EPA-230-02-87-02-4

    January 1987

**Improving RIAs: Suggestions for the**\
** Analysis of Hazardous Waste Regulations**

    EXECUTIVE SUMMARY

    by
    Josephine A. Mauskopf 
    Donald Anderson 
    Pamela Jacobs
    Research Triangle Institute Research 
    Triangle Park, NC 27709

    Contract No.:  68-01-7033 
    Project Officer:  Ann Fisher

    Economic Analysis Division
    Office of Policy, Planning and Evaluation
    U.S. Environmental Protection Agency
    Washington, DC

    The information in this document has been funded wholly or in part by the United States Environmental Protection Agency underContract No. 68-01-7033, work assignments 169 and 198.  It has been subjected to the Agency's peer and administrative review and has been approved for publication as an EPA document.  Mention or trade names or commercial products does not constitute endorsement or recommendation for use.

# `EXECUTIVE SUMMARY`

    ES.1 FRAMEWORK FOR ANALYSIS

    Executive Order 12291, issued by President Reagan on February 17, 1981,

    requires that Federal agencies prepare a regulatory impact analysis (RIA) for 

    their new major regulations.  The intent of this order was to ensure that 

    regulations would be subject to a rigorous benefit-cost analysis before they

    could be promulgated and that alternatives to regulation would be considered. 

`As stated in the Environmental Protection Agency (EPA) `[`Guidelines for Perform-`]{.underline}

[`ing Regulatory Impact Analyses`]{.underline}`, "...by developing and organizing information, `

    quantifying and monetizing benefits and costs to the extent possible, and 

    determining distributional effects and economic impacts, the RIA should pro-

    vide decisionmakers with a comprehensive assessment of the implications of 

    alternative regulatory actions."  This study explores how future hazardous 

    waste RIAs could be performed so as to provide such comprehensive information 

    for regulatory decisionmakers.

    Figure ES-1 illustrates the eight main components described by EPA for its RIAs of hazardous waste regulations as well as other environmental rulings.  A hazardous waste RIA starts with a brief description of the nature of the problem the proposed regulations are designed to correct as well as the Agency's statutory authority to impose such regulations.  The current and proposed regulations and other regulatory alternatives to be analyzed are presented next.  Major sources of data used in the analysis are then described.  Supplementary data needed for each specific estimation model used in the analysis are presented later with the estimation models.

    The analysis of impacts on products markets uses an economic model to determine how the new regulations will affect the prices and quantities of various goods.  Impacts on employment level and plant closures are estimated as part of this analysis.  The analysis of impacts on products markets pro-vides inputs into two further components of the RIA:  estimating the benefits due to the resulting changes in exposure to hazardous substances, and estimating the costs of the new regulation due to enforcement and compliance activities.

    ES-1

    ES-2

    New regulations for managing hazardous wastes may reduce releases of the toxic substances into the environment in two ways:  through the use of different disposal technologies or cleanup methods,and through reductions in the generation of hazardous wastes.  The exposure analysis estimates the accompanying changes in environmental contamination and human exposure attributable to the new regulations.  The results of the exposure analysis are used to estimate the benefits from regulatory action.  Generally,the major benefit expected as a result of hazardous waste regulations is an improvement in health for persons at risk of exposure.  Other benefits also may occur, such as fewer communities having to find alternative water supplies or engage in costly cleanup activities when aquifers become contaminated.

    The promulgation of a regulation results in costs that include:  increased roduction costs incurred by industry, increased product costs to consumers, consumer and producer surplus losses, dislocation costs from unemployment of labor and capital, and government costs from regulation.  These costs are estimated using the results of the analysis of impacts on products markets. n some cases, a new regulation may result in reduced costs to producers and consumers in at least some market sectors.

    The final component of the RIA compares the estimates of costs and benefits. This comparison should provide decisionmakers with a comprehensive assessment of the implications of alternative regulatory actions.

    ES.2 COMPARATIVE ANALYSIS

    Table ES-1 lists eight recent hazardous waste RIAs.  Table ES-2 summarizes our comparative analysis of how well they satisfy the EPA guidelines for performing RIAs.

    All of the RIAs include some quantitative analysis of the proposed regulation and all, except one, include some quantitative analysis of other regulatory alternatives under consideration.  No RIA addresses alternatives to Federal regulation, and most do not discuss market-oriented regulatory alternatives and alternatives beyond current legislative scope.

    All the RIAs use a variety of data sources, including some estimates based on informed judgment.  Five of the eight perform sensitivity analysis on some or all of the variable values based on informed judgment.  Half of the RIAs rely heavily on survey data to characterize the wastes, waste facilities,

    ES-3

    TABLE ES-1. REGULATORY IMPACT ANALYSES

<table>
<tbody>
<tr class="odd">
<td><p><code> Abbreviated title</code></p></td>
<td><p><code> Full reference</code></p></td>
<td></td>
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<td></td>
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<td></td>
<td></td>
</tr>
<tr class="even">
<td><p><code> 1.   Contingency Plan:</code></p></td>
<td><p><u><code>Regulatory Impact Analysis of the Revisions to the National Oil and Hazardous Substances </code></u><br />
<u><code>Pollution Contingency Plan</code></u><code>. ICF, Inc. For U.S. EPA, Office of Emergency and Remedial </code><br />
<code>Response.  1983.</code></p></td>
<td><p><code> 2.   Used Oil:</code></p></td>
<td><p><u><code> Regulatory Impact Analysis of Proposed Standards for the Management of Used Oil.</code></u><code> Temple, </code><br />
<code>Barker, and Sloane. For U.S. EPA, Economic Analysis Branch, Office of Solid Waste. </code><br />
<code>November 1985.</code></p></td>
<td><p><code> 3.   Small-Quantity Generators:</code></p></td>
<td><p><u><code>Regulatory Analysis for Proposed Regulation Under RCRA for Small Quantity Generators of </code></u><br />
<u><code>Hazardous Wastes.</code></u><code> Industrial Economics. For U.S. EPA, Office of Solid Waste, June 1985.</code></p></td>
<td><p><code> 4.   Reportable Quantities:</code></p></td>
<td><p><u><code>Regulatory Impact Analysis of Reportable Quantity Adjustments Under Section 102 and Section 103 of </code></u><br />
<u><code>the Comprehensive Environmental Response, Compensation, and Liability Act.</code></u><code> ICF, Inc. For </code><br />
<code>U.S. EPA, Emergency Response Division, March 1985.</code></p></td>
<td><p><code> 5.   Incineration:</code></p></td>
<td><p><u><code>Supporting Documentation for the RCRA Incinerator Regulations.</code></u><code> PEER Consultants, for U.S. </code><br />
<code>EPA, Office of Solid Waste and Emergency Response, October 1984.</code></p></td>
<td><p><code> 6.   Land ban:</code></p></td>
<td><p><u><code>Regulator Analysis of Proposed Restrictions on Land Disposal of Hazardous Wastes.</code></u><code> </code><br />
<code>Industrial Economics, Inc. and ICF, Inc.  For U.S. EPA, Office of Solid Waste.  December </code><br />
<code>1985.</code></p></td>
<td><p><code> 7.   Dioxins:</code></p></td>
<td><p><u><code>Regulatory Analysis of Proposed Restrictions on Land Disposal of Certain Dioxin-Containing </code></u><br />
<u><code>Wastes.</code></u><code> Industrial Economics, Inc.  For U.S. EPA, Office of Solid Waste.  Draft Final Report. </code><br />
<code> January 1986.</code></p></td>
</tr>
<tr class="odd">
<td><p><code> 8.   Solvents:</code></p></td>
<td><p><u><code>Regulatory Analysis of Proposed Restrictions on Land Disposal of Certain Solvent Wastes.</code></u><code> </code><br />
<code>Industrial Economics.  For U.S. EPA, Office of Solid Waste.  Draft Report.  January 1986.</code></p></td>
<td></td>
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</tr>
</tbody>
</table>

    ES-4

    TABLE ES-2. SUMMARY OF COMPARATIVE ANALYSIS OF EIGHT RIAs

<table>
<tbody>
<tr class="odd">
<td><p><code>Topic</code></p></td>
<td><p><code>Contingency plan</code></p></td>
<td><p><code>Used oil</code></p></td>
<td><p><code>Small-quantity generators</code></p></td>
<td><p><code>Reportable quantities</code></p></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
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</tr>
<tr class="even">
<td><p><code>Nature of </code><br />
<code>problem</code></p></td>
<td><p><code>Releases of oil and haz-</code><br />
<code>ardous substances to</code><br />
<code>water and protection of </code><br />
<code>environment when dis-</code><br />
<code>charges do occur</code></p></td>
<td><p><code>Management of used oil</code></p></td>
<td><p><code>Disposal of hazardous waste from small-quantity </code><br />
<code>generators</code></p></td>
<td><p><code>Releases of hazardous wastes to all environ-</code><br />
<code>mental media from spills/accidents</code></p></td>
<td><p><code>Statutory </code><br />
<code>  authority</code></p></td>
<td><p><code>CERCLA</code></p></td>
<td><p><code>RCRA</code></p></td>
<td><p><code>RCRA</code></p></td>
<td><p><code>CERCLA</code></p></td>
<td><p><code>Regulatory alternatives</code></p></td>
<td><p><code>Some quantitative anal-</code><br />
<code>ysis for two alternative</code><br />
<code>regulations</code></p></td>
<td><p><code>Quantitative analysis for four alternative regula-</code><br />
<code>tions</code></p></td>
<td><p><code>Some quantitative analysis for six alternative regu-</code><br />
<code>lations</code></p></td>
<td><p><code>Some quantitative analysis for two alternative </code><br />
<code>regulations</code></p></td>
<td><p><code>Data sources</code><br />
<code>used</code></p></td>
<td><p><code>Reporting data, industry </code><br />
<code>data, estimates from EPA </code><br />
<code>and other publications, </code><br />
<code>and informed judgment; </code><br />
<code>some sensitivity analysis</code></p></td>
<td><p><code>Industry data, estimates from EPA and other publi-</code><br />
<code>cations,and informed </code><br />
<code>judgment</code></p></td>
<td><p><code>Reporting data, survey </code><br />
<code>data, industry data, estimates from EPA and other publications, and informed judgment; some sensitivity analysis</code></p></td>
<td><p><code>Reporting data, survey data, case study data, </code><br />
<code>industry data, estimates from EPA and other publications, and informed judgment; some sensitivity </code><br />
<code>analysis</code></p></td>
</tr>
<tr class="odd">
<td><p><code>Impacts in </code><br />
<code>products</code><br />
<code>markets</code></p></td>
<td><p><code>Not estimated</code></p></td>
<td><p><code>Estimated percent change in prices and production levels</code></p></td>
<td><p><code>Not estimated because not expected to be significant</code></p></td>
<td><p><code>Not estimated because not</code><br />
<code>expected to be significant</code></p></td>
<td><p><code>Exposure </code><br />
<code>estimates</code></p></td>
<td><p><code>Number of people exposed </code><br />
<code>in air, groundwater, and </code><br />
<code>surface water; no expo-</code><br />
<code>sure levels or durations</code></p></td>
<td><p><code>Number of people and steady-</code><br />
<code>state average exposure in air, groundwater, and surface water; assumed 70-year </code><br />
<code>exposure duration</code></p></td>
<td><p><code>Number of people and steady-state average exposure in air with 70-year exposure duration; number of people and moving average exposure </code><br />
<code>in groundwater with </code><code>400 </code><br />
<code>year total and 70-year individual exposure durations</code></p></td>
<td><p><code>None</code></p></td>
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</tr>
<tr class="even">
<td><p><code>Estimates of </code><br />
<code>cancer and </code><br />
<code>other harmful</code><br />
<code>health effects</code></p></td>
<td><p><code>Discussed for typical </code><br />
<code>chemicals but no quanti-</code><br />
<code>tative estimates</code></p></td>
<td><p><code>Cancer cases for used oil use in 10 model facilities </code><br />
<code>and national aggregates;exposure levels relative to </code><br />
<code>RFD for noncarcinogens</code></p></td>
<td><p><code>Cancer and noncancer cases for disposal in landfills </code><br />
<code>and to POTW</code></p></td>
<td><p><code>Discussed very briefly</code></p></td>
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</tr>
</tbody>
</table>

    ES-5

    TABLE ES-2. SUMMARY OF COMPARATIVE ANALYSIS OF EIGHT RIAs (contined)

+-------------+-------------+-------------+-------------+-------------+
| `Topic`     | `Contin     | `Used oil`  | `Smal       | `           |
|             | gency plan` |             | l-quantity  | Reportable  |
|             |             |             | generators` | quantities` |
+-------------+-------------+-------------+-------------+-------------+
| `Esti       | `Non        | `Non        | `None`      | `No         |
| mates of `\ | e --briefly | e - briefly |             | ne--briefly |
| `other      |  discussed` |  discussed` |             |  discussed` |
|  harmful `\ |             |             |             |             |
| `effects`   |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| `Esti       | `Eng        | `Real       | `Eng        | `Eng        |
| mates of `\ | ineering co | resource co | ineering co | ineering co |
| `costs`     | mpliance `\ | sts from `\ | mpliance `\ | mpliance `\ |
|             | `c          | `p          | `c          | `c          |
|             | osts and re | rojected im | osts and re | osts and re |
|             | gulatory `\ | pacts on `\ | gulatory `\ | gulatory `\ |
|             | `costs`     | `produc     | `costs`     | `costs`     |
|             |             | ts markets` |             |             |
+-------------+-------------+-------------+-------------+-------------+
| `Cost-ben   | `Useful     | `Usef       | `           | `Table      |
| efit compar |  table for  | ul table pr | None given` |  for costs  |
| isons in `\ | proposed `\ | esenting `\ |             | only for `\ |
| `use        | `reg        | `cost-e     |             | `tw         |
| ful format` | ulation, bu | ffectivenes |             | o alternati |
|             | t compar-`\ | s ratios `\ |             | ve regula`\ |
|             | `son        | `for all al |             | `tions`     |
|             |  of alterna | ternatives` |             |             |
|             | tive new `\ |             |             |             |
|             | `reg        |             |             |             |
|             | ulations no |             |             |             |
|             | t included` |             |             |             |
+-------------+-------------+-------------+-------------+-------------+

    ES-6

    TABLE ES-2. SUMMARY OF COMPARATIVE ANALYSIS OF EIGHT RIAs (continued)

<table>
<tbody>
<tr class="odd">
<td><p><code>Topic</code></p></td>
<td><p><code>Incineration</code></p></td>
<td><p><code>Land ban</code></p></td>
<td><p><code>Dioxins</code></p></td>
<td><p><code>Solvents</code></p></td>
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</tr>
<tr class="even">
<td><p><code>Nature of </code><br />
<code>problem</code></p></td>
<td><p><code>Stack emissions from </code><br />
<code>hazardous waste incin-</code><br />
<code>erators</code></p></td>
<td><p><code>Land-disposed wastes</code></p></td>
<td><p><code>Disposal of dioxin-</code><br />
<code>containing wastes, espe-</code><br />
<code>cially land disposal</code></p></td>
<td><p><code>Disposal of solvent wastes, especially land disposal</code></p></td>
<td><p><code>Statutory </code><br />
<code>authority</code></p></td>
<td><p><code>RCRA</code></p></td>
<td><p><code>RCRA</code></p></td>
<td><p><code>RCRA</code></p></td>
<td><p><code>RCRA</code></p></td>
<td><p><code>Regulatory alternatives</code></p></td>
<td><p><code>Some quantitative anal-</code><br />
<code>ysis for two alternative </code><br />
<code>regulations</code></p></td>
<td><p><code>Quantitative analysis for </code><br />
<code>four alternative regula-</code><br />
<code>tions</code></p></td>
<td><p><code>Quantitative analysis for </code><br />
<code>proposed regulation only</code></p></td>
<td><p><code>Quantitative analysis for </code><br />
<code>two alternative regula-</code><br />
<code>tions</code></p></td>
<td><p><code>Data sources </code><br />
<code>used</code></p></td>
<td><p><code>Reporting data, survey </code><br />
<code>data, case study data, </code><br />
<code>industry data, estimates </code><br />
<code>from EPA and other publi-</code><br />
<code>cations, and informed </code><br />
<code>judgment; some sensitivi-</code><br />
<code>ty analysis</code></p></td>
<td><p><code>Survey data, estimates from </code><br />
<code>EPA and other publications, </code><br />
<code>and informed judgment; </code><br />
<code>uncertainty analysis for </code><br />
<code>exposure estimates</code></p></td>
<td><p><code>Reporting data, survey </code><br />
<code>data, industry data, </code><br />
<code>estimates from EPA and </code><br />
<code>other publications, and </code><br />
<code>informed judgment; uncer-</code><br />
<code>tainty analysis for expo-</code><br />
<code>sure estimates</code></p></td>
<td><p><code>Survey data, estimates </code><br />
<code>from EPA and other publi-</code><br />
<code>cations, and informed </code><br />
<code>judgments; some sensitiv-</code><br />
<code>ity analysis</code></p></td>
<td><p><code>Impacts in </code><br />
<code>products </code><br />
<code>markets</code></p></td>
<td><p><code>Not estimated</code></p></td>
<td><p><code>Not estimated</code></p></td>
<td><p><code>Not estimated</code></p></td>
<td><p><code>Not estimated</code></p></td>
<td><p><code>Exposure </code><br />
<code>estimates</code></p></td>
<td><p><code>Number of people and </code><br />
<code>steady-state exposure </code><br />
<code>level in air; assumed </code><br />
<code>70-year exposure dura-</code><br />
<code>tion</code></p></td>
<td><p><code>Distribution of number of </code><br />
<code>people and steady-state </code><br />
<code>exposure levels in air, </code><br />
<code>groundwater, and surface </code><br />
<code>water; assumed 70-year </code><br />
<code>exposure duration</code></p></td>
<td><p><code>Not presented</code></p></td>
<td><p><code>Number of people not esti-</code><br />
<code>mated; average level and </code><br />
<code>actual duration of expo-</code><br />
<code>sure in air and ground-</code><br />
<code>water; 70-year exposure </code><br />
<code>duration assumed for </code><br />
<code>health risk estimates</code></p></td>
<td><p><code>Estimates of </code><br />
<code>cancer and </code><br />
<code>other harmful </code><br />
<code>health effects</code></p></td>
<td><p><code>Cancer cases for inhala-</code><br />
<code>tion of air emissions </code><br />
<code>from incinerators; poten-</code><br />
<code>tial to be above safe </code><br />
<code>threshold for noncarcin-</code><br />
<code>ogens</code></p></td>
<td><p><code>Cancer and noncancer cases </code><br />
<code>for multiple disposal me-</code><br />
<code>thods; weighted by severity </code><br />
<code>factor</code></p></td>
<td><p><code>Cancer cases for multiple </code><br />
<code>disposal methods; no esti-</code><br />
<code>mates for noncarcinogens</code></p></td>
<td><p><code>Cancer cases for multiple </code><br />
<code>disposal methods; exposure </code><br />
<code>level relative to RFD for noncarcinogens</code></p></td>
</tr>
<tr class="odd">
<td><p><code>Estimates of </code><br />
<code>other harmful </code><br />
<code>effects</code></p></td>
<td><p><code>None</code></p></td>
<td><p><code>None--briefly discussed</code></p></td>
<td><p><code>None</code></p></td>
<td><p><code>None--briefly discussed</code></p></td>
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</tr>
</tbody>
</table>

    ES-7

    TABLE ES-2 SUMMARY OF COMPARATIVE ANALYSIS OF EIGHT RIAs (continued)

+-------------+-------------+-------------+-------------+-------------+
| `Topic`     | `In         | `Land ban`  | `Dioxins`   | `Solvents`  |
|             | cineration` |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| `Esti       | `Eng        | `Eng        | `Eng        | `Eng        |
| mates of `\ | ineering co | ineering co | ineering co | ineering co |
| `costs`     | mpliance `\ | mpliance `\ | mpliance `\ | mpliance `\ |
|             | `costs`     | `costs`     | `costs`     | `costs`     |
+-------------+-------------+-------------+-------------+-------------+
| `Cost-ben   | `No;        | `           | `No, discu  | `Comp       |
| efit compar | costs estim | None given` | ssion is `\ | ares percen |
| isons in `\ | ated for `\ |             | `           | t change `\ |
| `use        | `comp       |             | inadequate` | `           |
| ful format` | liance with |             |             | in costs to |
|             |  current `\ |             |             |  percent `\ |
|             | `regul      |             |             | `change     |
|             | ations only |             |             |  in benefit |
|             | :  corre-`\ |             |             | s.  Does `\ |
|             | `sp         |             |             | `n          |
|             | onding bene |             |             | ot look at  |
|             | fits not `\ |             |             | absolute `\ |
|             | `estimated` |             |             | `ch         |
|             |             |             |             | anges.  Dur |
|             |             |             |             | ation of `\ |
|             |             |             |             | `dis        |
|             |             |             |             | posal diffe |
|             |             |             |             | rent for `\ |
|             |             |             |             | `costs an   |
|             |             |             |             | d benefits` |
+-------------+-------------+-------------+-------------+-------------+

    ES-8

    and current management practices.  The other half primarily use reporting data 
    and previous EPA reports for their waste characterizations.  Estimates from 
    data provided in a report from a subcontractor or from a previous EPA report 
    are used extensively as well as estimates from the research literature.  In-
    dustry sources are used in many of the RIAs for data on current practices, 
    costs, and resources available for cleanup programs.

    All eight RIAs identify and discuss in some detail the markets that would 
    be affected directly by the regulations.  Impacts on market prices and output 
    rates constitute "primary" economic impacts of regulations.  Seven of the 
    eight RIAs do not project these prices and output impacts at all.  Of these 
    seven, two explicitly state that price and output impacts are expected to be 
    insignificant and are thus not projected.  Others discuss price and output 
    impacts qualitatively.  The Used Oil RIA projects price and output impacts 
    both in percentage and absolute terms.

    "Secondary" market impacts include impacts on employment and impacts on 
    capital utilization/industry growth.  None of the eight RIAs quantitatively 
    project employment impacts, though some do discuss possible impacts.  Seven of 
    the RIAs do not discuss potential impacts on existing or new capital at all. 
    The Contingency Plan RIA does discuss possible changes in the cost of capital 
    following regulation.

    In the exposure analysis, the two CERCLA RIAs do not estimate actual 
    release rates from the toxic chemical spills because the variability in size 
    and chemical content was considered too great and the data too sparse to allow 
    for adequate waste characterization.  The RCRA RIAs all generate quantitative 
    estimates of release rates from model waste streams to some or all of the 
    media--air, groundwater, and surface water--for different waste disposal 
    methods.  Although the two CERCLA RIAs discuss releases to soil, none of the 
    RCRA RIAs estimate exposures via soil contamination.

    The number of persons exposed for each regulatory alternative is esti-
    mated in one CERCLA RIA (Contingency Plan) and all but one of the RCRA RIAs 
    include estimates of the number of persons exposed.  For the RCRA RIAs, esti-
    mates of exposure levels are obtained using release, fate, and transport 
    models for air, groundwater, and surface water.  Only two of these RIAs gen-
    erate estimates for the duration of this exposure corresponding to a given

    ES-9

    duration and method of waste disposal.  All of the RCRA RIAs assume lifetime 
    exposure for the health risk estimates for all disposal methods.  Plant and 
    animal exposure is discussed in only three of the RIAs and other environmental 
    impacts are discussed in four.

    The two CERCLA RIAs discuss health benefits but perform no quantitative 
    estimates.  The six RCRA RIAs all generate quantitative estimates of cancer 
    risks attributable to the toxic chemicals for various disposal methods.  Five 
    out of six of these RIAs also generate quantitative estimates of noncancer 
    isks attributable to the toxic chemicals for various disposal methods.  All 
    these estimates are used to determine the reduction in risk with the regula-
    tion. None generates quantitative estimates of other harmful effects, al-
    though most discuss such effects and the Solvents RIA assumes exposure ceases 
    when the water concentration is above the taste-odor threshold because people 
    switch to alternative water supplies.  The costs associated with switching are 
    not estimated, however.

    None of the RIAs explicitly estimates the timing of avoided cancer or 
    noncancer cases relative to the time of exposure.  In some cases the issue is 
    discussed briefly.  In these RIAs, the cancer cases are assumed to occur over 
    the next 70 years or, in one RIA, over the next 400 years.  None of the RIAs
    attempts to estimate or even discuss a dollar value that might be associated
    with a case of environmentally induced cancer or other adverse health effect.
     None of the RIAs attempts to discount the avoided cancer cases and only one 
    even discusses the issue of discounting health benefits.  In three of the RCRA 
    RIAs the results of either sensitivity or uncertainty analyses for the esti-
    mates of avoided cancer risks are presented.

    For the cost estimates, all but one of the RIAs use estimates of engi-
    neering compliance costs to estimate the real resource costs of the regula-
    tion. In the Used Oil RIA, the results of the products markets analysis are 
    used to estimate the real resource costs of the regulation.  None of the RIAs 
    estimates costs of unemployment or displacement of capital.  The three RIAs 
    that estimate the regulatory costs are those in which such costs are likely to 
    be significant.

    Most of the RIAs present some comparison of the benefits and costs of new 
    regulations.  The Reportable Quantities RIA estimates net-monetized benefits

    ES-10

    but for changes in compliance costs only.  The rest of the RIAs do not gen-
    erate estimates of net-monetized benefits because health effects are not 
    assigned a monetary value.  However, in most cases some cost-effectiveness 
    comparisons are attempted.  These vary in their degree of quantification and 
    in their clarity.  In the Used Oil RIA, the ratio of annual dollar costs of 
    the regulation to the annual number of avoided cancer cases is calculated. 
    Annual avoided cancer cases are assumed equal to the avoided cancer cases for 
    a single population cohort divided by 70.  These ratios are used to compare 
    regulatory alternatives.  In the Contingency Plan RIA, although quantitative 
    health effects are not generated, a useful tabular listing of benefits and 
    costs is presented and discussed.  The Small-Quantity Generators and Dioxins 
    RIAs discuss the relationship between benefits and costs for different regu-
    latory alternatives, but no attempt is made to quantify the relationship and 
    no table is presented.  The Solvents RIA compares the percentage reduction in 
    cancer risks or noncarcinogenic exposure ratio with the percentage increase in 
    compliance costs.  The Incinerator RIA does not compare costs and benefits at 
    all.  The costs estimated are the compliance costs to move existing incinera-
    tors into compliance with the current regulations.  Comparable benefits are 
    not estimated, only health risks when complying with the current regulations 
    and the health risks mandated by a possible alternative regulatory approach.

    ES.3 SUGGESTIONS FOR IMPROVEMENT

    Based on the framework outlined above and our comparative analysis of the 
    eight RIAs, we have developed a set of specific suggestions of ways in which 
    hazardous waste RIAs might conform more closely to EPA's guidelines in the f
    uture.  These suggestions are described below under 12 general headings.

`ES.3.1 `[`Broader Perspective`]{.underline}

    The adverse effects of the releases of hazardous substances, in addition 
    to health effects, should be discussed and, where possible, estimated.  For 
    example, if contaminated well water is detected, the health effects may be 
    zero, but the costs of alternate water supplies and aquifer cleanup may be 
    large.  However, care must be taken to avoid double counting of adverse effects.

    ES-11

    Releases to all relevant media should be estimated as well as all rele-
    vant routes of exposure from each medium.  Thus, care should be taken to omit 
    media or exposure routes from the benefits estimates only if their effects are 
    likely to be insignificant.

`ES.3.2 `[`Quantitative Analysis of Several Alternatives`]{.underline}

    Future RIAs should generate quantitative estimates of benefits and costs 
    for the proposed regulation and at least one regulatory alternative.  
    The regulatory alternatives analyzed should represent significantly different 
    approaches to that of the proposed regulation.  These alternatives should be 
    selected from those that have been considered during the regulatory develop-
    ment process.  To the extent that only a narrow range of options was consid-
    ered during regulatory development, the RIA will necessarily have a narrower 
    scope.

`ES.3.3 `[`Derivation/Presentation of Input Parameter Values`]{.underline}

    Data sources should be described clearly and references included where 
    appropriate.  Survey data are a good, reliable source of data from industry. 
    In RIAs that rely more heavily on reporting data, discussions of the limita-
    tions of that data and the likelihood and extent of under- or overreporting 
    should be included.  In RIAs that use estimates provided by a subcontractor, 
    the primary data sources, whether industry sources, engineering estimates, or
    informed judgment, should be indicated so that the degree of certainty about 
    the estimates may be ascertained.

    Input parameter values should be tabulated for each estimation model 
    used.  Although uniformity in parameters estimates is not necessarily desir-
    able or possible, all RIAs should include tables that list the values (or 
    distributions) assumed for all input parameters so that the reader can easily 
    compare the parameter values used in different RIAs.

`ES.3.4 `[`Methods for Cost Estimates`]{.underline}

    The effects of the regulation on the products markets should be described 
    in an economic framework.  For example, a supply/demand framework might be 
    used.

    The estimation method chosen should be selected on the basis of clearly 
    defined decision rules.  For example, such decision rules might be derived

    ES-12

    using a simulation approach to determine when the more simplistic models are 
    likely to misrepresent significantly the true costs of the regulation.  The 
    degree of misrepresentation might depend on the magnitude of the compliance
    costs relative to total industry costs and the elasticities of supply and 
    demand in the products markets.

    Cost estimates should include a broader definition of costs than industry 
    compliance costs.  For example, the degree to which these costs are passed on 
    to the consumer as higher product prices should be estimated.  Also, costs due 
    to unemployment and dislocation of capital should be estimated.

`ES.3.5 `[`Products Markets Trends and Exposures`]{.underline}

    The regulations' compliance costs may change the volume of hazardous 
    waste generated in future years.  Such changes may change exposures and should 
    be discussed and estimated if likely to be significant.

    Some attempt should be made to incorporate into the analysis overall 
    market trends for the affected industries.  Such trends can have a major 
    effect on the projected benefits and costs of a regulation over a multiyear 
    period.  For example, if generation of a hazardous waste is likely to decline 
    in the future, the cost and exposure impacts of the regulation will be less 
    than if more hazardous waste is likely to be generated.

`ES.3.6 `[`Release, Fate, and Transport Models`]{.underline}

    Use or develop transport models that allow variability in both level and 
    duration of releases.  For example, the Wilson and Miller Groundwater Trans-
    port model assumes a steady-state release whereas the PLUME and RANDOM WALK 
    Groundwater Transport models are able to estimate exposure levels and dura-
    tions that result from variable release levels and durations.  The latter 
    models or other similar models should therefore be used in future RIAs.

    Make more realistic assumptions for models estimating releases of toxic 
    chemicals from landfills for:  degradation of the toxic chemicals in the land-
    fill, concentration of toxic chemicals in leachate, concentration of toxic 
    chemicals in free liquids, total volume of leachate, volume of leachate 
    collected in leachate collection system, content of leachate collected in 
    leachate collection system, and fate of leachate collected in leachate collec-
    tion system.  The existing models have either ignored or made overly simplis-
    tic assumptions about some of these factors (for example, no degradation of

    ES-13

    the chemical in the landfill).  Models estimating releases to groundwater 
    should be reviewed carefully by EPA and an approach developed that explicitly
     deals with all the factors listed above as well as other relevant factors.

`ES.3.7 `[`People Affected by the Regulation`]{.underline}

    Distinguish between people affected by compliance activities and people
    affected because of changes in releases of the toxic chemical.  Among those 
    affected by compliance activities, include a discussion of the relative impor-
    tance of business owners, employees, and consumers.

    Develop a more consistent methodology for estimating the number of people 
    exposed to contaminated groundwater, surface water, and soil.  The RIAs ana-
    lyzed vary greatly in the methods used to estimate the number of people 
    exposed by route of exposure.  Because this is a key variable in determining 
    health effects, it might be useful for EPA to develop a methodology for popu-
    lation exposed to soil, surface water, and groundwater to complement the EPA 
    GEMs Modeling System for air.  In this way, a more consistent approach to this 
    estimation would be encouraged for future RIAs.

`ES.3.8 `[`Realistic Timing`]{.underline}

    Choose a common period of waste disposal for the estimates of benefits 
    and costs.  Because the goal of an RIA is to enable comparison of the benefits 
    and costs of new regulations, it is important that a common basis be used for 
    period of waste disposal--either 1 year or 20 to 30 years--and compute the 
    benefits and costs attributable to the new regulations for that disposal 
    period.  For a given disposal period, duration of release to the different 
    media should also be estimated explicitly for different disposal methods.  
    period, while releases to groundwater from landfills may occur for up to 200 
    years after the end of the disposal period.  Based on the duration of release 
    to the environment, the duration of exposure from the different routes and 
    disposal methods should also be estimated explicitly.

    Discuss and present estimates, if possible, of the timing of the harmful 
    health effects relative to time of exposure.  There is an important difference 
    in timing for cancers and noncancers that should, at a minimum, be discussed;

    ES-14

    viz for cancers there is generally a long lag time after exposure (20 to 30 
    years) while noncancer effects may be experienced immediately.  The lag time 
    of the health effect determines the average age of the persons likely to 
    experience the harmful health effects.

`ES.3.9 `[`Valuation of Health Benefits`]{.underline}

    Dollar valuation of health benefits should, at a minimum, be discussed in 
    future RIAs.  A large literature exists on the topic, and the EPA RIA guide-
    lines describe appropriate methods that can be used to value both morbidity 
    and mortality.  Thus, it should also be possible to assign dollar values to 
    the health benefits.  An alternative approach is to estimate threshold values 
    for the health benefits, at which values the benefits would just exceed the 
    costs of the regulation.

`ES.3.10 `[`Benefit-Cost Comparisons`]{.underline}

    Comparisons of health effects with other dollar costs or benefits should 
    be made for comparable durations of disposal.  Annual costs, for example, 
    should be compared to the change in health effects attributable to a single 
    year of waste disposal.  If this is not done, such cost-effectiveness esti-
    mates will be misleading for decisionmakers.

    So that the decisionmaker will have information available in a useful 
    format, the comparison of benefits and costs should be presented in a table as 
    well as being discussed in the text.  Both qualitative and quantitative esti-
    mates of the benefits and costs should be presented in this table so that the 
    decisionmaker can make his/her own judgment about whether the unquantified 
    benefits and costs are likely to be of sufficient importance as to change the 
    decision he/she might make on the basis of the quantitative estimates alone. 
    The discussion of the table should provide a summary of the implications of 
    the entire analysis for the decisionmaker.

`ES.3.11 `[`Sensitivity/Uncertainty Analysis`]{.underline}

    Sensitivity analysis should be performed when there is considerable 
    uncertainty about the values of some of the input parameters.  For example-
     both are estimated with considerable uncertainty.  Sensitivity analysis

    ES-15

    should be performed for the exposure estimates and the dose-response relation-
    ships to provide information about the impact of changes in these parameter 
    values.  Full-scale uncertainty analysis should be used only to the extent 
    that the results can be presented in a way that improves the decisionmaker's 
    ability to make informed judgments.

`ES.3.12 `[`The RIA as a Complete Document`]{.underline}

    The RIA should include a combination of text and appendixes such that the 
    results are reproducible by the reader from the RIA alone.  Since the methods 
    used for performing benefit-cost analyses for hazardous waste regulations are 
    not standardized, it is important for all methods used to be described 
    clearly.  Equations should be presented in appendixes where appropriate.  The 
    results of each stage of the analysis should be presented in tabular form 
    (e.g., waste characterization, release rates, and exposure concentrations) so 
    that the reader can easily follow the steps of the estimation process.  Refer-
    ences to supporting documents cannot substitute for such detail within the RIA 
    document, even if the bibliographical reference is complete.  The supporting 
    document may not be readily obtainable.

    The text should avoid lengthy background discussions and should clearly
     and concisely present the benefit-cost analysis methodology and results.  If 
    more detailed discussion seems necessary (e.g., for the derivation of input 
    parameter values), it should occur in an appendix.  For example, only the 
    summary of data derived from the industry profile should be included in the 
    text.  The industry profile should be presented in an appendix.

`In order to facilitate the implementation of all these suggested improve-`\
`ments, we recommend that EPA prepare a reference handbook that would comple-`\
`ment the RIA Guidelines.  Such a handbook might include:  a brief but detailed `\
`description of all relevant, currently used estimation models and a set of`\
` decision rules for choosing among them; for each estimation model, tables of `\
`commonly used input parameter values and their sources; and a listing of major `\
`data sources that might be useful for hazardous waste RIAs.  The handbook also `\
`should present suggested refinements to currently used methods, where appro-`\
`priate. The appendixes for the `[`RCRA Risk-Cost Analysis Model`]{.underline}` and a more `\
`recent report `[`Risk Assessment Methodology for Hazardous Waste Management`]{.underline}` pro-`\
`vide a convenient starting point for such a reference work.`

    ES-16

    With the use of such EPA reference documents, the increase in resources 
    needed to achieve all the improvements suggested above may not be large.  Some 
    of them involve only clearer presentation of the results of the analysis, 
    including data sources and parameter values used (3), cost-benefit comparisons 
    (9), and overall organization of the report (12).  The other suggested 
    improvements might require the use of additional models, but the burden on the 
    preparer of the RIA can be minimized by developing a centralized listing of 
    all such models and central access to the computer programs for them.  Even if
     resource or data limitations prevent additional modeling, all these other 
    suggested improvements can be addressed qualitatively, clearly presenting the 
    methods used in the analysis and how more extensive modeling is likely to 
    affect the results.

    ES-17