United States                        10019855
           Environmental Protection
           Agency
           Washington DC 20460
  Assessing and Managing
               Risks
       in  the  Real World
Address by
Lee M. Thomas
Administrator
U.S. Environmental Protection Agency
be/ore the
National Petroleum Refiners Association
San Antonio, Texas
March 25, 1985
  U.S.
  401 M Street, s.W.   "
  Washington, DC   20460

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  It is a pleasure for me to be here this morning to share
  with you my thoughts on the state of our environment
 and how we go about protecting it. During the 'two years
 or so that I have been with EPA, I have learned a great
 deal about the'complexity of this process.
  Managing an agency such as EPA is a tremendous
 challenge. On the one hand, we have a clear mission
 from Congress and the support of all Americans. On the
 other, we must be able to see beyond that mission in its
 abstract sense to appreciate the impact of our decisions.
  It is not uncommon, in making regulatory decisions, to
 find ourselves between the proverbial  rock and hard
 place. For every issue, there seems to be a corps of vocal
 advocates and a cadre of equally vocal opponents. The
 problem is that these groups tend to change from issue
 to issue. And, of course, the issues themselves never
 seem to end.
  Now I know why Bill Ruckelshaus had a smile on his
 face the day he handed me the  keys to the
 Administrator's office.
  The rulemaking process at EPA today is really a series
 of tradeoffs. There is a general realization among all who
 actively participate in this process—environmentalists,
 the regulated community, and  even the media — that we
 must find an optimum pathway to our goals. That
 pathway must ensure that we continue to enjoy
 economic prosperity and growth, but not at the expense
 of our environment.
  We achieve  these objectives by carefully assessing the
 risks we face as an industrial society,.and managing
 those risks effectively.
  To assess the risk at hand, we gather as many facts as
 possible about the problem. This is a scientific process
 in which experts thoroughly review the extent of our
 knowledge and carefully design and conduct
 experiments to expand that knowledge. This scientific
 process gives us a basis for understanding the risk we
 face. It tells us what the risk is, what we know about it,
 and who is exposed.
  Then comes the hard part—risk
 management—deciding what to do about a problem once
 we  are sure there is one. Based upon our assessment of
 the nature and extent of the risk, we must devise a way
 of dealing with it. The options before us include such
 things as new  regulations, additional reporting
 requirements,  new outreach programs or some
 combination of these and other approaches.
  Our recent decision to take most of the lead out of
gasoline is a very important example of how the risk
assessment/risk management process works. The
increasing evidence of the injury done  to children by

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 airborne lead is undeniable. We know lead threatens
 hundreds of thousands of children, particularly in the
 inner city.
   We are not alone in our assessment of this risk. The
 Centers for Disease Control  recently lowered the level of
 lead in blood it says constitutes serious toxicity. And,
 beyond the problem with children, there are new
 indications emerging that lead may increase high blood
 pressure in adults.
   Last month, I signed regulations that will phase down
 the lead content of gasoline by more than 90% this  year.
 The process will take  place in two steps. And by January
 1986, lead in gasoline will be limited to no more than
 one tenth of a gram per gallon.
   As a result, we will  substantially reduce the
 concentration of airborne lead, 80% of which  comes
 from gasoline. We hope our requirements will help to
 equalize the price of leaded and unleaded gasolines.
 This, in turn, should minimize any financial incentive
 for motorists to  put leaded fuel in cars designed for
 unleaded, thereby increasing the emission of other
 pollutants as well as lead.
   Misfueling has been a problem in the past. We
 estimate as  many as 16% of all vehicles designed to use
 unleaded gas are fueled illegally with cheaper leaded
 gas.
   Our standard  is a stringent one. But it is justified  by
 the substantial benefits to be gained by all Americans.
 And we are convinced that the refining industry can
 meet the standard.
   Bear in mind, this may not be the end of the line  for
 the lead-in-gasoline issue. We are looking closely at
 whether lead should be banned entirely as a gasoline
 additive.
   The rule we have adopted will provide net benefits  of
 more than a billion dollars a year when we compare
 health-related savings  and lower auto maintenance costs
 with increased production costs. And it is very possible
 that we have understated the full benefits of lead
 reduction.
   If new data on the relationship between blood lead
 and blood pressure hold up, the medical value of our
 standard will increase  by several billion dollars per  year.
 This is a highly  cost-effective regulation.
   I am aware that implementing this rule will  bring with
 it a certain amount of disruption to  the refining industry.
 Our objective, of course, is to substantially cut lead
 levels in our air, and to do it as soon as possible. We
 want to work with your industry to  accomplish this goal
as efficiently as possible.

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   To ease the potential for capacity problems, I am
 announcing today that I have signed final rules to allow
 the banking of lead rights. These rules will extend the
 successful lead trading program through 1987, and
 would give refineries more flexibility in meeting the new
 standard  without reducing its effectiveness.
   Banking will allow refiners to cut lead use now, ahead
 of schedule, and use that lead later in meeting the new
 standard. We estimate it will save refiners more than
 $200 million without increasing the amount of  lead in
 gasoline.  Our banking provisions are retroactive to
 January 1, 1985. We will give you full credit for the
 reductions you have already  achieved.
  A related risk-management decision of importance to
 your industry deals with achieving the 1987 attainment
 date for ozone extension areas, which embrace about
 half of the country's population. We are convinced the
 lead rule  will help, as will expanded inspection and
 maintenance programs.
  They are not going to solve the entire problem,
 however,  and we are exploring alternatives.  One
 problem is that many vehicles are not meeting our
 evaporative emission standards. This increases
 hydrocarbon loadings and thereby ozone. As much as
 one-half of the  hydrocarbons come from motor vehicles,
 and  now up to  half of those are evaporative  emissions.
  Two factors may be contributing to this situation.
 First, controls may not be as  effective as we had
 expected.  They may need improvement. Second, the
 volatility  of gasoline is higher than that  of the test  fuels
 used to certify vehicles. We are exploring a range  of
 options.
  We are  releasing test results and soliciting public
 comments, in preparation for workshops as early as this
 summer. At the same time, we are sensitive to the
 interaction between our new  lead rule and the costs of
 volatility control.
  Other options for vapor recovery are also bci.'ig
 studied, including controls at service stations and on
 vehicles. We've received many comments on a study
 released last fall. Not surprisingly, those in the
 petroleum industry think onboard controls make sense,
 while the  auto manufacturers find a lot to like about
 Stage II controls at service stations.
  There are a number of other EPA programs with
 important implications for the refining industry where
 we must apply  our risk assessment/risk management
 skills. I will be  very honest with you. In some areas, we
 are moving in the right direction.  We have sound,
obtainable objectives. In others, I'm not as certain.

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   I've already cited our lead regulation as one I believe
 is a sound product of the risk assessment/risk
 management process. It is one we initiated based upon
 reliable data, thorough analysis, and careful assessment
 of costs and benefits.
   We cannot always be sure that the impact of our
 efforts is so clearly positive. This is particlarly true
 when we are carrying out a statutory mandate that,
 however well intended, may have been enacted on the
 basis of limited information.
   For example, when it enacted amendments  to the
 Resource Conservation and Recovery Act last year,
 Congress imposed a  number of important new
 responsibilities on EPA. Not all of them will pay such
 obvious benefits as our lead rule.
   RCRA  now broadens the reach of  EPA's hazardous
 waste regulatory program to those businesses generating
 relatively small quantitites of regulated wastes. On the
 surface, this would seem to be a good  idea.
   Until the new amendments were developed, our
 cradle-to-grave regulations applied only to those who
 generated more than 1,000 kilograms of hazardous waste
 each month. We know of approximately 15,000 such
 generators. Combined,  they produce some 264 million
 metric tons of waste  annually.  That's about 99.5% of all
 hazardous  wastes generated in this country.
  RCRA's new small-quantity-generator provisions bring
 into the regulatory system another 175,000 firms. Yet
 they generate only half of one percent  of the total
 volume. So, as a result of statutory requirements, we
 now must vastly and rapidly expand the size of our
 regulated universe. In so doing, we pick up a very small
 amount of  wastes which had escaped our net in the first
 place.
  My concern is this kind of requirement may serve only
 to make our overall hazardous  waste management
 program less effective. We must devote substantial
 resources to the small-quantity-generator program on the
 assumption that a problem exists, with severe
 constraints in the law, requiring a full  regulatory
 solution.  Additionally, a portion of our enforcement
 resources will now have to be oriented toward these
 175,000 generators.
  I question whether our limited resources are best spent
 on these activities. I question whether  the American
 people are  best served by the requirement for such a
 program before we have fully defined the problem to be
addressed and determined how best  to manage it, i.e.
risk assessment/risk management.

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   Another new RCRA provision about which I have
 reservations is the underground storage tank program.
 There are more than 2 million underground tanks in the
 U.S.today; about  100,000 new ones are installed each
 year.  Congress, in the new RCRA law. told us to develop
 specific rules  and performance standards for these tanks
 in a relatively short lime-frame, although we are just
 beginning the data collection effort needed to determine
 the extent of the  problem they pose.
   The program is'bound to become a massive,
 resource-intensive undertaking. It will involve a long and
 complicated regulatory process. It will probably be very
 difficult to implement and enforce, due in part to our
 lack of expertise  in  this  area and because of its sheer
 size.
   Both the small-quantity generator and underground
 storage tank programs are examples of major regulatory
 responsibilities imposed on EPA by Congress in the
 absence of sound risk assessment/risk management
 proceedings. I am uncertain at this point as  to how well
 we can implement either given the specificity and time
 frames in the law.
  This is not to suggest  that everything in the new RCRA
 statute is ill-conceived. To the contrary, regulation of
 small quantity generators and underground storage tanks
 may be necessary, but we will need time to assess risks
 and recommend solutions before the law mandates
 remedies. Another important  provision of RCRA calls on
 EPA to move forward with efforts to ban the land
 disposal of many  hazardous wastes.
  We have learned the hard way over the years that land
 disposal is the least desirable method of hazardous
 waste management.  We have the data we need to assess
 the risks of land disposal. The agency was preceding
 with land disposal bans  on its own, even in the absence
 of this specific Congressional  mandate.
  Finally,  I think  we should  look for a moment at our
 Superfund  program  as an example of how EPA has
 employed a Congressional mandate effectively. We have
 used many principles of risk assessment and  risk
 management to build the Superfund cleanup  program
 We will continue  to do so.
  First of all, in developing our list of national priority
 sites requiring long-term cleanup, we assess  each
 potentially  hazardous site. If it poses an immediate
 threat to human health or the environment, we take
emergency steps to eliminate the danger. At  the same
time, we do detailed studies at those sites that appear to
 pose long-term hazards.  Where we determine sites
represent a  chronic hazard, we place them on our
priority list.

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  After a slow start, our cleanup program has during the
last two years made substantial progress. By the end of
the current fiscal year, we will have taken emergency
actions at nearly 650 sites. Long-term cleanup will have
begun at nearly 500.
  A month ago,  President Reagan sent to Congress a
proposal to reauthorize Superfund for another five years.
The $5.3 billion package  would triple the size of the
current fund. It would also focus Superfund's authorities
on the most serious problems first — uncontrolled
hazardous waste dumps.  In addition, the President's
program strengthens our enforcement tools and provides
for a reliable source of adequate funding through 1990.
  All of this brings me back  to the philosophical
question I started to ask in the beginning. Once we have
decided that a given risk  needs managing, exactly what
do we do about it? And if we can't create a risk-free
society, how do we determine an acceptable level of
risk? How much do we spend to reduce risk?
  There are no fast, cheap or easy answers to these and
other questions dealing with risk. What we must do is
address all of our environmental challenges squarely,
assess the relative risks of each, and determine who best
to manage them. To do this effectively, we must involve
the public in the risk-management process.
  We must build trust among our citizens. They must
know that EPA, industry, environmental organizations
and others are working together to address the most
serious  hazards facing the American environment.
  We will spend billions  on  environmental and health
protection over the next couple of decades. That's a
major investment, most of it  funded  by taxpayers and
purchasers of products. We should make certain that
every penny is spent to get real, solid, measurable
results.  That's our bottom line at EPA. That's what we
are trying to achieve.
  Thank you  very much.

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