _______


     May 25 (legislative day, May 15), 1995.--Ordered to be printed

_______________________________________________________________________


  Mr. Murkowski, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                         [To accompany S. 333]
    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 333) to direct the Secretary of Energy to 
institute certain procedures in the performance of risk 
assessments in connection with environmental restoration 
activities and for other purposes, having considered the same, 
reports favorably thereon with an amendment and recommends that 
the bill, as amended, do pass.
    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:
SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Risk Management Act of 1995''.

SEC. 2. TABLE OF CONTENTS.
Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Definitions.
Sec. 4. Applicability.
Sec. 5. Rule of construction.
Sec. 6. Requirement to prepare risk assessments.
Sec. 7. Requirements for major rules and environmental management 
activities.
Sec. 8. Principles for risk assessment.
Sec. 9. Principles for risk communication.
Sec. 10. Review of existing risk assessments.
Sec. 11. Risk assessment and program planning.
Sec. 12. Risk assessment and budgetary priorities.
Sec. 13. Risk assessment improvement programs.
Sec. 14. Judicial review.
SEC. 3. DEFINITIONS.

    In this Act--
          (1) Agency.--The term ``agency'' has the meaning stated in 
        section 551(1) of title 5.
          (2) Benefit.--The term ``benefit'' means the reasonably 
        identifiable benefits and desired effects, including 
        quantifiable and nonquantifiable social, environmental, and 
        economic benefits, that are expected to result directly or 
        indirectly from implementation of, or compliance with, a rule 
        or an alternative to a rule.
          (3) Causation assessment.--The term ``causation assessment'' 
        means a scientific evaluation of the relationship between the 
        degree of exposure to a presumed cause of an adverse effect or 
        condition and the incidence or severity of the adverse effect 
        in question, with particular emphasis on the quantitative 
        relation between the presumed cause and the effect.
          (4) Cost.--The term ``cost'' means the reasonably 
        identifiable costs and adverse effects, including quantifiable 
        and nonquantifiable social, environmental, and economic costs 
        that are expected to result directly or indirectly from 
        implementation of, or compliance with, a rule or an alternative 
        to a rule.
          (5) Emergency.--The term ``emergency'' means an imminent and 
        substantial endangerment to public health, safety, or natural 
        resources.
          (6) Environmental management activity.--The term 
        ``environmental management activity'' means a corrective action 
        under the Solid Waste Disposal Act, the treatment, disposal, or 
        storage of radioactive or mixed waste, or a remedial or removal 
        action under the Comprehensive Environmental Response, 
        Compensation, and Liability Act of 1980, as amended.
          (7) Exposure assessment.--The term ``exposure assessment'' 
        means the scientific determination of the intensity, frequency, 
        and duration of actual or hypothetical exposures to the hazard 
        in question.
          (8) Hazard.--The term ``hazard'' means any activity, 
        substance, or condition which might pose a risk to human 
        health, safety, or the environment.
          (9) Hazard identification.--The term ``hazard 
        identification'' means the scientific determination of whether 
        exposure to a hazard can cause an increased incidence of 
        adverse health or environmental effects that are of sufficient 
        importance to warrant further scientific study or regulatory 
        attention, as well as characterization of the nature and 
        strength of the evidence of causation.
    (10) Major rule.--The term ``major rule''--
                  (A) means a rule or group of closely related rules 
                that the agency proposing the rule or the President 
                reasonably determines is likely to have an effect on 
                the economy of $75,000,000 or more in reasonably 
                quantifiable costs, in any one year; but
                  (B) does not include a rule that involves the 
                internal revenue laws of the United States.
          (11) Major risk communication.--The term ``major risk 
        communication'' means a written or broadcast public 
        communication by an agency, or by another organization under a 
        contract, cooperative agreement, or financial assistance award 
        from an agency, to Congress, State, local or tribal 
        governments, or the general public, which makes a 
        recommendation as to risk that would, if implemented, be likely 
        to have an effect on the economy of $75,000,000 or more in 
        reasonably quantifiable costs, in any one year.
          (12) Person.--The term ``person'' has the meaning stated in 
        section 551(2) of title 5.
          (13) Plausible.--The term ``plausible'' means realistic and 
        scientifically supported.
          (14) Policy judgment.--The term ``policy judgment'' means any 
        assumptions, inferences, choices of models, or safety factors 
        that are used in a risk assessment because of the absence of 
        relevant available information.
          (15) Risk assessment.--The term ``risk assessment'' means the 
        systematic process of organizing and analyzing scientific 
        knowledge and information for potentially hazardous situations 
        and activities or for substances that might pose risks under 
        specified conditions, taking into account both the intrinsic 
        hazard as well as the exposure to that hazard. As appropriate 
        for the specific risk involved, risk assessment includes hazard 
        identification, causation assessment, exposure assessment, and 
        risk characterization.
          (16) Risk characterization.--The term ``risk 
        characterization'' means the combination of assessments of 
        exposure and response under various exposure conditions to 
        estimate the probability of specific harm to an exposed 
        individual, population, or natural resource including, to the 
        extent feasible, a characterization of the distribution of 
        risk, and including an analysis of uncertainties, conflicting 
        data, and inferences and assumptions in the assessment.
          (17) Rule.--The term ``rule'' has the meaning stated in 
        section 551(4) of title 5.
          (18) Screening analysis.--The term ``screening analysis'' 
        means an analysis using simple, conservative models and 
        assumptions to arrive at an estimate of upper and lower bounds 
        that permits the manager to eliminate risks from further 
        consideration and analysis, or to help establish priorities for 
        agency action.
          (19) Substitution risk.--The term ``substitution risk'' means 
        an increased risk to human health, safety, or the environment 
        likely to result from a regulatory or nonregulatory option 
        designed to decrease other risks.

SEC. 4. APPLICABILITY.

    (a) Except as provided in subsection (b), this Act shall apply to 
all risk assessments prepared by, or on behalf of, an agency in 
connection with health, safety, and environmental risks.
    (b) Exclusions.--The head of an agency shall not be required to 
prepare a risk assessment under this Act for--
          (1) any situation that the head of the agency finds to be an 
        emergency;
          (2) a rule or agency action that authorizes the introduction 
        into commerce, or recognizes the marketable status of a 
        product;
          (3) a health, safety, or environmental inspection or 
        individual facility permitting action;
          (4) product registrations, re-registrations, tolerance 
        settings; and reviews of premanufacturing notices and existing 
        chemicals under the Federal Insecticide, Fungicide, and 
        Rodenticide Act (7 U.S.C. 136 et seq.) and the Toxic Substances 
        Control Act (15 U.S.C. 2601 et seq.);
          (5) any food, drug, or other product label or any risk 
        communication appearing on any such label or product insert; or
          (6) a screening analysis.
    (c) An analysis shall not be treated as a screening analysis for 
the purposes of paragraph (b)(6) if the results of the analysis is 
used--
          (1) as the basis for imposing a restriction on a substance, 
        product, or activity; or
          (2) to characterize a positive finding of risks from a 
        substance or activity in any major risk communication.

SEC. 5. RULE OF CONSTRUCTION.

    (a) Nothing in this Act shall be construed to modify any statutory 
standard or requirement to protect health, safety, or the environment.
    (b) Nothing in this Act shall be construed to preclude the 
consideration of any reliable scientific data or the calculation of any 
estimate to describe more fully risk or to provide examples of 
scientific uncertainty or variability.
    (c) Nothing in this Act shall be construed to require the 
disclosure of any trade secret or other commercial proprietary 
information or any other confidential information.

SEC. 6. REQUIREMENT TO PREPARE RISK ASSESSMENTS.
    (a) Major Rules.--An agency shall prepare a risk assessment under 
this Act for each major rule relating to human health, safety, or the 
environment that is--
          (1) proposed after the date of enactment of this Act; or
          (2) not published as a final rule before the date of 
        enactment of this Act.
    (b) Major Risk Communication.--An agency shall prepare a risk 
assessment under this Act for each major risk communication that is 
released after the date of enactment of this Act.
    (c) Environmental Management Activity.--Except where otherwise 
required by law or regulation, an agency shall prepare a risk 
assessment under this Act prior to conducting an environmental 
management activity to eliminate a risk or reduce it to reasonable 
limits, if the agency head determines that the estimated cost of the 
environmental management activity is more than $25,000,000.

SEC. 7. REQUIREMENTS FOR MAJOR RULES AND ENVIRONMENTAL MANAGEMENT 
                    ACTIVITIES.

    (a) In General.--Except as provided in subsection (b), in 
promulgating any proposed or final major rule relating to human health, 
safety, or the environment or in conducting any environmental 
management activity, an agency shall publish in the Federal Register 
along with the rule, or make part of the publicly available record for 
the environmental management activity, a clear and concise statement 
that--
          (1) describes and, to the extent practicable, quantifies the 
        risks to human health, safety, and the environment to be 
        addressed by the major rule or environmental management 
        activity based on the conclusions of a risk assessment 
        performed in accordance with this Act;
          (2) compares the human health, safety, or environmental risk 
        to be addressed by the major rule or environmental management 
        activity to other risks chosen by the agency head, including--
                  (A) at least three other risks regulated by a Federal 
                agency; and
                  (B) at least three other risks that are familiar to 
                the general public;
          (3) describes and, to the extent practicable, quantifies any 
        known, plausible substitutions risks when information on such 
        risks is known to or has been provided to the agency;
          (4) estimates--
                  (A) the costs to the United States Government, State, 
                and local governments, and the private sector of 
                complying with or implementing the major rule or 
                carrying out the environmental management activity; and
                  (B) the benefits of the regulation or environmental 
                management activity including both quantifiable 
                measures of costs and benefits, to the fullest extent 
                that they can be estimated, and qualitative measures 
                that are difficult to quantify; and
          (5) contains a certification by the agency head that--
                  (A) the analyses performed under paragraphs (1), (2), 
                and (3) are in accordance with the requirements of 
                section 8;
                  (B) the major rule or environmental management 
                activity is likely to reduce significantly the human 
                health, safety, or environmental risks to be addressed;
                  (C) no regulatory alternative, or alternative 
                environmental management activity, that would achieve 
                an equivalent reduction in risk in a more cost-
                effective manner, is permitted under law, along with a 
                brief explanation of why other such alternatives that 
                were considered by the agency head were found to be 
                less cost-effective; and
                  (D) the major rule or environmental management 
                activity, is likely to produce incremental benefits to 
                human health or the environment that will justify the 
                incremental costs to the United States Government, 
                State, local, or tribal governments, and the private 
                sector.
    (b) Substantially Similar Final Major Rules.--If the agency head 
determines that a final major rule is substantially similar to the 
proposed version of the major rule with respect to each of the matters 
referred to in subsection (a), the agency head may publish in the 
Federal Register a reference to the statement published under 
subsection (a) for the proposed rule in lieu of publishing a new 
statement for such final rule.
    (c) Reporting.--If the agency head cannot certify with respect to 
one or more of the matters addressed in subsection (a), the agency head 
shall identify those matters for which certification cannot be made, 
and shall include a statement of the reasons therefore in the Federal 
Register along with the major rule or, in the case of an environmental 
management activity, the publicly available plan. Not later than April 
1 of each year, the agency head shall submit a report to Congress 
identifying those major rules and environmental management activities, 
promulgated or carried out during the previous calendar year, for which 
complete certification was not made and summarizing the reasons 
therefor.
    (d) Additional Requirements for Environmental Management 
Activities.--(1) The agency head shall use the risk assessment for an 
environmental management activity to determine the need for the 
environmental management activity and to evaluate environmental 
management alternatives. A risk assessment conducted under this section 
shall be incorporated into any similar statement, assessment, or 
analysis conducted under any other statute for this environmental 
management activity.
    (2) If the agency head cannot make a certification with respect to 
one or more of the matters described in subsection (a)(5) of this 
section, the agency head shall consider--
          (A) funding research and development of new technologies for 
        environmental management; and
          (B) selecting the new technology, if any, achieving the 
        greatest risk reduction and cost efficiencies for use in the 
        environmental management activity.

SEC. 8. PRINCIPLES FOR RISK ASSESSMENT.

    (A) In General.--Except as provided in section 4, the head of an 
agency shall follow the principles set forth in this section when 
preparing risk assessments. Agencies shall not be required to repeat 
discussions or explanations required under this section in each risk 
assessment if there is an unambiguous reference to a relevant 
discussion or explanation in another reasonably available agency 
document that was prepared in accordance with the principles of this 
section.
    (b) Relationship to Risk Management.--An agency shall design and 
conduct risk assessments and report the results in a manner that 
promotes rational and informed risk management decision making and 
informed public input into the process of making agency decisions. In 
undertaking risk assessments, agencies should establish and maintain a 
clear distinction between the identification, qualification, and 
characterization of risks and the selection of methods for managing 
risks. Agency priorities for managing risks, and a consideration of the 
types of information that would be important in evaluating a full range 
of decisions, may play a role in developing priorities for risk 
assessment, activities.
    (c) Iterative and Proportionate Approach.--(1) In conducting risk 
assessments, an agency shall--
          (A) employ the level of detail and rigor appropriate and 
        practicable for reasoned decision making on the matter 
        involved, taking into account the significance and complexity 
        of the potential agency action and the need for expedition; and
          (B) develop and use an iterative approach to risk assessment, 
        which may start with relatively inexpensive screening analyses 
        and then progress to more rigorous analyses.
    (2) In determining whether to proceed to more detailed analyses 
that might improve the scientific quality and completeness of the risk 
estimates, the agency head shall take into consideration--
          (A) whether or not the available information has demonstrated 
        that the estimated risk is below the applicable decision-making 
        level;
          (B) whether or not further improvements in scientific data or 
        models would significantly change the risk estimate;
          (C) whether or not the risk is significant enough to warrant 
        further analysis.
    (3) If an iterative risk assessment process results in the 
availability of more and better scientific information on a specific 
risk, and correspondingly less uncertainty in the analysis, the level 
of conservatism applied to the risk assessment should decrease.
    (d)  Use of Policy Judgments in Risk Assessment.--Policy judgments 
used in developing a risk assessment, including assumptions, defaults, 
inferences, choices of models, and safety factors, shall be described 
explicitly in connection with each risk assessment in which they are 
used, along with--
          (1) a description of the scientific and policy basis for each 
        policy judgment;
          (2) a description of any available scientific data, with 
        emphasis on site- or situation-specific data, that was not used 
        because a policy judgment was utilized in its place, the 
        rationale for using the policy judgment, and a description of 
        the sensitivity of the conclusions of the risk assessment to 
        the available data had it been used;
          (3) a description of reasonable alternative policy judgments 
        that were not selected by the agency for use in the risk 
        assessment, and a discussion of why the agency believes that 
        the policy judgments selected for use are appropriate to the 
        specific risk assessment;
          (4) a description of the extent to which policy judgments 
        used in the risk assessment are validated by, or conflict with, 
        empirical data relevant to the assessment; and
          (5) a description of the sensitivity of the conclusions of 
        the risk assessment to the policy judgments used in the risk 
        assessment.
Each agency shall develop a procedure and publish guidelines for 
choosing default policy judgments to use in risk assessments and for 
deciding when and how, in a specific risk assessment, to adopt 
alternative judgments or to use available scientific information in 
place of a policy judgment.
    (e) Consideration of Future Land Use.--In conducting a risk 
assessment for an environmental management activity under this Act, the 
agency head shall consider the reasonably anticipated future use of the 
land affected by the environmental management activity.
    (f) Treatment of Scientific Data in Risk Assessments.--
          (1) The technical basis of a risk assessment shall be--
                  (A) the best available, scientifically replicable 
                data that finds, or fails to find, a correlation 
                between a potential hazard and adverse effects;
                  (B) the best available, scientifically replicable 
                laboratory or experimental data that has relevance to 
                understanding the potential hazard to humans or the 
                environment; and
                  (C) hazard, dose, exposure, or other relevant 
                physical conditions that are reasonably expected to be 
                encountered under usual and realistic circumstances.
        A risk assessment shall not exaggerate risks by inappropriately 
        compounding multiple hypothetical conservative policy 
        judgments.
          (2) When conflicts among scientific data appear to exist, the 
        assessment shall include an explanation for, or possible 
        reconciliation of, conflicting information.
          (3) When animal data are used as a basis to assess human 
        health risks, the assessment shall include a discussion of the 
        relevance of experimental animal responses to human outcomes, 
        the basis for selecting any interspecies scaling factors that 
        were used, and the correspondence among routes of exposure in 
        humans and the exposure routes utilized in the animal studies.
          (4) Any relevant scientific data meeting the requirements of 
        subsection (f)(1) of this section that are submitted by 
        interested parties shall be reviewed and considered in the risk 
        assessment. The risk assessment shall include an explanation of 
        whether such data were used and, if not, why not.
    (g) Public Involvement in Risk Assessments.--Agency heads shall 
provide for early involvement by all interested parties in the 
development of risk assessments. Agency heads shall provide appropriate 
opportunity for meaningful public participation and comment on risk 
assessment throughout the regulatory process commensurate with the 
consequences of the decision to be made.
    (h) Peer Review and Scientific Participation in Risk Assessments.--
(1) Each agency shall develop procedures that make the greatest 
possible use of peer review, scientific workshops, expert bodies, or 
other devices to ensure broad peer and scientific participation in its 
risk assessments, through a process that allows full public discussion 
and peer participation by the scientific community.
    (2) Peer review panels shall consist of independent and external 
experts who are broadly representative and balanced to the extent 
feasible.
    (3) A person shall not be excluded from participation in the 
scientific review of a risk assessment on the basis of potential 
interest in the outcome, if the interest is fully disclosed.

SEC. 9. PRINCIPLES FOR RISK COMMUNICATION.

    (a) Description of Risks.--Except as provided in section 4, in any 
major risk communication, regulatory proposal or decision, report to 
Congress, or other document that is intended to communicate the 
conclusions of a risk assessment to the public, the head of the agency 
shall, to the appropriate degree--
          (1) describe the hazard deemed to be harmful;
          (2) describe the populations or natural resources that are 
        the subject of the risk assessment;
          (3) explain the exposure scenarios used in the risk 
        assessment and provide an estimate of the corresponding 
        population at risk and the likelihood of such exposure 
        scenarios;
          (4) describe the nature and severity of the harm that could 
        plausibly occur; and
          (5) briefly describe the major uncertainties in the hazard 
        identification, causation assessment, and exposure assessment 
        phases of the risk assessment and their influence on the 
        results of the assessment.
    (b) Estimates of Risk.--The estimate of risk shall, to the maximum 
extent practicable, be presented as an overall estimate of risk, 
expressed as a probability distribution that reflects variabilities and 
uncertainties in the analysis. If a single point estimate of risk is 
provided, it must be based on the most plausible inferences from the 
supporting scientific information. Where quantitative estimates of the 
range and distribution of risk estimates are not available, a list of 
qualitative factors influencing the range of possible risks shall be 
provided.
    (c) Comparisons of Risk.--The agency shall provide a statement that 
places the nature and magnitude of risks to human health, safety, and 
the environment being analyzed in context. Such statement shall include 
appropriate comparisons with other risks, including those that are 
familiar to and routinely encountered by the general public.
    (d) Substitution Risks.--When the agency provides a risk assessment 
or risk characterization for a proposed or final regulatory action, 
such assessment or characterization shall include a statement of any 
significant substitution risks to human health or safety, where the 
agency is aware of such information, or it has been provided to the 
agency.
    (e) Summaries of Risk Estimates.--(1) Where an agency provides a 
summary of a risk assessment, the conclusion must include a description 
of the risk that reflects the information required in subsections (a), 
(b), (c), and (d) of this section; and
    (2) if a commenter provides a risk assessment carried out in a 
manner consistent with the principles under section 8 of this Act, and 
a summary of results of such risk assessment, the agency shall present 
such summary in connection with the presentation of the agency's risk 
assessment.
    (f) Review of Major Risk Communications.--The head of an agency 
shall ensure that major risk communications are peer-reviewed by 
appropriate scientific experts and tested with representative groups of 
the public prior to distribution of the major risk communications, to 
ensure that such communications are scientifically accurate and 
communicate the intended risk message without exaggeration.

SEC. 10. REVIEW OF EXISTING RISK ASSESSMENTS.

    (a) Regulation.--Not later than 18 months after the date of 
enactment of this Act, the President shall promulgate a final rule for 
the review and revision of risk assessments previously prepared by, or 
on behalf of, an agency. Such rule shall--
          (1) provide procedures for the agency itself to identify risk 
        assessments that should be reviewed and revised to conform to 
        the principles of risk assessment in this Act or to accommodate 
        new scientific information:
          (2) provide procedures for receiving and considering new 
        information relevant to risk assessments from any person;
          (3) provide a mechanism whereby a person can petition the 
        agency to review and revise a risk assessment because--
                  (A)(i) the risk assessment is inconsistent with the 
                principles set forth in section 8 of this Act; or
                  (ii) the risk assessment does not take into account 
                material and significant new scientific data or 
                scientific understanding; and
                  (B) a revised risk assessment is likely to provide a 
                basis for re-evaluating one or more major rules 
                currently in effect or one or more major risk 
                communications;
          (4) provide for the creation of a permanent advisory 
        committee to each agency head that shall--
                  (A) consist of independent and external experts in 
                risk assessment and in the substantive scientific 
                issues related to regulations under the purview of the 
                agency, who are appointed pursuant to the principles of 
                section 8(h);
                  (B) review new information, risk assessment, and 
                petitions from the public regarding review and 
                revisions of risk assessments;
                  (C) recommend to the agency head for each petition 
                under subsection (a)(3)--
                          (i) whether a petition should be granted;
                          (ii) priorities for the review or revision; 
                        and
                          (iii) target dates for completion of the 
                        review or revision; and
                  (D) evaluate the adequacy of the agency's review or 
                revision of a risk assessment, with respect to the 
                principles in section 8 of this Act, and prior to 
                publication of the review or revision, provide 
                recommendations to the agency head.
    (b) Publication of Recommendations.--Recommendations provided to an 
agency head under subsections (a)(4) (C) and (D) shall be published in 
the Federal Register within 45 days of their transmittal to the agency 
head, along with the formal response of the agency head.
    (c) Completion of Agency Action.--(1) If the agency head accepts 
the recommendation of the advisory committee provided under subsection 
(a)(4)(C), the agency shall, to the maximum extent practicable, 
complete its review or revision of the risk assessment within the time 
recommended by the advisory committee.
    (2) An agency head may start or continue and environmental 
management activity during the pendency of a petition unless the 
petition reasonably indicates such action would result in an emergency.
    (d) Judicial Review.--Agency action with respect to a petition that 
is substantially inconsistent with the recommendations provided by the 
advisory committee under subsections (a)(4)(C)(i), (a)(4)(C)(ii), or 
(a)(4)(D) may be judicially reviewed under any other applicable 
provision of law.

SEC. 11. RISK ASSESSMENT AND PROGRAM PLANNING.

    (a) In General.--In exercising authority under, or complying with 
applicable laws protecting human health, safety, or the environment, 
the head of an agency shall use risk assessment to set priorities for 
the use of the resources available under those laws, with the goals 
of--
          (1) addressing preferentially the risks to human health, 
        safety, and the environment that the agency determines are the 
        most serious risks that can be addressed in a cost-effective 
        manner, and
          (2) structuring agency actions to achieve promptly the 
        greatest overall net reduction in risks with the private and 
        public sector resources to be expended.
In identifying the most serious risk in paragraph (1), the head of the 
agency shall consider, at a minimum, the likelihood and severity of the 
hazard and the size of the population and natural resources potentially 
affected.
    (b) Annual Report on Risk Assessment Priorities and Program 
Agenda.--In conjunction with the April publication of the regulatory 
agenda required under section 602 of title 5, the head of an agency 
that plans to promulgate one or more major rules concerning human 
health, safety, or the environment shall publish a report on current 
risk assessment priorities of the agency to support such regulatory 
agenda. Such report shall include--
          (1) a prioritized list combining--
                  (A) the most serious risk that the agency believes 
                can be addressed in a cost-effective manner through 
                additional major rules or major risk communication;
                  (B) any other risks that the agency is required by 
                statute, court order, or consent decree to address 
                through the promulgation of additional major rules or 
                major risk communication; and
                  (C) any risks that are to be re-assessed by the 
                agency pursuant to section 10 of this Act.
        Such list shall rank risks on a comparative risk basis to each 
        other, to the extent practicable and without regard to 
        statutory, judicial, or administrative deadlines;
          (2) a list of risk assessments and supporting assessments 
        related to the risks in paragraph (1), including hazard 
        identifications, causation assessments, and exposure 
        assessments, under preparation or for which budgetary resources 
        have been committed by the agency;
          (3) a brief summary of the relevant issues addressed or to be 
        addressed by each assessment in paragraph (2), and their 
        relationship to the risks in paragraph (1);
          (4) an approximate schedule for completing each listed 
        assessment in paragraph (2);
          (5) an identification of potential major rules in the 
        regulatory agenda, potential guidance, or other potential 
        agency actions supported or affected by each assessment in 
        paragraph (2), including any deadlines for such major rules 
        pursuant to statute, court order, or consent decree; and
          (6) the name, address, and telephone number of an agency 
        official knowledgeable concerning each assessment in paragraph 
        (2).
The identification and ranking of risks in paragraph (1) may be carried 
out on the basis of screening analyses, if more complete information is 
not reasonably available.

SEC. 12. RISK ASSESSMENT AND BUDGETARY PRIORITIES.

    (a) Incorporation of Risk-Based Priorities into Budgets and 
Planning.--To the extent consistent with other statutory requirements, 
the head of an agency shall incorporate the priorities identified in 
section 11 into the budget and planning activities of the agency by, in 
the agency's annual budget request to Congress--
          (1) explicitly identifying how the agency's requested funds 
        will be used to address the risks listed in the most recent 
        report under section 11(b)(1); and
          (2) identifying any statutory, judicial, or administrative 
        obstacles to allocating agency resources in accordance with the 
        priorities established under section 11(b)(1).
    (b) Recommendation.--On April 1 of each year, the agency head shall 
submit to Congress specific recommendations for repealing or modifying 
laws that would enable the agency to set priority among its activities 
in accordance with the priorities established under section 11(b)(1).

SEC. 13. RISK ASSESSMENT IMPROVEMENT PROGRAMS.

    (a) Improving Peer Review in Risk Assessment.--The Director of the 
Office of Science and Technology Policy shall develop a systematic 
program to oversee the use of, and quality of, peer review by agencies 
developing risk assessments pursuant to this Act.
    (b) Improving Comparative Risk Assessment.--The Secretary of 
Energy, in consultation with the heads of other agencies, shall direct 
a national program to foster and improve comparative risk analysis as a 
tool in regulatory and environmental management decision making, using, 
among other research performers, the Department of Energy's National 
Laboratories.

SEC. 14. JUDICIAL REVIEW.

    Except as provided for in section 10(d), a risk assessment, peer 
review, cost-benefit analysis, or certification provided for under this 
Act shall not be subject to judicial review separate and apart from any 
final agency action to which it relates, but shall be made part of the 
administrative record for judicial review of any final agency action to 
which it relates.
                         purpose of the measure

    The purpose of S. 333, the ``Risk Management Act of 1995,'' 
is to require Federal agencies promulgating health, safety, and 
environmental regulations to: improve procedures for performing 
risk assessments; conduct cost-benefit analyses of major rules 
and major risk communications; and incorporate risk-based 
priorities in budgeting and strategic planning to more 
effectively manage risk in the regulatory process.

                          background and need

    Public policy makers must determine how society's resources 
will be used to contribute most directly to the health and 
well-being of citizens and the environment. Although this is 
often a State or local government function, it is also 
accomplished through Federal agency implementation of health, 
safety, and environmental regulations authorized by Federal 
enabling legislation. The process of developing these 
regulations and providing resources to accomplish their goals 
is termed ``risk management.'' Over the past several decades, 
these regulations have grown in number, detail, and complexity, 
resulting in vastly increased costs for compliance. At the same 
time, the ability of these regulations to provide cost-
effective health or environmental risk reduction has been 
called into question.
    Managing risk through regulation now requires a significant 
allocation of available resources. Annual estimates of the cost 
of regulatory compliance range from $450 to $600 billion; of 
that $100 to $150 billion is estimated to be spent on 
environmental regulations alone. Both public and private 
resources are affected. For example, the Department of Energy 
spends approximately one-third of its annual budget of $18 
billion on environmental management activities such as 
hazardous waste storage and disposal and environmental 
restoration. All of these regulatory costs, whether publicly or 
privately incurred, are eventually passed on to individuals as 
taxpayers and consumers. In addition, technological and other 
scientific improvements in our ability to detect substances in 
minute quantities has increased our sensitivity to claimed or 
potential threats to human health and the environment at the 
same time budgetary resources are decreasing. To reduce costs 
and improve the effectiveness of regulations, the bill codifies 
use of risk assessment and cost-benefit analysis as analytical 
tools.
    Risk assessment is the process for identifying the risks to 
be managed. It is generally defined as the use of a factual 
base to identify, characterize, and to the extent possible, 
quantify the potential adverse effects of exposure of 
individuals or natural resources to hazardous materials, 
activities, or situations. The risk assessment process 
recognizes that a complete factual base may not exist, and data 
gaps may occur. Risk assessors fill such gaps using default 
options--guidelines based on general scientific knowledge and 
policy determinations. Default options tend to be a 
conservative assumption about what the science would indicate 
if it were available, and their use tens to overestimate rather 
than underestimate risk. When more than one default option is 
used in a risk assessment, as is often the case, the 
conservative aspect of the assumptions is multiplied. The 
ultimate characterization of a risk is substantially affected 
by the use of default options, and because they are often based 
on policy determinations, their use moves a risk assessment 
away from a factual or scientific basis toward the policy 
preferences that are the basis for the default options. In some 
instances, default options are used even if scientific data 
have become available.
    Other problems with development of the scientific basis for 
determining a risk are lack of validation for methods or models 
used in analysis, sufficiency of data to support a risk 
characterization and explanations of uncertainty in the 
assessment. Additionally, assumptions about the exposure that 
will occur are often exaggerated or contrary to common sense 
and understanding. As a consequence, the risks these 
regulations seek to reduce or avoid are frequently less harmful 
or problematic than the consequences of many other basic, 
common activities or substances to which a citizen is regularly 
exposed.
    Cost-benefit analysis evaluates the benefits of a 
regulation, such as reducing risk, to the monetary costs or 
possible adverse effects of the regulation. Since 1974, Federal 
agencies have been required by executive order to prepare 
comprehensive impact analyses for regulations. These 
techniques, alternatively termed cost-benefit, economic impact, 
or cost-effectiveness analysis, have also been widely adopted 
in various statutes.
    The limited scientific basis for regulations, the 
questionable benefits of regulations as related to their costs, 
and the intrusiveness of regulations into the day-to-day 
behavior of individuals and businesses has called into question 
the authority, wisdom, and capability of the Federal government 
in enacting such measures. Improving risk assessment and 
requiring cost-benefit analysis in the regulatory process will 
provide a more understandable and rational basis for government 
officials to manage risk through the regulatory process. In 
addition, improved risk assessment and cost-benefit analysis 
will permit limited resources to be allocated in a manner that 
maximizes public health, safety, and environmental protection 
using the most cost-effective solutions to address the most 
dangerous risks.

                          legislative history

    S. 333 was introduced by Chairman Murkowski (for himself 
and Messrs. Johnston and Lott) on February 2, 1995. Two printed 
amendments were introduced and referred to the Committee prior 
to consideration by the full Committee (Amendment 230 
introduced by Chairman Murkowski for himself and Mr. Lott on 
February 3, 1995, and Amendment 316 to the bill introduced by 
Mr. Lott on March 2, 1995).
    A hearing was held on March 6, 1995. At a business meeting 
on March 29, 1995, the Committee ordered S. 333 favorably 
reported with an amendment in the nature of a substitute.
    Related legislation dealing with risk assessment was 
introduced in the Senate in the 102d Congress (S. 2132) and a 
hearing was held before the Committee on Environment and Public 
Works. An amendment similar to provisions in S. 333 was 
introduced and passed the Senate as part of reauthorization of 
the Safe Drinking Water Act in the 103d Congress, but was not 
enacted into law.
           committee recommendations and tabulation of votes

    The Committee on Energy and Natural Resources, in open 
business session on March 29, 1995, by majority vote of a 
quorum present recommends that the Senate pass S. 333, if 
amended as described herein.
    The roll call vote on reporting the measure was 10 yeas, 9 
nays as follows:
        YEAS                          NAYS
Mr. Murkowski                       Mr. Johnston
Mr. Hatfield \1\                    Mr. Bumpers
Mr. Domenici                        Mr. Ford
Mr. Nickles \1\                     Mr. Bradley
Mr. Craig                           Mr. Bingaman
Mr. Campbell \1\                    Mr. Akaka
Mr. Thomas \1\                      Mr. Wellstone \1\
Mr. Kyl \1\                         Mr. Heflin \1\
Mr. Grams                           Mr. Dorgan
Mr. Burns\1\

    \1\ Indicates by proxy.

                      section-by-section analysis

    Section 1 entitles the bill the ``Risk Management Act of 
1995.''
    Section 2 is the table of contents.
    Section 3 sets forth the definitions of certain terms used 
in the bill. The terms ``causation assessment'', ``exposure 
assessment'', ``hazard identification'', and ``risk 
characterization'', were taken or adopted from definitions 
given in the 1993 Report ``Science and Judgment in Risk 
Assessment'' prepared by the National Academy of Sciences.
    Section 4 makes the bill applicable to all risk assessment 
prepared by an agency in connection with health, safety, and 
environmental risks. Subsection (b) excludes certain agency 
actions from the requirement in Section 6 to prepare risk 
assessments.
    Section 5 provides that nothing in the bill shall be 
construed to modify any existing statutory standard or 
requirement to protect public health, safety, or the 
environment. The section also provides for consideration of 
reliable scientific data and protection of commercial 
proprietary information or trade secrets.
    Section 6 establishes the requirement that a risk 
assessment be prepared for all major rules and major risk 
communications as those terms are defined in the bill, and 
environmental management activities costing more than 
$25,000,000. This requirement is applied to rules proposed 
after enactment of the bill and to rules not published as final 
before enactment. Because risk assessment is currently used in 
the development of most major rules, the Committee believes 
few, if any, pending rules will be delayed or postponed in 
order to comply with this requirement.
    Section 7 establishes the requirement for agencies to 
conduct cost-benefits analysis of major rules relating to human 
health, safety, or the environment and environmental management 
activities and certify that the regulations or environmental 
management activity will meet the criteria set out in the bill.
    Section 8 sets out specific principles that an agency head 
must follow when conducting risk assessments.
    Section 9 sets out the principles that an agency head must 
follow for any major risk communication, regulatory proposal or 
decision, report to Congress, or other document that is 
intended to communicate the conclusions of a risk assessment to 
the public.
    Section 10 requires the President to promulgate a final 
rule setting out procedures for the review and revision of risk 
assessments previously prepared by, or on behalf of, an agency. 
Certain agency actions in the review process are made subject 
to judicial review. Such a rule must be promulgated no later 
than 18 months after the date of enactment, should the bill 
become law.
    Section 11 requires the head of an agency to use risk 
assessment to set priorities for the use of the agency's 
resources in exercising authority under, or complying with, 
applicable laws protecting human health, safety, or the 
environment. The section also specifies that the head of an 
agency that plans to promulgate one or more major rules 
concerning human health, safety, or the environment must 
publish a report on current risk assessment priorities of the 
agency to support such regulatory agenda in conjunction with 
the April publication of the regulatory agenda required under 
section 602 of title 5 of the United States Code. This section 
also sets out requirements for the content of the report.
    Section 12 requires agency heads to incorporate the 
priorities identified in Section 11 into the budget and 
planning activities of the agency to the extent consistent with 
other statutory requirements by providing certain specified 
information in the agency's annual budget request to Congress.
    Subsection 13(a) requires the Director of the Office of 
Technology Policy to develop a systematic program to oversee 
the use of, and quality of, peer review by agencies developing 
risk assessments.
    Subsection 13(b) establishes a national program to foster 
and improve comparative risk analysis as a tool in regulatory 
and environmental management decision making under the 
direction of the Secretary of Energy, in consultation with the 
heads of other agencies, using, among other research entities, 
the Department of Energy's National Laboratories.
    Section 14 provides that a risk assessment, peer review, 
cost-benefit analysis, or certification provided for under this 
Act shall not be subject to judicial review separate and apart 
from any final agency action to which it relates, but shall be 
made part of the administrative record for judicial review of 
any final agency action to which it relates. It is the 
Committee's intent to prevent bifurcation of judicial review of 
agency rulemaking by prohibiting consideration of an analytical 
component of a rule such as a cost-benefit analysis separately 
from the rule to which it relates.

                   cost and budgetary considerations

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 25, 1995.
Hon. Frank H. Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 333, as ordered 
reported by the Senate Committee on Energy and Natural 
Resources on March 29, 1995. The legislation would impose many 
requirements on federal agencies that issue regulations that 
would affect the economy by at least $75 million annually and 
environmental management activities that would cost more then 
$25 million.
    The bill would affect direct spending and thus would be 
subject to pay-as-you-go procedures under section 252 of the 
Balanced Budget and Emergency Deficit Control Act.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

               congressional budget office cost estimate

    1. Bill number: S. 333.
    2. Bill title: Risk Management Act of 1995.
    3. Bill status: As ordered reported by the Senate Committee 
on Energy and Natural Resources on March 29, 1995.
    4. Bill purpose: S. 333 would impose many requirements on 
federal agencies that issue regulations that would affect the 
economy by at least $75 million annually or that carry out 
environmental management activities that would cost more that 
$25 million. The bill has three major provisions:
    All agencies would be required to prepare cost-benefit 
analyses of complying with or implementing a regulation or 
carrying out an environmental management activity.
    The President would be required to issue a rule 
establishing mechanisms for both the review and revision of 
existing risk assessments. The rule also would create an 
external advisory committee to review new information, risk 
assessments, and petitions from the public. The advisory 
committee would recommend to the agency head whether a petition 
would be granted, the priorities for the review or the 
revision, and the timetable for completion of the action.
    Each agency would be required to issue an annual report on 
risk assessment priorities and how they would be addressed. The 
agency would also be required to incorporate the priorities 
into the agency's annual budget request to Congress and to 
submit annual recommendations for repealing or modifying laws 
in order to attain the priorities.
    5. Estimated cost to the Federal Government: We estimate 
that enactment of S. 333 would increase the cost of issuing and 
reviewing regulations by the major federal regulatory agencies 
by at least $150 million annually. Few of the agencies that 
would be affected by this bill, however, have had the time to 
study systematically the additional costs that it would impose.
Cost of issuing new regulations

    The bill would require analyses that are similar to those 
most agencies currently conduct for regulations that affect the 
economy by more than $100 million annually. This estimate 
assumes that agencies would try to adhere to their current 
schedules for implementing new regulations and revising 
existing rules. CBO has insufficient information at this time 
to estimate the cost impacts of this bill on all federal 
agencies; however, we believe the major cost impacts would fall 
upon the agencies discussed below.
    The Environmental Protection Agency currently spends more 
than $120 million annually on regulatory impact analysis to 
support rule making efforts for regulations expected to have an 
economic impact greater than $100 million annually. Based on 
preliminary information from the agency we estimate that the 
analyses called for by this bill would cost $50 million to $100 
million annually.
    The Department of Agriculture (USDA) currently prepares 
regulatory impact assessments, environmental impact statements, 
and risk analyses for all regulatory actions affecting human 
health, safety, or the environment that are expected to result 
in annual costs to the economy of more than $100 million. Based 
on information from USDA, we estimate that lowering the 
threshold for these analyses would increase the number of 
assessments and cost-benefit studies by 25 to 75 each year. The 
additional costs associated with such assessments and studies 
range from less than $100,000 for a relatively routine rule to 
several million dollars for a major regulatory change. CBO 
estimates that most of the additional work would cost $150,000 
to $250,000 per analysis, or an additional $5 million to $15 
million annually for this department.
    Based on information from the Food and Drug Administration, 
CBO estimates that the bill's requirements would add less than 
$10 million annually to the agency's current spending on pre-
market regulatory activities.
    The Department of the Interior currently spends about $50 
million per year for regulatory analysis. This work is carried 
out primarily by the Office of Surface Mining, the Minerals 
Management Service, and the Bureau of Land Management as part 
of their overall regulatory enforcement activities. Lowering 
the threshold for regulatory analyses from $100 million to $75 
million would increase the number of analyses these agencies 
would have to prepare, resulting in additional costs of less 
than $20 million annually.
    Requirements in S. 333 also would increase costs for the 
Occupational Safety and Health Administration, the Mine Safety 
and Health Administration, and the Consumer Product Safety 
Commission. Based on information from these agencies, CBO 
estimates that enactment of the bill would result in total 
additional costs of less than $10 million per year for these 
agencies.
    The Department of Energy, Department of Transportation, and 
Department of Defense would incur additional costs to implement 
the bill. Based on comparisons with estimated costs for other 
agencies, CBO estimates that the additional costs for these 
departments would total at least $25 million annually.

Cost of reviewing existing regulations

    The cost of reviewing existing regulations under S. 333 
would depend on how the agencies fufill the bill's 
requirements. For example, costs to review rules will depend on 
the time frame set by the advisory committee. Based on limited 
information from agencies, CBO estimates that the incremental 
costs resulting from the bill's review requirements would 
probably range from $20 million to $40 million annually.
    6. Comparison with spending under current law: CBO 
estimates that enactment of this bill would add at least $150 
million annually to the cost of issuing and reviewing 
regulations.
    7. Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Act of 1985 sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts through 
1998. Enactment of S. 333 could affect direct spending; 
therefore, pay-as-you-go procedures would apply to the bill.
    The additional regulatory requirements of S. 333 could lead 
to a delay in the implementation of rules relating to the 
collection of user fees or other charges. CBO cannot estimate 
the potential magnitude of any such effects.
    8. Estimated cost to state and local governments: How 
enactment of S. 333 would affect the budgets of state and local 
governments is unclear. If regulations that would impose 
additional requirements on state and local governments are 
delayed by the enactment of these provisions, then costs to 
these entities would be less. It is also possible, however, 
that some regulatory actions that would otherwise provide 
relief to state and local governments could be delayed, thereby 
increasing their costs for various activities. CBO has no basis 
for predicting the direction, magnitude, or timing of such 
impacts.
    9. Estimate comparison: None.
    10. Previous CBO estimate: In addition to this estimate for 
S. 333, CBO has prepared estimates for the following regulatory 
reform bills:
    S. 343 as ordered reported by the Senate Committee on the 
Judiciary on April 27, 1995.
    S. 291 as ordered reported by the Senate Committee on 
Governmental Affairs on March 22, 1995.
    S. 343 as ordered reported by the Senate Committee on 
Governmental Affairs on March 22, 1995.
    H.R. 926 as ordered reported by the House Committee on the 
Judiciary on February 17, 1995.
    H.R. 9 as ordered reported by the House Committee on 
Science on February 8, 1995.
    The table summarizes these estimates by displaying for each 
bill the relevant thresholds, whether reviews or existing rules 
are required, and CBO's estimate of its cost. The current 
threshold for cost-benefit analysis is an estimate economic 
impact of $100 million.

------------------------------------------------------------------------
                                              Review of                 
                           Threshold \1\ ($   existing       CBO cost   
          Bill                millions)         rules      estimate ($  
                                              required?   millions/year)
------------------------------------------------------------------------
S. 333..................          \2\ 75/25  Yes.......  At least $150. 
S. 343 (Committee on the                 50  Yes.......  At least $180. 
 Judiciary).                                                            
S. 291..................                100  Yes.......  $10-$20.       
S. 343 (Committee on                    100  Yes.......  $10-$20.       
 Governmental Affairs).                                                 
H.R. 926................                 50  No........  At least $150. 
H.R. 9..................                 25  No........  At least $250. 
------------------------------------------------------------------------
\1\ Annual economic impact of regulations subject to review.            
\2\ Agency rules expected to have an economic impact of at least $75    
  million annually and any environmental management activity expected to
  cost more than $25 million.                                           

    11. Estimate prepared by: Elizabeth Chambers.
    12. Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                      regulatory impact evaluation

    In compliance with paragraph 11(b) of Rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 333. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant economic responsibilities on private individuals 
and businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    The paperwork that would result from the enactment of S. 
333, as ordered reported is substantially similar to the 
paperwork currently produced under existing law and Executive 
Order.

                        executive communications

    The testimony provided by the Office of Management and 
Budget and the Department of Energy at the Committee hearing 
follows:
  Statement of Sally Katzen, Administrator, Office of Information and 
          Regulatory Affairs, Office of Management and Budget

    Good afternoon, Mr. Chairman, and Members of the Committee. 
I am pleased to be here to discuss S. 333, the ``Department of 
Energy Risk Management Act of 1995'' as introduced, as well as 
the amendment to it. This is an important issue to the 
Administration, and we are eager to work with you in the coming 
months as we both continue to improve the regulatory system.
    S. 333 and the amendment seek to bring greater scientific 
and economic rationality to the regulation of risks to our 
health, safety, and environment. This is a laudable goal, that 
the Administration fully and actively supports. Indeed, we have 
spoken frequently and forcefully of the importance of basing 
regulatory decisionmaking on good data and good analysis of 
cost, benefits, and risk, and of the desirability of an open 
and transparent process. More importantly, we have done a great 
deal to put these ideas into practice, beginning almost 
immediately after we took office.
    Executive Order No. 12866, which President Clinton signed 
on September 30, 1993, represents the cornerstone of our 
efforts. It recognizes the important role that regulation plays 
in protecting the health, safety, environment, and well-being 
of the American people. At the same time, it emphasizes that 
Government has a basic responsibility to govern wisely and 
carefully, regulating only when necessary and only in the most 
cost-effective manner.
    To implement this philosophy, the Order sets forth 
principles emphasizing the critical role of analysis (of costs, 
benefits, and risk) and of the use of that analysis in 
decisionmaking; consideration of different regulatory 
alternatives and of alternatives to regulation; the importance 
of private markets and the use of market incentives in 
regulating; the need for performance standards rather than 
command and control techniques; better consideration of the 
needs of small businesses and the roles of state and local 
governments; and the need for extensive consultation with all 
those affected by the regulation (both those who will benefit 
and those who will be burdened).
    The Executive Order requires agencies to propose or adopt a 
regulation only after determining that the rule would achieve 
its objective in a cost-effective manner, and that its benefits 
would justify its costs. And it specifically calls for the use 
of the risk analysis in regulatory decisionmaking. The 
Executive Order states that in developing regulations, agencies 
are to consider ``how the action will reduce risks to public 
health, safety, or the environment, as well as how the 
magnitude of the risk addressed by the action relates to other 
risks within the jurisdiction of the agency.'' It also provides 
that ``[i]n setting regulatory priorities, each agency shall 
consider, to the extent reasonable, the degree and nature of 
the risks posed by various substances or activities within its 
jurisdiction.''
    The Executive Order established the Regulatory Working 
Group, which I chair and which serves ``as a forum to assist 
agencies in identifying and analyzing important regulatory 
issues (including * * * the methods, efficacy, and utility of 
comparative risk assessment in regulatory decision-making * * 
*''). One of the subcommittees of the Regulatory Working Group 
has been focusing on the issue of risk analysis, and it 
recently produced a set of principles to give agencies more 
specific guidance in assessing, managing, communicating, and 
prioritizing risks.
    Recognizing that risk assessments and cost-benefit analyses 
are valuable tools in helping agencies make regulatory 
decisions in a sensible and cost-effective manner, the 
Administration has expressed its support for risk and cost/
benefit legislation. Indeed, two weeks ago, President Clinton 
stated, ``[W]e're attempting to work with members of both 
parties in Congress to further reform regulation. * * * For 
example, we want all agencies to carefully compare the cost and 
benefits of regulations so that we don't impose any unnecessary 
burdens on business.'' \1\ The President would like to sign 
risk/cost-benefit legislation that improves the regulatory 
process. He has supported--indeed, encouraged--members of the 
Administration to work with you to that end. At the same time, 
however, we cannot support legislation that is likely to burden 
the regulatory process with unnecessary or costly requirements 
that will cause delay or gridlock or are likely to have 
substantive consequences that are detrimental to the American 
public.
    \1\ Remarks by President Clinton at a Regulatory Reform Event, Room 
450, Old Executive Office Building, February 21, 1995.
---------------------------------------------------------------------------
    We have carefully reviewed S. 333 as introduced. Many of 
its features appear reasonable and workable. At the same time, 
however, we have serious concerns with several aspects of the 
bill--particularly its failure to preclude judicial review; its 
scope, extending to every environmental restoration, no matter 
how small; and its petition process. These features, we fear, 
would drown the Department in paper and process, rather than 
helping it direct its resources to where they are most needed. 
These issues warrant further discussion, and it may be that we 
will be able to resolve them.
    We have also reviewed the amendment to S. 333 and regret to 
report that it is not a workable legislative proposal. The 
Amendment fails to meet our standards of fair, effective, and 
affordable legislation--indeed, it fails to live up to its own 
professed standards of regulatory efficiency. It is, in the 
President's words, an ``extreme'' proposal. The amendment not 
only dramatically extends the scope problems but, as the 
President said, ``could pile so many new requirements on 
government that nothing would ever get done. It would add to 
the very things that people have been complaining about for 
years.'' In the comments that follow, I will discuss some of 
the broader issues that we have focused on to date.

                                   II

    S. 333 as introduced focuses on a narrow problem--
Department of Energy environmental restoration activities under 
CERCLA--and presents a relatively tailored approach to 
addressing that problem. While it provides substantial guidance 
to the agency concerning how risks are to be assessed and 
communicated, for the most part it stops short of being 
unnecessarily prescriptive. For example, while it requires the 
Secretary to consider laboratory and epidemiological data when 
assessing health risks, it does not tell her precisely which 
tests to run. Nor does it impose on the Department unnecessary 
reports and paperwork. Also, while it requires the Secretary to 
indicate where risk-based priorities cannot be acted upon 
because of existing statutory requirements, it does not (as the 
House has done) seek to change those statutory requirements 
without even identifying the particular provisions that are 
being changed.
    The amendment, to its credit, appears to avoid the pitfall 
of superseding existing law, instead requiring the agency head 
to make a finding that no alternative allowed under the statute 
would be more cost-effective, flexible, or likely to produce 
greater net benefits.\2\ It does, however, change the bill as 
introduced in two significant ways. First, it expands the 
applicability of the bill from the Department of Energy's 
environmental restoration activities to all risk assessments 
undertaken and all ``major'' regulations proposed or 
promulgated by all Federal agencies. Second, it changes 
virtually all of the standards and requirements of the original 
bill, presumably superseding the original standards and 
requirements for the Department of Energy--although that is by 
no means clear.
    \2\ Section 9 of the bill explicitly states that it shall not be 
construed to ``modify any statutory standard or requirement designed to 
protect health, safety, or the environment.'' However, curiously, 
Section 623 of the amendment, which covers rules of construction, 
contains no similar language.
---------------------------------------------------------------------------
    This amendment is subject to many of the criticisms that 
have legitimately been leveled at the regulatory system it is 
seeking to fix: its provisions apply too broadly and are not 
tailored to the particular problems that should be remedied; 
they are too prescriptive, relying on command and control 
rather than performance standards; and they require excessive 
paperwork and invite limitless opportunities for litigation. 
Let me be more specific.
    The amendment creates risk assessment, cost-effectiveness, 
peer review, and prioritization requirements for agencies in 
connection with regulatory programs designed to protect 
``health, safety, and risk to natural resources.'' This phrase, 
which at is core is an apt description of a category of well-
defined regulatory programs, would--as used here--apply a 
series of requirements to a large number of regulatory 
activities that do not warrant, and could not conceivably 
profit from, a full-blown risk assessment and cost/benefit 
analysis. For example, do you really want the Department of 
Commerce to have to go through the risk assessment, 
certification, and peer review process before issuing a rule 
opening a fishing season at a particular set of fisheries? The 
Department of Interior before it authorizes the seasonal 
hunting of certain migratory birds otherwise illegal to shoot? 
The Internal Revenue Service before it revises its income tax 
regulations concerning the electric vehicle or the alternative 
fuel tax credit? The Bureau of Alcohol, Tobacco, and Firearms 
before it restricts the sale of a type of explosive? The 
Department of Transportation before it issues mirror 
requirements to help school bus drivers see children near the 
bus? The Federal Aviation Administration before it prohibits 
runways from being used for both takeoffs and landings at the 
same time? The Occupational Safety and Health Administration 
before it can protect forklift drivers, scores of whom are, 
each year, crushed in roll over accidents because of inadequate 
training? The Food and Drug Administration before it can 
prohibit the importation of cans containing lead?
    Section 625(b)(3) states that a risk assessment ``shall be 
prepared at the level of detail appropriate and practicable for 
reasoned decisionmaking on the matter involved, taking into 
consideration the significance and complexity of the decision 
and any need for expedition.'' This provision makes sense; it 
permits agencies to spend resources on risk analysis that are 
commensurate with the significance of the regulatory decision 
to be made. Unfortunately, however, other provisions of the 
section and the one that follows it effectively negate that 
sensible language. Read literally, as a statute should be, the 
amendment requires an agency to perform a full-blown risk 
assessment (including a discussion of comparative physiology, 
route of exposure, bioavailability, and pharmacokinetics; a 
presentation of plausible and alternative assumptions, a full 
description of the model used in the risk assessment and the 
assumptions incorporated therein, and an indication of the 
extent to which this model has been validated by empirical 
data; a statement of the reasonable range of scientific 
uncertainties; a best estimate of risk; an explanation of the 
exposure scenarios employed by the risk analysis; comparisons 
to other health risks; and an analysis of any substitution 
risks) every time it makes any characterization about any risk 
that it wishes to communicate to the public or to Congress or 
that it wishes to rely on in pursuing virtually any regulatory 
activity.\3\
    \3\ There are very limited exceptions in Section 622 for use of 
risk assessments for screening analyses that do not result in positive 
findings of risk and in emergencies.
---------------------------------------------------------------------------
    Congress has in some cases specified the factors that 
agencies are to consider in issuing health, safety, and 
environmental regulations, and it has on occasion explicitly or 
implicitly precluded the consideration of risk in 
decisionmaking. Technology-based standards are one example. In 
those instances, what purpose is served by requiring an agency 
to perform a rigorous risk assessment, let along undertake each 
and every one of the specified steps? And even in those 
circumstances where the underlying statute does not preclude 
consideration of risk, the requirements in the amendment are 
overly broad and undifferentiated given the different missions 
of different agencies. For example, the focus of several of the 
amendment's provisions appear to be on cancer risks. That may 
be one of several factors relevant to EPA's regulation of toxic 
chemicals, but does it make sense when evaluating a Department 
of Agriculture proposal designed to reduce the instances of 
bacterial contamination of meat? What purpose would be served 
by requiring the FAA, in determining whether an airplane should 
be grounded because of icing problems, to ``explain the 
exposure scenarios'' used in its risk assessments, or the 
Department of Commerce, in regulating against overfishing of 
fisheries, to compare the risk of fish depletion to six other 
risks?
    The excessive breadth of the amendment's one-size-fits-all 
risk assessment model is also reflected in the many ways its 
provisions would be triggered. To be sure, the amendment 
contains one necessary feature that S. 333 as introduced is 
lacking--namely, a dollar threshold. As noted above, under S. 
333 as drafted, the Department of Energy would have to do a 
full risk and cost/benefit analysis regardless of whether the 
price of an environmental restoration would be $5,000 or $500 
million. The amendment moves a small distance toward addressing 
this problem, but the threshold it sets is clearly inadequate.
    Under Section 624, the amendment's risk assessment 
requirements would apply to a ``major rule,'' which is defined 
as a rule that ``is likely to have a gross annual effect on the 
economy of $50,000,000 or more * * * or has a significant 
impact on the economy,'' or ``is likely to result in a 
substantial increase in costs or prices'' or to have 
``significant adverse effects'' on competition, employment, 
investment, innovation, the environment, public health or 
safety, etc.
    Since President Ford, every President has had an executive 
order establishing regulatory review. An essential ingredient 
of these orders is a distinction between that which is 
important and that which is more routine or administrative. For 
over 20 years, that distinction has been drawn at an aggregate 
annual effect on the economy of $100 million.
    In developing Executive Order No. 12866, the Administration 
consciously retained $100 million as the threshold for 
requiring a cost/benefit analysis, having determined that the 
resources devoted to regulatory analysis should be commensurate 
with the significance of the decision to be made. Allocating 
resources where they are most productive (i.e., getting the 
biggest bang for the buck) is a tenet embraced by proponents of 
risk and cost/benefit analysis. But by setting the threshold 
for such analysis at one-half of what President Reagan used (14 
years ago) in his Executive Order, the amendment dilutes this 
distinction.
    The situation is compounded by introducing a series of non-
numerical factors in the definition of a ``major rule.'' These 
phrases are appropriate for an executive order that is not 
subject to judicial review. But once written into statute, to 
be interpreted by the courts, they would start us down a 
slippery slope. Is there a ``substantial increase'' in price if 
there is a 5 cent increase in a 15 cent item? A 5 cent increase 
in a $1.00 item? What if you use 1,000 of those $1.00 items? Is 
it still ``substantial'' if the 1,000 items account for less 
than 1% of your cost of service? Are there not some cases where 
the cost of following the detailed assessment and communication 
procedures set forth in the amendment would overwhelm the 
benefits to be derived such analysis? How are agencies to know 
where the line should be drawn and what criteria would be used 
by the courts in reviewing whatever decision is made?
    There is general agreement that agencies should use 
objectively verifiable scientific methods, provide sufficient 
information so that their scientific analysis could be 
replicated, explain and make transparent their assumptions 
(including who or what is being protected and why), and provide 
meaningful explanations of risks (including comparisons that 
are meaningful to the public and relevant to the decision being 
made). The amendment, however, is quintessential command and 
control. Rather than specifying what is to be achieved (or, in 
regulatory parlance, the performance standard that is to be 
met), it tells agencies not only what to do, but also how to do 
it and when to do it.
                                  III

    Let me turn now to another problem that pertains to both S. 
333 and the amendment: the availability of judicial review.
    The objective of risk legislation should be to improve the 
regulatory decisionmaking process, not to create unproductive 
paper record requirements or additional opportunities for 
litigation. Because neither the bill nor the amendment preclude 
judicial review, the Administrative Procedure Act, which 
authorizes judicial review of final agency action, would apply. 
In addition, Section 624(b) and Section 630(c) of the amendment 
require that risk assessments and peer review reports be made 
part of the administrative record for purposes of judicial 
review of final agency action. Presumably, then, both an 
agency's compliance with the bill and the amendment's 
procedural steps and the contents of the agency's risk/cost-
benefit analyses could become the subject of court challenges 
once a final rule is promulgated. Such a result would be most 
unfortunate.
    Last year the Administration and the Senate reached 
agreement, in the context of the Johnston Amendment to the Safe 
Drinking Water Act, that risk analysis should not be subject to 
judicial review. The Executive, with oversight by Congress, 
should be responsible for determining the processes by which 
agencies make their decisions, particularly when the decisions 
are to be informed by substantial doses of science and 
economics. We should think twice before inviting generalist 
judges to evaluate the quality of the science and scientific 
judgment used in risk assessments; before we give economists 
the opportunity to serve as expert witnesses opining on the 
sufficiency or accuracy of the cost and cost-effectiveness 
estimates an agency made before promulgating a regulation; and 
before requiring Federal agencies to spend added time 
satisfying (with the extra margin needed to assure affirmance 
in court) each step, producing even more paper and an even 
larger record--efforts that would consume a great deal of time 
and resources without producing sounder regulations.
    If there is one thing that the last 30 yeas of 
administrative law has taught us, it is that courts are not 
always good at second guessing agency rulemaking. Judicial 
interpretations that emerge in the context of an individual, 
hard-fought litigation do not always make sense in the broader 
context of setting priorities and reducing risks in a cost-
effective manner. Given the ready availability of congressional 
oversight, the cost of adding a judicial component to risk/
cost-benefit legislation far exceeds the benefits that judicial 
enforcement is likely to provide.

                                   iv

    Another issue that warrants comment is that both the 
original bill and the amendment establish a petition process 
for revising a previously conducted risk assessment. The bill 
gives the Secretary of Energy 60 days to such respond to the 
petition; the amendment provides an agency head with 90 days.
    This Administration strongly supports the idea that 
agencies should review the effectiveness and efficiency of 
existing rules--particularly those that have been on the books 
for a number of years. On February 21, the President 
specifically instructed the Federal regulatory agencies ``to go 
over every single regulation and cut those regulations which 
are obsolete.'' The issue, then, is not principle; we agree on 
the objective. The issue is how to do it (and continue to have 
it done) in the most effective way.
    We believe the petition process in Section 5 of S. 333 and 
Section 627 of the amendment is unworkable and, if enacted as 
drafted, would, in the President's words, ``paralyze the 
government by process.'' First, the task facing an agency is 
likely to be formidable. Under the amendment, petitions could 
be filed to request the revision of previously completed risk 
assessments that do not satisfy the requirements of Sections 
625 and 626, which contain the highly-prescriptive requirements 
for risk assessment and risk communication discussed above. It 
is likely that many, if not most, of the risk assessments 
already completed did not follow each and every one of the 
steps outlined in the amendment.
    Second, consider the short time frame provided for 
response. Presumably, responding to a petition would take 
priority over even the high risk, priority issues the agencies 
would otherwise address. Even so, the time pressure will be 
severe. Recall also that if an agency were to deny a petition, 
under either S. 333 or the amendment, judicial review would be 
available to the petitioning party, thus exacerbating the 
strain on agency resources.
    Most significantly, however, the agencies' task will not be 
determined by the President or the people he appoints, or by 
the Congress. Rather, the agencies' priorities will be set by 
the special interests who are the first to flood the agencies 
with their petitions and sufficiently well-financed to keep the 
petitions coming. Thus the management of the agencies will be 
turned over to those pursuing their own parochial interests.

                                   v

    Like the risk assessment/risk characterization 
requirements, the peer review requirements of the amendment 
reflect a ``one-size-fits-all'' approach. Section 630 requires 
the President to develop a ``systematic program for the peer 
review,'' which is to be ``used uniformly across the 
agencies.'' Of course, different agencies have very different 
missions, and not surprisingly their peer review needs and 
requirements will vary accordingly. Thus, for example, the 
Department of Transportation, which possesses very concrete 
data concerning automobile and airplane accidents, is less 
likely to require the same type or scope of peer review as the 
Environmental Protection Agency's program office that is 
working on global climate change issues.
    The peer review requirements are troubling for two 
additional reasons. First, Section 628(1) requires that each 
agency head certify that its risk assessments are ``supported 
by the best available scientific data, as determined by the 
peer review panel. * * *'' This provision would take ultimate 
authority away from the agencies and vest it in individuals who 
do not work for, and are not responsible to, the Federal 
government. Such a delegation of ultimate power is, to my 
knowledge, unprecedented since the days of President 
Roosevelt's National Recovery Administration. Second, the 
amendment carries micromanagement so far that it explicitly 
makes an exception to customary standards of ethical conduct by 
prohibiting agencies from restricting those with an interest in 
the outcome from participating on the panel.
    Would it not be more productive for the legislation simply 
to require agencies to have a peer review plan, tailored to the 
types of risks they address and the relevant sciences that are 
involved? The plan could indicate which types of risk 
assessments would be subject to peer review, whether external 
or internal, and could be made available to the public--indeed, 
there could be public comment on the plan. Here, as above, we 
urge that whatever legislation is passed set forth the 
objective and not seek to specify each and every detail along 
the way.
    If the layering of the regulatory process with complicated 
requirements were costless, we would not object so much to 
portions of S. 333 and to the overall prescriptiveness and 
inflexibility of the amendment. But we must be clear about what 
is at stake. The effect of these requirements is not to bring 
sound science and solid economics to bear on regulation, but to 
create more bureaucracy, more paperwork, and less efficiency in 
government--to the point that the regulatory system could not 
move forward and our ability to take sensible steps to protect 
human health and human safety and the environment would be 
substantially retarded.
    I regret that I have spent so much time speaking to matters 
on which we disagree rather than on the areas where we do 
agree. As President Clinton said, ``We all want the benefits of 
regulation. We all want clean air and clean water and safe food 
and toys that our children can play with. But let's face it, we 
all know the regulatory system needs repair. Too often the rule 
writers here in Washington have such detailed lists of dos and 
don'ts that the dos and don'ts undermine the very objectives 
they seek to achieve, when clear goals and operation for 
cooperation would work better. Too often, especially small 
businesses, face a profusion of overlapping and sometimes 
conflicting rules. * * * We need to change this system.''
    Working together, I am confident that we will be able to 
help bring the American people a rational regulatory system 
that works for them, not against them, and that improves our 
quality of life, promotes our health and safety, and protects 
the environment, without imposing undue costs or burdens.
    Thank you, Mr. Chairman. I am happy to answer your 
questions.
                                ------                                

 Statement of Thomas P. Grumbly, Assistant Secretary for Environmental 
 Management, U.S. Department of Energy, Before the Committee on Energy 
                  and Natural Resources, March 6, 1995

    Mr. Chairman, and Members of the Committee. I appreciate 
this opportunity to appear before you to discuss the Department 
of Energy's comments on S. 333, the ``Department of Energy Risk 
Management Act of 1995.''
    In my testimony, I will:
    Begin with some background of the Environmental Management 
program and describe the challenges we face.
    Describe a risk-based approach we have put in place to 
assist us in establishing priorities and in managing the wastes 
and the cleanup activities from the nuclear weapons complex.
    Discuss our comments on the proposed legislation.
    The Department of Energy favors the use of sound science in 
the conduct of risk assessments, the use of risk assessments 
and cost benefit analyses as tools for decision-making, and the 
consideration of risk to human health and the environment in 
establishing priorities. Our Administration appreciates this 
Committee's leadership on this important matter and we are 
prepared to work with this Committee to evolve a sound and 
effective approach that captures many of the essential 
principles in S. 333 as introduced by Senators Murkowski, 
Johnston and Lott.

                            i. introduction

    The Department of Energy's Environmental Management program 
faces many responsibilities and challenges, including how to 
reduce the threat of explosion of tanks filled with highly 
radioactive waste; how to decontaminate and decommission some 
of the largest buildings in the world, which are contaminated 
with radioactive and other hazardous materials; how to safely 
store almost three thousand tons of spent nuclear fuel, some of 
which has been in pools for over 30 years and is not corroding; 
and how to stabilize and safeguard 26 metric tons of plutonium 
scraps and residues--enough to make several thousand 
thermonuclear warheads while protecting the safety and health 
of our workers and the public in communities around our sites. 
Answers to many of these questions rely on the successful 
development of effective and affordable technologies and 
innovative methods for data collection and assessment. 
Furthermore, the Environmental Management program has extensive 
site management responsibilities consisting of a wide range of 
activities including fire safety, providing for basic 
utilities, roadway maintenance, and security.
    The Department of Energy's Environmental Management program 
is making significant strides in reducing the environmental and 
public health risks and hazards from more than fifty years of 
nuclear weapons production, testing, and research. While it has 
been said the Department moved slowly in the past, we have a 
number of accomplishments that are unparalleled in the 
corporate sector in a similar period of time. For example, we 
have:
          Decommissioned 100 facilities across the complex.
          Cleaned up 16 former nuclear weapons and industrial 
        sites and 14 sites associated with uranium mining and 
        milling since 1989.
          Remediated 5,000 public and private properties 
        contaminated with uranium tailings since 1989.
          Treated 2.4 billion gallons of ground water and 1.8 
        billion gallons of surface water since 1989.
          Recycled 16 million pounds of scrap metal.
          Safely transported one million tons of hazardous 
        materials in 140,000 shipments since 1989.
          Made safety improvements to Building 707 and begun to 
        stabilize inventories of pyrophoric plutonium at the 
        Rocky Flats Plant in Colorado in Fiscal Year 1995. This 
        material poses a fire hazard since, under certain 
        conditions, plutonium ignites in air.
          Received 153 spent nuclear fuel elements of United 
        States origin from foreign research reactors. Accepting 
        these fuel elements helps support the Nation's 
        nonproliferation policy since they contain weapons-
        usable highly-enriched uranium.
          Safely transferred 199 spent nuclear fuel elements to 
        safer storage facilities in Idaho.
          Developed, installed, and operated a pump that has 
        virtually eliminated the threat of explosion in a high-
        level waste tank at our Hanford site.
          Saved over $115 million through the use of new 
        technologies.
    DOE's continuing environmental challenge includes a legacy 
of hazardous, radioactive, and mixed wastes from nuclear 
weapons complex facilities encompassing:
          3,300 square miles of land in 36 states;
          3,700 contaminated sites;
          Over 100 million gallons of radioactive/mixed waste 
        in 332 tanks at Hanford, Washington, Oak Ridge, 
        Tennessee, Savannah River, Georgia, Idaho, and Fernald, 
        Ohio;
          169,000 cubic meters of stored mixed low level waste;
          3,000,000 cubic meters of radioactive or hazardous 
        buried waste;
          250,000 cubic meters of contaminated soils (from 
        landfills and plumes);
          Over 600 billion gallons of contaminated groundwater;
          1,200 facilities for decontamination and 
        decommissioning.
    The DOE Strategic Plan's Environmental Quality Strategy 
states that the principal environmental quality objective--and 
greatest challenge--of the Department of Energy is to eliminate 
the risks and imminent threats posed by past departmental 
activities and decisions. Consistent with this objective, the 
primary mission of DOE's Environmental Management Program is 
protecting human health and the environment. The goals that 
have been developed for the program since I became Assistant 
Secretary address: Urgent risks and threats, a safe workplace, 
managerial and financial control, outcome orientation, focused 
technology development, and strong partnerships with 
stakeholders.
    Credible risk assessment and good risk management are and 
will be major keys to success for these goals. Risk assessment 
is the process by which we evaluate the potential adverse 
effects to humans, workers and the environment: risk management 
involves the steps we take to control and reduce these risks. 
The Environmental Management program must employ the best risk 
assessment techniques if it is to set priority goals for 
cleanup responsibly. The ``rightness'' of selected priorities 
and goals has important implications for public health and 
environmental protection. The uncertainty surrounding even the 
best risk assessment requires that all assumptions be 
explicitly stated and be transparent to the public. This is 
critical to the credibility of risk assessment as a tool for 
decision-making.

                         ii. real world issues

    The Environmental Management program is focused on real 
world issues: Keeping nuclear materials safe; maintaining or 
stabilizing our facilities; and minimizing the spread of 
radioactive and chemical contamination and exposure to the 
environment, workers and the public. In addition, we are 
working to return land and facilities to productive use. We are 
investing in technological solutions where there were none 
before and in order to do things cheaper, faster, and better. 
Environmental Management deals with risks, costs, benefits, 
communication, priority-setting, and decisions on a daily and 
routine basis, at all levels of management. It is not an 
academic exercise, and we cannot afford to get lost in 
``theoretical'' exercises. Risk is one of several factors 
considered in our decision-making and for us, risk and risk 
assessment are not about ``theology'' but about the application 
and use of powerful tools. Our responsibilities parallel those 
of major corporations in the private sector, who are subject to 
the laws of the land. We are meeting our legal obligations, but 
as we do so, tougher resource allocation decisions will have to 
be made.
    Some of the difficult decisions the Department faces with 
regard to the management of these problems include:
          How do we insure that special nuclear materials are 
        managed safely?
          Where will we dispose of the wastes generated in the 
        cleanup process?
          How will our land and facilities be used in the 
        future?
          To what extent can we control access to our 
        facilities and the contamination we leave in place?
          To what extent should we put our workers at risk 
        during the cleanup of our site and facilities and what 
        are the benefits from these exposures?
          To what extent are we willing to affect sensitive 
        ecosystems to clean-up soil contamination?
          How do we protect valuable water resources from 
        further degradation?

  iii. national academy of sciences--national research council report

    We cannot answer and/or address all of these questions at 
once. Logically, risk assessment could be an invaluable tool in 
making some of these decisions. When I became Assistant 
Secretary for Environmental Management, I identified that the 
major problem faced by the department is that we have not been 
able to define what the risks are on a site-by-site basis and 
in a systematic way. In addition, I believe that it matters 
``who'' does the risk assessment. Although risk assessment is 
valuable, there are many methodology questions about these 
risks and how to assess them.
    Knowing the controversy surrounding risk and the use of a 
risk-based approach for Environmental Management, I requested 
in July 1993, two months after assuming my current 
responsibilities, that the National Academy of Sciences--
National Research Council advise the Department on whether and 
how risk and risk-based decisions could be incorporated into 
the Environmental Management Program. The National Academy of 
Sciences was chartered by the Congress in 1863 to advise the 
federal government on scientific and technical matters and has 
long been recognized for its distinguished contributions to 
national science, engineering, and medical fields.
    My request to the National Research Council resulted in the 
January 1994 report, ``Building Consensus Through Risk 
Assessment and Management of the Department of Energy's 
Environmental Remediation Program.'' In the report, the Council 
identified the following obstacles to a risk-based management 
approach:
          Use of risk assessment to set priorities for 
        remediation is viewed with skepticism by many in the 
        public.
          Risk assessment is viewed as a process without 
        opportunity for public input.
          Risk assessment is viewed as a mechanical process.
          Risk assessment is viewed as a process that does not 
        give proper weight to those affected stakeholders.
          Risk assessment is viewed with concern by 
        stakeholders as a method for allocating financial 
        resources between facilities, and to a lesser degree, 
        to allocate resources within facilities without 
        adequate consideration of other important criteria.
    The National Research Council report identified critical 
risk assessment issues the Environmental Management Program 
needed to overcome, the first of which was to understand and 
state the limitations of risk assessment and that risk 
assessment is just one part of the overall decision-making 
process. Further and specifically to Environmental Management's 
Program, assumptions needed to be clearly stated about the 
future use of the land to be remediated. Such assumptions are 
critical to determining future risks.
    The National Research Council report also identified 
barriers to implementing a risk-based approach within 
Environmental Management, including:
          Coordinating risk management programs within DOE, 
        preserving flexibility, yet implementing common methods 
        and approaches for different facilities.
          Coordinating methodology and developing working 
        relationships with other federal and state agencies.
          Understanding (by stakeholders and DOE managers) the 
        strengths/limitations of risk assessment.
    Nevertheless, the National Research Council concluded that 
the use of risk assessments and a risk-based approach would be 
feasible, even with little current information, provided its 
purposes and limitations are clearly defined. If risk 
assessments are conducted as an iterative process, then the 
initial analyses could help define where more information is 
needed.
    Further, the National Research Council stated that risk 
assessments are desirable because they can help build consensus 
to set overall priorities for spending limited funds, including 
those of stakeholders and citizens. Such assessments can 
provide information and interpretation for managing risks for 
public and worker health and safety, in addition to comparing 
potential outcomes and cost effectiveness of possible actions. 
Early and full public involvement and consideration of 
cultural, socioeconomic, historic and religious values, need to 
be pursued for the process to be successful.

                         iv. report to congress

    At the same time the National Research Council prepared its 
report. Congress reflected its increasing concern over the 
budget for the program, as well as the concern for the costs 
and effectiveness of its risk reduction efforts. Congress 
directed the Department to submit a report by June 30, 1995 to 
the Committees on Appropriations, evaluating the risks to the 
public health and safety posed by the conditions at weapons 
complex facilities that are subject to compliance agreements 
with our state and federal regulators. The Congressional 
conferees further agreed that the Department needed to develop 
a mechanism for establishing priorities among competing cleanup 
requirements. We are on schedule to deliver this report to you 
in June.

                           v. risk principles

    Obviously, risk has become a highly visible topic. Public 
discussions on risk assessments and analysis have been 
particularly prominent in the Congress and the press lately, 
yet the discussion itself is not new. Policy makers, 
scientists, economists, and students of public administration 
have long debated the subject. The growing body of literature 
that has been generated is now receiving increased visibility, 
capturing the attention of both the Congress and many citizens 
throughout the Department of Energy's far reaching community.
    Because of this increased emphasis on risk activities, the 
Department has needed to give focus to, and guidance for, all 
such initiatives now being conducted or anticipated. A general 
framework for risk analysis is a timely and appropriate aid to 
policy making.
    The Clinton Administration recognized the importance of 
applying sound risk analysis procedures to regulatory decision-
making early on. An interagency regulatory work group has 
established a set of risk principles to guide decision makers 
in the areas of risk assessment, risk management, risk 
communication and priority-setting. DOE is the first agency to 
adopt these principles, which were modified to apply more 
specifically to Department of Energy programs and processes, to 
accommodate our citizen values, to more specifically address 
inter-generational issues, and to clarify the role of 
prevention programs and social and economic considerations in 
risk management. These modifications are a tailoring that does 
not depart from the basic tenets of general principles. The 
Environmental Management Program was the principle driver in 
the department for adopting these principles and for modifying 
them for specific activities and situations unique to DOE. We 
sent these principles out to all of our field offices for 
comment for them to use as guidance. We know we will need to 
use these principles to prioritize our work at each site--
particularly if we move to a site based budgeting scheme. The 
principles are designed to be a first cut at defining and 
communicating how risk analysis will be used within the 
Department and fall into four major categories (described in 
greater detail below): (1) risk assessment; (2) risk 
management; (3) risk communication, and (4) priority setting.
    The DOE Principles for Risk Assessment recommend using the 
best available information from all sources. Characterization 
should be qualitative and quantitative (descriptive and 
mathematical). Judgments and assumptions, should be explicitly 
stated. All appropriate hazards to human health, worker health 
and the environment should be included. Peer review should be 
used to ensure high standards. The principles stress the 
importance of consistent approaches.
    The DOE Principles for Risk Management recommend an 
analysis of the distribution of risks and costs/benefits of 
potential risk management strategies, using the best available 
tools and techniques. Where programs have the discretion to 
choose among alternative approaches to reducing risk, they 
should do so in the context of prevention programs and broad 
social and economic considerations, such as equity. Programs 
should develop criteria and methods to evaluate the 
effectiveness of decisions.
    The DOE Principles for Risk Communication involve the open, 
2-way exchange of information between professionals and the 
public. The principles emphasize the importance of stating risk 
management goals, assumptions, uncertainties and comparisons 
clearly, accurately, and meaningfully. Public access should be 
provided in a timely manner.
    The DOE Principles for Priority Setting Using Risk Analysis 
seeks to compare risks by grouping them into broad categories 
of concern (e.g., high, medium, low) and identifying the 
population at risk. Programs should set priorities in managing 
risks to account for relevant management and social 
considerations. The setting of priorities should be informed by 
as broad a range of views as possible, ideally with consensus.

                    vi. comments on risk legislation

Overall position

    As I stated earlier, the Department of Energy favors the 
use of sound science in the conduct of risk assessments, and 
the use of risk assessments and cost benefit analyses as tools 
for decision-making and in establishing priorities. S. 333 as 
introduced provides a basis for the development of a risk 
framework for legislation that the Department could support.

S. 333 principles for risk assessments too prescriptive

    The bill introduced to date raises several important 
concerns. S. 333 requires a certification that proposed 
measures will reduce risks, generate benefits that justify 
costs in the broad sense of Executive Order 12866, and are 
cost-effective among the legally relevant options. The 
Secretary must report to Congress if certification cannot be 
made. The bill does not incorporate sufficient flexibility to 
allow the Department to address other important factors such as 
public involvement in priority setting. This flexibility is 
currently embedded in DOE programs and is reflected in the DOE 
Risk Principles.
    An example where public involvement has played a major role 
in the decision-making process will be discussed later in the 
hearing by John Applegate, the Chairman of Environmental 
Management's Site-Specific Advisory Board for Fernald, Ohio. 
Although his views may be different from the Department's, as a 
result of public involvement in our program regulators, 
technical and management staff, cost-effective solutions were 
agreed to for the contamination issues. The proposed 
legislation would make it more difficult for DOE and other 
federal agencies to address these important elements. As part 
of the regulated community and as a preparer of risk 
assessments. DOE expects compliance with these provisions will 
delay certain DOE activities, and thus could increase health, 
safety and environmental risks and program costs over time.
    Second, S. 333 goes well beyond the attempt at 
standardization of risk assessment methods under Superfund that 
the Clinton Administration supported in the last Congress. The 
risk assessment approach outlined in S. 333 is prescriptive and 
dictates a framework for assessing risk that is most suitable 
for the evaluation of health impacts from exposure to 
environmental toxins, most of which are assumed to be 
carcinogens. Consideration must also be given to operational 
risks such as those involving nuclear safety, risks related to 
birth defects effects, and immediate health effects related to 
exposure to hazardous materials. Most importantly, the 
principles in S. 333 do not incorporate risks to workers and 
the environment during remediation. Incorporation of such risks 
would be a major improvement to the legislation.

Review requirements

    The requirement in S. 333 for the Secretary to review and 
revise risk assessments if significant new information or 
methodologies become available, or if there are other reasons 
why such a review and revision should be conducted causes us 
concern about our ability to implement decisions that involve 
actions--building of waste treatment and disposal facilities, 
containing or transporting materials. Members of the public 
could petition the Secretary for review of particular risk 
assessments not to their liking and cause significant delays in 
actual clean-up work.

vii. specific impacts of s. 333 legislation on environmental management

    The long-term decisions that Environmental Management as a 
regulated entity must be concerned about are: the future use of 
the lands for which we are now responsible; the short-term and 
long-term solutions for disposal and treatment of the nuclear 
and chemical wastes that were produced during weapons 
production and during stabilization treatment and remediation 
at the sites; and the extent of institutional controls that 
must be maintained to prevent exposure to, or releases of, the 
nuclear and/or chemical materials at our sites.
    The clean-up decisions that Environmental Management must 
implement are based on regulatory decisions, often made without 
cost-benefit information. S. 333 would require that benefit/
cost assessment be completed and available in the decision 
process. We would expect that this information would then be 
used by regulators in their decisions. This could be very 
important. In Environmental Management's Environmental 
Restoration program, approximately 90 percent of approximately 
280 decisions have required clean-up action by DOE. We do not 
have benefit/cost assessment on these actions but a number of 
studies that have been done generally tend to show that if 
positive net benefits were a decision criterion, fewer actions 
would result.
    The underlying assumption in S. 333 is that increased 
understanding of the risks, costs, and benefits will lead to 
better and more balanced decisions. We believe that for the 
Environmental Management Program, the direct cost of conducting 
the assessment of risks, costs, and benefits will have a 
relatively small impact on an annual basis. Indirect costs will 
increase because of delays in deactivating and decommissioning 
activities resulting in increasing surveillance and maintenance 
costs. While indirect costs are difficult to estimate because 
the number of factors to consider, we believe that they would 
be small on an annual basis.
    Properly structured legislation building on the Committee's 
original proposal in S. 333 would provide the framework to 
provide regulators, decision makers, and the public with very 
useful information about risks and cost-benefit assessment in 
making decisions. We believe the net overall impact of such 
revised legislation would be positive. However, the revised 
legislation should incorporate the following.
          It should have a reasonable dollar or other threshold 
        for the requirements of the legislation to be 
        applicable,
          It should state clearly that the legislation does not 
        provide an independent basis for judicial review, and
          It should not override the substantive standards or 
        requirements of other statutes.

                             viii. example

    In closing, I want to share with you an example of the 
types of decisions and priority setting activities that 
Environmental Management has addressed and resolved. This 
example demonstrates the flexibility that we as public mangers 
need to have in our decision-making and managing of risk 
reduction actions. As we state in our DOE principles, risk is a 
component in decision-making, but not the only consideration. 
Values, justice, benefits, and costs have been factors that 
must be considered to arrive at successful decisions.
    In the 1950s, the United States began the Plowshare 
program, an attempt to find peaceful uses of nuclear 
explosions. One such attempt, Project Chariot, was hoped to 
allow enlargement of a harbor near Point Hope in Northern 
Alaska. More than thirty years later, Environmental Management 
had to deal with the legacy in cooperation with the State of 
Alaska.
    Briefly, 26 millicuries of radioactive Cesium were placed 
on the tundra in a remote area of Northwest Alaska, as an 
experiment to learn with would happen to the material under 
those climatic conditions. No safeguards for the Native 
Americans were provided and no information about the 
``experiment'' was provided until fairly recently.
    After over 30 years, the radioactive material left in place 
had decayed to 3 millicuries. There was a small possibility 
that up to 5 curies might have been brought to the site, but no 
firm evidence has been uncovered to support this possibility.
    From a technical assessment of the risks, the health risks 
to the Native American population were assessed to be low, due 
to the lack of exposure and remoteness of the site. However, 
the level of public concern was very high on the part of the 
citizens of the North Slope and Point Hope, Alaska. 
Environmental Management removed the contaminated soil in a 
manner acceptable to the citizens in Northwest Alaska for $7 
million.
    This example demonstrates practical, real-world decisions 
and issues that our program faces every day. We in the DOE have 
materials that pose unique challenges unlike other waste 
management and restoration programs. Flexibility and judgment 
are needed within a defined framework to be able to manage a 
successful, cost-effective program that reduces the risks to 
public health, worker health, and the environment.

                             ix. conclusion

    In conclusion, Mr. Chairman and members of the Committee, I 
am pleased to have had this opportunity to share with you our 
views on S. 333 and how it would relate to our program. We 
believe, in principle, that a properly and carefully structured 
risk assessment program can have significant benefits. We are 
prepared to work with the Congress to evolve a sound and 
effective approach to such a risk analysis program.
                   MINORITY VIEWS OF SENATOR JOHNSTON

    I want to make clear that my vote against reporting this 
bill does not indicate a lack of support for legislation 
requiring risk assessment and cost-benefit analysis when 
promulgating major regulations. In fact, as many of my 
colleagues know, I authored a risk assessment amendment that 
passed the Senate in 1993 by a vote of 95-3. I then made 
certain modifications to the amendment before passing it again 
in 1994 by a vote of 90-8.
    I voted against reporting this bill solely because I became 
concerned that the judicial review provisions in the bill, when 
applied to the specific requirements of the bill, could well 
lead to extensive litigation. The bill contains at least 44 
steps or requirements that the agency must comply with in 
performing the risk assessment and cost-benefit analysis. For 
example, the bill requires that risk assessment must be based 
on the ``best available, scientifically replicable data.''
    I agree that we should include specific steps in the 
statute, but I became concerned that, under the bill's judicial 
review provision, a failure by the agency to fully comply with 
each of these steps might lead a court to overturn the 
regulation, even if the failure to comply was relatively 
trivial in nature. The basis for the judge's action would be 
the language in section 706 of the Administrative Procedures 
Act that a rule may be held invalid if it is ``not in 
accordance with law,'' or is ``without observance of procedure 
required by law.''
    To avoid this potential pitfall, I intend to propose 
changes to the bill's judicial review language before the bill 
reaches the floor. Essentially, I want to make clear that the 
adequacy of compliance with this Act may be considered by the 
court solely for the purpose of determining whether the final 
agency action is arbitrary and capricious or an abuse of 
discretion. Otherwise, I fear that this important legislation 
may become a lawyers' dream by allowing litigation regarding 
the adequacy of compliance with each and every requirement of 
the bill, no matter how inconsequential the failure to comply 
may have been.
                                             J. Bennett Johnston.  
                        changes in existing law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the bill S. 333, as ordered 
reported.