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EPA Invokes Benefits Only When It Suits Rollbacks, Watchdog Says

June 27, 2019, 10:01 AM

The EPA is selectively counting health benefits from controlling air emissions in order to weaken some rules and roll back others, according to a watchdog group’s review of recent agency regulations.

The inconsistent approach could create uncertainty about the costs and benefits of implementing the agency’s air regulations, and make the Environmental Protection Agency appear less credible, according to Amit Narang, regulatory policy advocate for Public Citizen, a nonprofit consumer protection watchdog group.

The case is illustrated most recently with the EPA’s June 19 Affordable Clean Energy, or ACE, regulation, when the agency decided to count the health benefits of regulating pollutants that form haze and smog. ACE replaced the Obama-era Clean Power Plan, which set the first-ever limits on carbon dioxide pollution from existing power plants.

But in a separate December 2018 proposal (RIN: 2060-AT99) to address the neurotoxin mercury and other air pollutants, the EPA suggested ignoring any health benefits from reducing lung-harming fine particle pollution, known as the co-benefits, that aren’t directly targeted by the regulation.

“They have definitely flip-flopped on the cost-benefit approach in how they are using co-benefits,” Narang said.

The Trump EPA has argued that previous administrations relied too heavily on such secondary health benefits in order to justify rules. But Narang and others said the EPA did the same thing in its analysis of the Affordable Clean Energy rule last week.

In the rule, the EPA highlighted one estimate projecting the regulation would result in annual net benefits of up to $730 million, gleaned from its reliance on co-benefits. But if such co-benefits were excluded and the rule were to only count benefits related to reducing carbon dioxide, ACE’s costs would outweigh its benefits by $82 million.

Backing From Industry

In its approach to the cost-benefit analysis, the EPA said it was simply following past White House Executive Orders and directives on the methods used in regulatory reviews, including Circular A-4, the George W. Bush-era guidance that outlined how agencies should consider co-benefits in analyzing regulations.

“We continue to follow that practice in the ACE Regulatory Impact Analysis,” the EPA told Bloomberg Environment.

But for the mercury proposal in particular, the EPA said the previous administration’s “equal reliance on co-benefits in considering benefits was flawed,” according to an agency spokesperson.

The business community has largely been supportive of the EPA’s rewrite of the Clean Power Plan. Dan Byers, vice president for policy at the U.S. Chamber of Commerce’s Global Energy Institute, said the various scenarios in the ACE rule highlighted the problems with counting co-benefits.

“I think it is important to note that EPA has done something new here with its emphasis on uncertainties in health effects and limitations of air quality modeling,” Byers said. “For now, EPA is saying we will show you the numbers the way we have done them in the past, but we have no confidence in this approach going forward.”

Joe Johnson, the chamber’s executive director for federal regulatory process, also said the cost-benefit analysis system is imperfect, but he said the EPA should be lauded, not criticized, for including all uncertainties dealing with particle pollution exposure and health effects in its ACE rule.

The EPA, in the regulatory impact analysis for the ACE rule, said it was “less confident” about the risk of fine particulate matter at lower observed levels and included multiple co-benefits scenarios to give “insight to the uncertainty.”

Thomas A. Lorenzen, a partner with Crowell & Moring LLP in Washington, also pointed out that how the EPA handles co-benefits depends on the context of the underlying law. He said the Clean Air Act provision dealing with hazardous air pollutants like mercury is dependent on a cost-benefit analysis, but it doesn’t address the question of ancillary benefits.

In contrast, the ACE rule, which addresses carbon pollution, is governed by a different Clean Air Act provision that depends on the best system of emissions reduction, not on how a regulation’s benefits stack up against its costs.

Cherry-Picking Benefits?

But others are challenging what they see as selective use of side benefits.

Narang said the agency’s inconsistent approach to co-benefits throws a wrench into its plans to rewrite its broader guidelines through a rulemaking due out this December. Those guidelines would detail how to calculate the costs and benefits of reducing air pollution in the future.

In the past, a regulation’s co-benefits—especially from cutting fine particle pollution—sometimes accounted for the majority of the health protections that the EPA tallied, such as reducing asthma attacks, sick days, and even deaths. Dropping such benefits from the equation may make it more difficult for the EPA to set stricter carbon dioxide and air quality limits for power plants and other industries.

For example, in the ACE rule, the EPA considered how the regulation would fare if it included all of the health benefits of the rule, including if pollution fell to levels below federal air quality standards, an approach in line with what the agency had done for decades.

But the EPA also considered two additional scenarios for the rule. One would count only the benefits of reducing particulate matter to the lowest level where health effects are observed. The other would discount any benefits from reducing air pollution below national air quality standards.

The first scenario offered the largest amount of benefits to justify the rule’s costs, and that was the one the EPA highlighted in announcing the final rule.

“This is the irony: In order to make the cost-benefit math work, the EPA had to include co-benefits. And this is exactly what they have been criticizing the Obama administration for using co-benefits to make their environmental regulations” work, Narang said.

—With assistance from Abby Smith.

To contact the reporter on this story: Amena H. Saiyid in Washington at asaiyid@bloombergenvironment.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Steven Gibb at sgibb@bloombergenvironment.com; Anna Yukhananov at ayukhananov@bloombergenvironment.com