Analysis of the 2007-08 Budget Bill: Resources

Office of Environmental Health Hazard Assessment (3980)

The Office of Environmental Health Hazard Assessment (OEHHA) identifies and quantifies the health risks of chemicals in the environment. It provides these assessments, along with its recommendations for pollutant standards and health and safety regulations, to the boards and departments in the California Environmental Protection Agency (Cal-EPA) and to other state and local agencies.

The budget requests total funding of $17.5 million for support of OEHHA in 2007-08, an increase of $387,000 (2 percent) above estimated current-year expenditures.

Public Health Goals and Drinking Water Regulation

The Office of Environmental Health Hazard Assessment (OEHHA) develops and periodically updates scientifically derived, health-based public health goals (PHGs) for drinking water contaminants regulated by the Department of Public Health.

The General Fund has funded the entirety of OEHHA’s PHG-related work since the program’s inception. We recommend shifting support for the PHG program from the General Fund to the fee-funded Safe Drinking Water Account. As OEHHA has consistently lagged statutory deadlines to develop and update PHGs, we further recommend that OEHHA report to the budget subcommittees prior to budget hearings on the required resources to complete its statutorily defined responsibilities in a timelier manner.

Background: Safe Drinking Water Regulation

Roles of OEHHA and Department of Public Health (DPH). In California, two state entities—OEHHA and the newly constituted DPH, formerly part of the Department of Health Services—are responsible for assuring that the state’s drinking water is safe, pure, and potable. The OEHHA scientifically assesses the risks to human health posed by contaminants that may be found in the state’s public drinking water systems and are regulated or proposed to be regulated under DPH’s safe drinking water regulatory program (discussed below). Based on that scientific assessment, OEHHA adopts contaminant-specific goals, known as PHGs, that specify, based solely on public health considerations, the maximum levels of concentration at which various contaminants can be found in drinking water without adversely affecting human health. Statute specifies that OEHHA is to set each PHG at a level that protects the public from both acute adverse health effects and chronic disease. Statute further directs OEHHA to consider possible combined and interactive effects of exposure to two or more contaminants, as well as the effect of contaminants upon specified subgroups, including infants, children, pregnant women, and elderly persons, and persons suffering from serious illness.

The DPH manages the risk to human health identified in OEHHA’s PHGs (which are advisory) by setting primary drinking water standards (also known as “maximum contaminant levels” or “MCLs”). Statute requires DPH to set its MCL for each regulated contaminant as close as is technologically and economically feasible to the corresponding PHG. In this way, OEHHA’s PHGs form the scientific basis of DPH’s regulation of drinking water to ensure public health and safety. (Until PHGs are developed for a regulated contaminant, DPH is guided by a federal requirement that the state set safe drinking water standards at least as stringent as any federal standards for that contaminant.) The MCLs specify the maximum level of each contaminant allowable in the state’s public drinking water systems that are regulated by DPH.

Public drinking water systems, which can be either publicly or privately owned, are those systems that regularly supply drinking water to at least 25 people or 15 service connections. In California, there are over 7,000 public drinking water systems, each of which is regulated and permitted by DPH. These systems include both groundwater systems and surface water systems and supply drinking water to the majority of Californians.

Statutory Timelines for OEHHA’s PHG Development and Review. Statute enacted in 1996 (and amended in 1999) provides a timeline for OEHHA to develop (and “publish”) PHGs for each drinking water contaminant regulated by DPH and to periodically review the PHGs, once developed. Specifically, OEHHA is required to have developed 25 PHGs by January 1, 1998, an additional 25 PHGs by January 1, 1999, and PHGs for all remaining drinking water contaminants for which DPH had adopted an MCL by December 31, 2001. (In 1996, DPH regulated 84 drinking water contaminants for which a PHG was to be developed.) Statute also requires OEHHA to have developed a PHG at the same time DPH proposes the adoption of an MCL for any newly regulated contaminant. In addition, statute requires OEHHA to review each established PHG every five years, and to revise the PHG as necessary, based on the availability of new scientific data.

Recommend Shift to Fee-Based Funding

The General Fund has been the only source of funding for the Office of Environmental Health Hazard Assessment’s public health goal program. In keeping with the “beneficiary pays” principle, we recommend shifting funding for this program to a fee-based funding source—the Safe Drinking Water Account. (Reduce Item 3980-001-0001 by $1.84 million and create new Item 3980-001-0306 for $1.84 million.)

General Fund Has Been Program’s Only Source of Funding. Unlike most other regulatory-related programs within the California Environmental Protection Agency, OEHHA’s PHG program receives no funding from regulatory fees. Rather, the program has been funded entirely from the General Fund since its inception in 1997-98, at which time the program’s budget was $835,000. For 2007-08, the budget proposes $1.84 million from the General Fund for OEHHA’s PHG program

The Beneficiary Pays Principle. We think that funding for OEHHA’s PHG program should be guided by the “beneficiary pays” principle. According to this principle, those who benefit from the use of public resources are responsible for paying the cost imposed on society to regulate that use.

We think that public drinking water systems regulated by DPH benefit directly from OEHHA’s PHG activities. This is because OEHHA’s development of PHGs benefits the operators of public drinking water systems, in that the PHG program provides a basis in science for the drinking water standards adopted by DPH and prevents the standards from being more stringent than is necessary to protect public health. As such, the PHG program benefits the regulated public drinking water systems and, therefore, should be funded through fees assessed on these systems.

Recommend Shift of OEHHA’s PHG Program Funding to Fee-Based Support. Accordingly, we recommend that OEHHA’s PHG program be funded through existing regulatory program fees paid by operators of DPH-regulated public drinking water systems. (Currently, DPH collects permit fees from these operators and deposits them in the Safe Drinking Water Account [SDWA].) We recommend permanently shifting all funding for OEHHA’s PHG activity from the General Fund to SDWA, creating savings of $1.84 million to the General Fund in the budget year. We note that, in light of a substantial balance projected to remain in SDWA at the end of the budget year (about $6.6 million), the adoption of our recommendation is unlikely to require an increase in DPH’s regulatory fees that support SDWA in either the budget year or the subsequent few years at current funding levels for the PHG program.

OEHHA Lags Statutory Timelines for PHG Activity

The Office of Environmental Health Hazard Assessment’s (OEHHA’s) development and update of the public health goals (PHGs) has persistently lagged statutory timelines. The Department of Public Health depends upon OEHHA’s timely development/update of PHGs for its regulation of public drinking water systems. We recommend that OEHHA report to the budget subcommittee of each house, prior to budget hearings, on the funding that would be required to enable OEHHA to complete its PHG activity according to statutory timelines.

Development of PHGs Persistently Lags Statutory Schedule. As mentioned above, statute sets a schedule by which OEHHA is to have developed PHGs for regulated drinking water contaminants. Figure 1 compares the timing of OEHHA’s development of PHGs to the schedule laid out in statute.

As the figure shows, OEHHA’s development of PHGs has consistently lagged the statutory schedule. That lag continues today. While there were 84 contaminants requiring PHGs at the time of the 1996 PHG legislation, DPH has since proposed regulating an additional five contaminants (including one for which DPH adopted an MCL in 2001), increasing to 89 the total number of contaminants for which OEHHA is to adopt PHGs. As of now, OEHHA has not developed the required PHGs for 11 contaminants (including at least six that are part of the original group of 84 regulated contaminants).

Updating of Previously Developed PHGs Also Behind Schedule. As noted earlier, statute requires OEHHA not only to develop PHGs, but also to periodically update them by reviewing its developed PHGs at least every five years and to revise them as necessary, based on new scientific data. Despite the statutory requirement, OEHHA has reviewed only 7 of the 56 PHGs it developed more than five years ago. Consequently, OEHHA is behind the statutory schedule for review of 49 of its existing PHGs. As those PHGs that OEHHA developed more recently become at least five years old, it is likely that OEHHA will fall even further behind in its review of existing PHGs.

DPH Regulation of Drinking Water Dependent on OEHHA’s Development and Update of PHGs. The OEHHA’s development of PHGs ensures the adequacy of the state’s regulation of public drinking water to protect human health. The DPH relies on PHGs to define the concentrations of contaminants that may safely be found in drinking water supplies. Absent up-to-date PHGs, DPH lacks a scientific basis for its regulation of public drinking water at levels more stringent than federal drinking water standards.

Review of Funding Adequacy Required. As OEHHA’s PHG program serves a significant public health function of statewide benefit, it is therefore important for the program to be adequately funded. The OEHHA’s persistent failure to meet statutory schedules for the development and review of PHGs is potentially a reflection of inadequate funding levels. However, when asked, OEHHA was unable to provide estimates of the resources it would need to meet its statutory PHG obligations in a timely manner. We think that this estimate is important information for the Legislature to have as it evaluates OEHHA’s proposed budget.

Recommend OEHHA Advise Legislature on PHG Funding Requirements. In order to provide the Legislature with the information it needs to evaluate the budget proposed for OEHHA’s PHG program, we recommend that OEHHA report to the budget subcommittee of each house, prior to budget hearings, on the funding that would be required in 2007-08 and future years to enable OEHHA to address the following workload within the timeframes specified:

• Develop/publish PHGs for the six regulated contaminants remaining from the 1996 list of 84 contaminants, within one year.

• Complete reviews of the 49 PHGs developed more that five years ago, within two years. (The OEHHA should give priority to those developed PHGs that seem most likely in need of revision, based on new scientific data.)

• Complete review of PHGs developed since 2001 within five years of development, and every five years thereafter.

• As required by statute, develop/publish a PHG at the same time DPH, in the future, proposes the adoption of a primary drinking water standard for a newly regulated contaminant.

The report should also include OEHHA’s estimates of the time it would take to address the above-noted workload (without the specified timeframes) at the current funding level of the PHG program. The report will allow the Legislature to determine whether revisions to OEHHA’s budget are appropriate so that the office can meet its statutory responsibilities for the PHG program in a timelier manner. Finally, should the Legislature, based on the report, determine that funding for the PHG program should be increased, we recommend that this increase be fee funded from SDWA.

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