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Is It 'Mission Accomplished' for the EPA?

Does it make any sense to spend ever greater sums of money for ever fewer environmental benefits? That’s the very fair question that’s been asked in two recent smart pieces. The first is by C. Boyden Gray in today’s Washington Examiner, and I’ve excerpted its main points below:  

We have come a long way since the days when, as a federal judge once described, “the air in the Los Angeles basin was so thick with smog that a mountain, or even a nearby mountain range, could simply disappear.” That's what the Clean Air Act was designed to remedy, and it has worked…

We no longer contend with the large­scale environmental crises that still plague the rest of the world.

But you’d never know it, judging by the actions of President Obama’s EPA.

Instead of sensibly enforcing laws and regulations already on the books, EPA rulemaking has consciously and conspicuously overreached into nooks and crannies of American commerce it was never meant to go…

Bureaucracy, by its nature, metastasizes, and the EPA has grown larger while its contribution to public health is getting smaller and smaller. As American industry and transportation have become ever cleaner and more efficient, incremental improvements in environmental quality become increasingly costly…

[T]he environmental gains the country has achieved over the past half century are here to stay: No EPA administrator could dismantle them…

As administrator, [Oklahoma attorney general Scott] Pruitt should require EPA employees to investigate whether the negligible benefits the agency has recently pursued are worth the cost…

Pruitt has an opportunity to substitute economic reality for the creative math EPA uses to justify its new rules.

Hear, hear! To Gray’s reasoning, I’d add only that there is an ideal mechanism by which the Environmental Protection Agency can undertake the sort of cost-benefit analysis he advocates. Every eight years, the agency is required to review technology-forcing regulation for new sources of conventional pollution and existing sources of hazardous air pollutants. In a previous post, I recommended that EPA give priority to these non-discretionary duties. In the course of these reviews, the agency could produce voluminous records demonstrating why further pollution controls that exceed any reasonable estimate of societal benefit should not be implemented. As an independent action, the agency could undertake an extensive investigation to expose dubious metrics like the statistical value of a life or the social cost of carbon. Such courses of action would create a powerful precedent and record that would make it difficult for subsequent administrations to justify fuzzy math before the public and courts of review.  

There is a hole in Gray’s op-ed. The most consequential and expensive environmental regulations are known as National Ambient Air Quality Standards (NAAQS), and the Clean Air Act precludes the EPA from taking costs into account when it sets NAAQS. In fact, the agency is precluded even from considering the feasibility of controls required for compliance. This unfortunate matter is the subject of the second excellent piece, by Craig Loehle & Eric B. Schilling in the most recent issue of Regulation.

Like Gray in his op-ed, Loehle & Schilling stress the environmental improvement to date as a success story. They write that “over the last 50 years there clearly has been progress in reducing water and air pollution,” as a result of industry adopting cost-effective controls, or “low-hanging fruit,” as the authors call it. They question the wisdom of “recent updates of pollution standards that have been very costly (and in some cases impossible) to achieve” but for which “incremental improvements in health have often been vanishingly small if not zero.” As a solution, they propose that environmental laws should be amended to eliminate low-benefit, high-cost policies. “In plain language,” they advocate that “environmental regulation should be subject to a budget constraint.”

I agree with almost everything the authors write. My only minor quibble relates to how reality is even worse than they what they portray. To be sure, EPA is not allowed to take costs into account when it sets a NAAQS. However, as a result of statutory interpretations by the D.C. Circuit Court, which has exclusive review of NAAQS, the EPA does not even have the discretion to set a NAAQS! Instead, this determination, on which hundreds of billions of dollars of compliance costs depend, is to be set by the Clean Air Science Advisory Committee, the most powerful body of unelected technocrats no one has ever heard of. I explain CASAC’s outsized role here and here.

Interestingly, CASAC’s crucial role perhaps provides a backdoor administrative (rather than legislative) means for the EPA to take costs into account when it sets a NAAQS. For some time, former Bush EPA official Jeffrey Holmstead and also C. Boyden Gray have pointed out that a provision of the Clean Air Act (Section 109d(D)(1)(C)) requires CASAC to advise EPA on the “public health, welfare, social, economic, or energy effects which may result from [compliance with NAAQS].” To date, this provision has been largely ignored, although the Obama administration, to its credit, got the ball rolling. Conceivably, this process could be fostered by the EPA and the results factored into CASAC’s recommendation to the agency.

In sum, Gray, Loehle, and Schilling are asking all the right questions. It simply makes no sense to preclude consideration of costs and feasibility. Imagine if we did that for cars and public safety. We’d have 5 mph speed limits (this analogy was made before in the context of climate policy by Bjorn Lomborg in his book Cool It). Congress should act, but realistically, any amendment of the Clean Air Act, no matter how much sense it makes, would engender a filibuster. Such is the political reality when green 501c4s have become major players in political campaigns. Given this reality, I’m keen on the administrative option, whereby CASAC considers costs and includes this consideration in its recommendation to EPA. Who knows whether it would withstand judicial review, but it’s a viable legal argument that’s no long shot.