CEI Submits Comment Letter in Support of EPA’s Benefit-Cost Analysis Rule

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The comment period closed this week on the Environmental Protection Agency’s (EPA) benefit-cost analysis (BCA) rulemaking. Under the proposal, all economically significant Clean Air Act (CAA) regulations must include benefit-cost analyses, and all BCAs must conform to “best practices.”

By “codifying” those requirements, the BCA rule should increase the transparency and consistency of the EPA’s analysis and presentation of the benefits and costs of CAA rulemakings, which in turn should improve the odds that regulatory benefits exceed (or at least reasonably justify) costs.

Under the BCA rule, future CAA rulemakings must “disaggregate” (separately present) the total benefits of regulation into two categories: “targeted” and “ancillary.” Targeted benefits are those directly related to the regulation’s statutory objectives. Ancillary benefits are those attributed to collateral reductions in air pollutants not targeted by the underlying statutory provision.

This seemingly innocuous presentational issue is controversial because the Obama-era EPA increasingly relied on collateral reductions in fine particulate matter (PM2.5) to make otherwise economically indefensible regulations look like a bargain at any price. In the most notorious case, the so-called Mercury Air Toxics Standards (MATS) rule, ancillary PM2.5 benefits accounted for 99.9 percent of total quantified benefits.

If one considers just the hazardous air pollutant (HAP) reductions that are the MATS rule’s statutory purpose, costs ($9.6 billion in 2016) exceed benefits ($4 million to $6 million) by up to 2,400 to one. To counter this PR problem, the EPA claimed the rule’s incidental PM2.5 reductions would avert 4,200-11,000 heart attacks, delivering $37 billion to $90 billion in collateral health benefits. Thus, the EPA concluded, the MATS rule’s PM2.5 “co-benefits” would exceed the rule’s costs by three to nine times.

The Obama EPA’s “co-benefits” policy is a license for regulatory excess, because even the most costly and inefficient CAA regulation will reduce PM2.5 to some degree.

The BCA rule will spotlight this problem—a critical first step to solving it. As the proposal states, disaggregation “may cause the EPA to explore whether there may be more efficient, lawful and defensible, or otherwise appropriate ways of obtaining ancillary benefits, as they may be the primary target of an alternative regulation that may more efficiently address such pollutants, through a more flexible regulatory mechanism, better geographic focus, or other factors.”

CEI’s comment letter encourages the EPA to consider, in the present rulemaking and future deliberations, several options for reining in PM2.5 co-benefits abuse.

1. Challenge the efficiency, propriety, and legality of regulating PM2.5 under the guise of regulating other pollutants. For example, the MATS rule was functionally a PM2.5 reduction mandate. PM2.5 is a “criteria” air pollutant regulated under the National Ambient Air Quality Standards (NAAQS) program. MATS was promulgated under CAA section 112—a provision that effectively prohibits the EPA from using it to regulate criteria pollutants.

2. Develop the case that ancillary PM2.5 reductions are likely to increase marginal costs rather than marginal benefits. That is because the NAAQS program, which requires the EPA to both ignore costs and err on the side of caution, very likely already regulates criteria pollutants beyond their BCA optima.

3. Develop the case that PM2.5 reductions below the NAAQS should not be monetized or at a minimum not valued equally with reductions above the NAAQS. That is implied in the very idea of a NAAQS—a pollution concentration standard “requisite to protect public health” with an “adequate margin of safety.” The health benefits of pollution reductions below the NAAQS are too uncertain to monetize. Note: More than 99 percent of the MATS rule’s PM2.5 co-benefits were attributed to reductions in areas already in compliance with the NAAQS.

4. Reconsider the health benefits of collateral PM2.5 reductions in the light of mundane realities that do not comport with the Killer PM2.5 Narrative. For example, a never-smoker inhales about 2 ounces of PM2.5 over a lifetime. A half pack a day smoker inhales 4.5 lbs. of PM2.5 over 15 years. If the smoker quits at age 35, her life expectancy (80 years) is identical to that of a never-smoker. As regulatory analyst Steve Milloy observes, “If one can inhale either a little or a lot of PM2.5 over the course of a lifetime and expect to live the same length of time, then PM2.5 does not kill on a long-term basis.”