Legislative Analyst's Office Analysis of the 2003-04 Budget Bill

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 OEHHA also provides scientific support to environmental regulatory agencies.

The budget requests total funding of $10.8 million for support of OEHHA in 2003-04. This is a decrease of $4.2 million, or 28 percent, below estimated current-year expenditures. Of this reduction, $3.6 million is from the General Fund. Major budget proposals include eliminating the Pesticide Worker Health and Safety Program, reducing various air quality standard reviews, and eliminating 34 positions throughout the office that are currently filled.

Alternative Fund Sources for OEHHA Programs

The Office of Environmental Health Hazard Assessment (OEHHA) is mainly supported by the General Fund. The budget proposes a significant General Fund reduction affecting most areas of the office. In the sections that follow, we discuss three sets of issues for legislative consideration concerning the Governor's proposal, and propose alternative funding sources for some of OEHHA's programs.

OEHHA Mostly General Fund Supported. Most of OEHHA's activities are required by statute and are supported mainly by the General Fund. Using General Fund money, OEHHA identifies cancer-causing chemicals for annual updates of the state list of chemicals in drinking water, provides health risk assessments of "toxic air contaminants," reviews health risk assessments of pesticides, and jointly regulates pesticide worker health and safety with the Department of Pesticide Regulation (DPR).

Budget Proposes Significant General Fund Reduction. As shown in Figure 1, the budget proposes significant General Fund reductions totaling $3.6 million throughout OEHHA's programs. These reductions affect most areas of the office. However, unlike a number of proposed General Fund reductions in other environmental protection and resources departments, the budget does not propose to backfill these reductions with other fund sources, such as fees or bond funds. (Since OEHHA is not a regulatory agency, it has traditionally not received direct appropriations from special funds supported by regulatory fees.) In addition, as part of the package of proposed General Fund reductions, the budget proposes to shift the responsibility to conduct scientific peer review of pesticide risk assessments from OEHHA to the Secretary for Cal-EPA. (Risk assessment for other areas would remain at OEHHA.) 

The Governor's proposal raises three issues for legislative consideration, as discussed below.

Governor's Proposed Pesticide Review Shift Problematic

We find that the Governor's proposal to shift responsibility for scientific peer review of pesticide risk assessments from the Office of Environmental Health Hazard Assessment to the Secretary for the California Environmental Protection Agency, with no corresponding shift in program funding, will reduce the efficiency and effectiveness of the pesticide risk assessment peer review process. We therefore recommend denying this proposal, and later recommend an alternative source of funding to support this activity.

Current Law Mandates OEHHA's Role in Pesticide Risk Assessment. Current law requires OEHHA to perform scientific peer review of pesticide studies, registration reviews, and risk assessments conducted by DPR. Peer review determines whether these studies and risk assessments agree with the latest scientific body of knowledge and are factually correct. The findings from OEHHA's peer review are provided to DPR to assist with that department's determination on matters relating to pesticide registration, use, and labeling. The OEHHA's peer review function has been supported by the General Fund.

Secretary's Office Also Coordinates External Peer Review. Pursuant to another statutory requirement, the Secretary for Cal-EPA coordinates the peer review of policies, regulations, and guidelines proposed by Cal-EPA departments, using an external scientific peer review panel. The Secretary's peer review panel (proposed to be funded at $618,000) is convened by the director of OEHHA and includes scientists not employed by any board or department in Cal-EPA. The committee makes its recommendations to both OEHHA and the Secretary. Funding for the peer review panel is in the Secretary's office and comes from a number of special funds.

Governor's Proposal Shifts Pesticide Peer Review to Secretary's Office. The budget proposes legislation to shift responsibility for pesticide-related peer review from OEHHA to the Secretary's external scientific peer review panel. As a consequence of this shift, the budget proposes to reduce OEHHA's General Fund budget by $309,000. (This reduction is part of the larger $1.4 million reduction proposed for OEHHA's pesticide programs, shown in Figure 1.)

Concerns With Proposal. We are concerned that the Governor's proposal will reduce the efficiency and effectiveness of the pesticide risk assessment peer review process. Currently, the state benefits from OEHHA's role as the centralized health risk assessor for Cal-EPA boards and departments. Specifically, in addition to its risk assessment work related to pesticides, OEHHA also works on risk assessment issues pertaining to air, water, and waste. This role allows for greater consistency across environmental agencies in risk assessment matters. As a peer reviewer of DPR's assessments, OEHHA can ensure that DPR's approach is consistent with that used in assessing other environmental risk under Cal-EPA.

We think that shifting the pesticide peer review function from OEHHA would reduce the effectiveness of the state's overall risk assessment process. This is because the Governor's proposal would only move one aspect of OEHHA's risk assessment functions to the Secretary's panel, thereby weakening OEHHA's position as the state's environmental risk assessor.

We are also concerned that it would be inefficient if this peer review function were shifted to a new body, particularly one that is not funded for its new role, given the amount of time it would take for the new entity to come up to speed on these technical scientific issues. The Secretary's scientific advisory panel as currently configured does not possess the technical expertise to perform the individual risk assessments required under statute. It would take time for the panel to develop this expertise, and would change the function of this panel from high-level policy review to operational pesticide product risk assessment.

Therefore, for the reasons stated above, we recommend denying the Governor's proposal to shift the pesticide peer review function from OEHHA to the Secretary's Office. As discussed below, we recommend alternative funding sources to the General Fund for pesticide-related peer review and other activities in the budget year.

Alternative Fund Sources to Proposed General Fund Reductions

We find that alternative fund sources are available to offset proposed General Fund reductions for both pesticide-related work ($1.4 million) as well as air programs ($300,000). We recommend that the Department of Pesticide Regulation Fund be used to support the Office of Environmental Health Hazard Assessment pesticide-related work in the budget year, and we identify the Environmental License Plate Fund as an alternative funding source for other program activities proposed for reduction. (Create Item 3980-001-0106 for $309,000.)

Alternative Fund Sources. We discuss below two fund sources available to offset $1.7 million of the $3.6 million General Fund reduction proposed by the administration. Specifically, we think that the DPR Fund—supported mainly by a mill assessment on pesticide sales—is an appropriate fund source to offset the $1.4 million in pesticide-related program reductions. The Environmental License Plate Fund (ELPF)—supported by a portion of the revenues from the sale of environmental license plates—is an appropriate fund source to offset the $300,000 reduction in air quality programs.

Department of Pesticide Regulation Fund Should Pay for Pesticide-Related Programs. In our analysis of DPR's budget, we concur with the Governor's proposal to shift most of DPR's current General Fund support to fees, and recommend that the administration go further by fully funding from fees pesticide-related work conducted by all other state agencies, including OEHHA.

We previously discussed the Governor's proposed shift of risk assessment peer review to the Secretary's office as a component of the $1.4 million proposed reduction. Some impacts of the proposed $1.4 million pesticide-related program reductions include eliminating scientific support for physician pesticide training, reducing worker and community pesticide illness investigations, and eliminating OEHHA's pesticide-related community outreach. In order for this activity to remain in OEHHA as recommended above, we recommend that $309,000 (the current funding level for this activity) be appropriated by the Legislature to OEHHA from the DPR Fund. If the Legislature wishes to restore funding for any of the remaining $1.1 million of pesticide activities proposed for reduction, it could appropriate additional funds from the DPR Fund. (Both of these actions would require the enactment of legislation to increase pesticide-related fees.) In order to maintain OEHHA's independence, we recommend that appropriations from the DPR Fund be made directly to OEHHA, rather than as a reimbursement from DPR. We find that the Legislature has used this method of funding in other cases. For example, fees paid for solid waste disposal (tipping fees) are appropriated to the State Water Resources Control Board, directly, rather than by reimbursement from the Integrated Waste Management Board.

Potential Alternative Funding Source for Mandated Air Studies. If the Legislature wishes to provide funding to restore the proposed $300,000 reduction in OEHHA's air program, the ELPF is a potential funding source to do so. The ELPF—which is administered by the Secretary for Resources—may be used to fund an array of programs that preserve and protect the environment, specifically including the control and abatement of air pollution. (Please see our write-up on Resource Assessments in the "Crosscutting Issues" section of this chapter for our recommendations that would free up ELPF funds that could be used to support OEHHA's air program.

Alternative Fund Sources to Create Additional General Fund Savings  

We find that additional General Fund savings can be created by shifting $600,000 of expenditures from the General Fund to the Department of Pesticide Regulation Fund for the pesticide-related activities that remain in the Office of Environmental Health Hazard Assessment's General Fund budget. (Reduce Item 3980-001-0001 by $600,000 and create Item 3980-001-0106 for a like amount).

While the Governor's budget proposes a $1.4 million General Fund reduction in OEHHA's pesticide-related activities, it does leave $600,000 from the General Fund for other pesticide-related activities. We believe that pesticide-related work of all state agencies should be funded by pesticide fees, as we discuss in our write-up on DPR in this chapter. We therefore recommend that OEHHA's remaining pesticide program be supported by the DPR Fund rather than the General Fund, for a General Fund savings of $600,000.