ses for proposed regulations imposing public and private costs of at least $100 million annually. Agency benefit-cost analyses were reviewed by the Office of Management and Budget (OMB). Environmentalists opposed Executive Order 12291 as administratively imposing benefit-cost criteria on federal environmental rules when such criteria were not authorized by Congress. However, both Presidents Bush and Clinton adopted similar Executive Orders.
The House of Representatives in 1994 adopted regulatory impact assessment legislation, HR9, which would require RIAs for major rules imposing public and private costs of at least $25 million annually ($50 million for small business costs) and on Superfund cleanups costing over $5 million. The RIA requirements would apply to all new federal environmental, health, and safety regulations, including new regulations under existing laws.
Risk assessment refers to identifying how many lives will be saved or other benefits achieved by the proposed regulation. Benefit-cost analysis in the RIA context refers to determining how much it will cost per life saved under the proposed regulation. The RIA process is intended to identify proposed regulations with "high" cost-benefit ratios.
HR9 stalled in the Senate and is unlikely to be adopted in 1997. Nonetheless, the bill raises fundamental environmental policy issues that relate directly to ground water valuation. The overall effect of RIA requirements would be to discourage rules for which a positive benefit-cost analysis cannot be generated or is marginal.
While general RIA legislation has not been enacted, elements of the HR9 RIA process were incorporated in the Unfunded Mandates Act of 1995. Federal programs often require state and/or local governments to bear a significant portion of program implementation costs. This practice is now referred to by critics as creating an "unfunded federal mandate." An example of an unfunded mandate is the Safe Drinking Water Act. Communities whose water supplies violate SDWA standards must either treat their water to EPA levels or obtain a new water supply. No federal funding is available to meet these costs, hence the SDWA imposes an "unfunded mandate."
President Clinton has signed legislation requiring that unfunded (or underfunded) federal mandates be identified before they are adopted by Congress (109 Stat. 48, March 22, 1995; Fort, 1995). Unfunded mandates costing states and/or local governments at least $50 million annually are subject to a separate vote on establishing the unfunded mandate if a vote is requested. Cost estimates are prepared by the Congressional Budget Office. When faced with an unfunded mandate "point of order," Congress has several options: (1) provide the funding, (2) delete the mandate, (3) reduce the mandate to fit the funding, or (4) approve the unfunded mandate.