EPA’s Hazy Air Rules

In the first major environmental effort of the Clinton Administration's second term, the Environmental Protection Agency proposed new rules tightening the nation's standards for two pollutants, ozone and particulate matter. Concentrations of ozone, the main constituent of smog, and airborne particulate matter have been declining for two decades. Nonetheless, the EPA wants to impose far tougher standards, despite the lack of clear evidence that tighter standards will do any good.

The proposals have generated considerable controversy – not unexpected given their potential high costs and dubious benefits. The EPA received a near-record 25,000 comments on the rules, and the agency must make a decision by July.

The Competitive Enterprise Institute submitted comments highly critical of the EPA rules, raising legal and scientific objections to the proposed standards and the manner in which the EPA put them forward.

CEI is concerned that the EPA is attempting to ram these rules through without performing the legally required analysis. The Unfunded Mandates Reform Act (UMRA) and the Regulatory Flexibility Act (RFA) were designed to protect state and local governments and the private sector from costly federal regulations. They require an agency proposing a significant rule to assess the impact on the non-federal governments and businesses that bear the brunt of compliance costs. The EPA's new rules will impose massive costs on the country and are precisely the type of federal action for which the UMRA and RFA were created. Yet the EPA claims that these laws don't apply to their rules.

The EPA's strained attempts at avoiding accountability under these laws rest on the notion that the rules merely set standards, and that it is the implementing regulations that will actually impose onerous costs. "Overly legalistic" is the charitable description of this argument Senators Christopher S. Bond (R-MO) and Dale Bumpers (D-AK) gave the EPA. Undoubtedly, if the proper analysis of the new rules had been conducted, it would have shown an extraordinary and unacceptable burden placed on state and local governments and businesses.

The EPA's cost estimates for the standards are suspiciously low. The text of the proposed rules reveals a number of highly questionable assumptions. For example, the EPA assumes only partial compliance with the new standards. The cost for full compliance (or attainment, as the EPA calls it) will be significantly higher, especially because the EPA has failed to identify how some nonattainment areas will ever meet the already-strict current standards, let alone more stringent ones. Most independent cost estimates are far higher than those of the EPA. An analysis by the George Mason University's Center For Study of Public Choice estimates the annual cost at $54 to $328 billion for the ozone rule and $55 billion for the particulate matter rule – orders of magnitude above the EPA's estimates.

Because of these high costs, the rules are likely to harm the public health, not improve it. It is well established that as incomes rise, health improves and as income falls, mortality and morbidity increase. In other words, wealthier is healthier and poorer is sicker. As Judge Stephen Williams of the D.C. Circuit Court of Appeals noted in International Union v. OSHA, "higher income can secure better health, and there is no basis for a causal assumption that more stringent regulation will always save lives. . . Incremental safety regulation reduces incomes and thus may exact a cost in human lives."

If enacted, these new rules may become the strongest example yet of this phenomenon. They will divert scarce resources away from life-saving and/or growth enhancing investments, resulting in more deaths, not fewer.

Despite a statutory mandate to consider "all identifiable health effects" in setting air quality standards, the EPA ignored its own evidence of adverse health effects associated with the proposed lowering of the ozone standard. Recall that the agency enacted a number of rules under the Clean Air Act to protect the public from a decline in atmospheric ozone. Chlorofluorocarbons (CFCs) and other chemicals linked to ozone thinning were banned, in the EPA's own words, because of "concern that significant ozone loss may occur over populated regions of the earth, exposing humans, plants, and animals to harmful levels of UVB radiation."

Although concerns about ozone depletion focused on ozone in the stratosphere, numerous scientific studies have shown that ozone in the troposphere (the part of the atmosphere that extends from ground level up to the stratosphere) also attenuates UVB to a significant degree. Research previously relied upon by the EPA states that "UVB penetration to the surface of the earth is affected by tropospheric ozone."

In clear violation of its appointed mission, the EPA ignored its own evidence that the new standard is likely to result in an increase in UVB, and thus a rise in UVB-related health effects, such as skin cancer. In fact, one internal EPA study estimates that the proposed change in the ozone standard will result in 3,000 to 4,000 additional cases of non-melanoma skin cancer annually.

A similar analysis by the Department of Energy estimated 2,000 to 11,000 additional cases of non-melanoma skin cancer, 130 to 260 additional cases of melanoma skin cancer, and 13,000 to 28,000 additional cases of cataracts annually. If accurate, these numbers greatly outweigh the small estimated health benefits that the EPA predicts from the lower ozone standard.

The EPA brushed aside such concerns when they were raised by the Office of Management and Budget, maintaining that the health risk from UVB is insignificant. This is understandable. In the past CEI has criticized the Agency's exaggerated estimates of the health threat posed by moderate thinning of the ozone layer. However, the Agency has repeatedly rejected such criticisms in adopting an aggressive agenda to control CFCs and other putative ozone depleters.

The EPA cannot have it both ways. Either increased exposure to UVB radiation is a substantial health threat or it is not. If ever there was an example of a federal bureaucracy selectively picking facts to fit the regulatory agenda of the moment, this is it.

But wait, there's more. The particulate matter standard, which proposes to regulate ultra-small particles not yet specifically regulated under federal law, rests largely on two epidemiological studies that found a very weak correlation between exposure and adverse health effects. The studies did not adequately discount confounding variables, such as humidity, nutrition, and fitness, and contrary studies have not been considered. Moreover, the link between particulate concentrations and mortality – the "risk factor" – in these studies is so small as to statistically uncertain.

These concerns are not news to the EPA. The Agency ignored many of its own scientific advisors who raised doubts about the purported benefits of the new rules while they were being written. George Wolff, then-Chairman of EPA's Clean Air Scientific Advisory Committee (CASAC) commented, "I don't think the standards that have been chosen reflect the advice the CASAC has given the administrator [of the EPA]." Recently released memoranda also indicate that the White House Science Advisor John Gibbons had similar concerns.

Indeed, CEI's criticisms of the proposed rules have been corroborated by an unexpected source – the Clinton Administration itself. The Departments of Agriculture, Commerce, Transportation and Treasury all challenged the EPA's analysis of the proposed rules behind closed doors. Alicia Munnell, a member of the President's Council of Economic Advisors, wrote in a memo that the EPA's Regulatory Impact Analysis "understates the true costs of stricter standards by orders of magnitude," and that "the incremental health-risk reduction for more stringent standards is small . . ." Indeed, within the past month, the EPA twice revised its erroneous benefit estimates.

Jere Glover, chief counsel for advocacy at the Small Business Administration strongly disagreed with the EPA's conclusion that the proposed ozone rule will not substantially impact small businesses, stating that the ozone rule "is certainly one of the most expensive regulations, if not the most expensive regulation faced by small businesses in ten or more years." Glover also challenged the EPA's assertion that the standards are not subject to the RFA. But as with the rest, Glover's concerns were ignored.

The Office of Management and Budget (OMB), performing an independent analysis of the rules as required by Executive Order, also raised serious questions about the costs and benefits. The OMB alleges that the EPA did not comply with federal guidelines for the promulgation of new regulations. Yet when the House Commerce Committee asked for the OMB's unvarnished opinion, the EPA intervened. One Agency official even offered to revise the OMB's response "line by line." These efforts to tamper with executive oversight of federal rulemaking has sparked concern on Capitol Hill and may be the subject of congressional hearings in the near future.

The EPA has until July 19 to issue a final decision on the proposed rules and prepare for the inevitable legal challenge that will follow unless the EPA backs down. EPA Administrator Carol Browner has given every indication that she plans to go forward and enact standards that will have an unprecedented impact on the entire nation. Thus, the fight over air regulations has only begun.

Ben Lieberman is a CEI research associate.