Tuesday, June 13, 2017

EPA Should Use Review of Mercury and Air Toxics 'Supplemental Analysis' to Put 'Co-benefits' in the Grave

By William Yeatman of CEI.
"In late April, the U.S. Court of Appeals for the D.C. Circuit paused five year-old litigation over the Environmental Protection Agency’s Mercury and Air Toxics Standards, while the Trump administration reviews the Obama administration’s legal and regulatory posture. Here’s how we got here:
  • February 2012: EPA promulgated the Mercury and Air Toxics Standards, also known as the Utility MACT. The EPA’s bizarre official justification for the rule is to protect an unidentified population of pregnant subsistence fisherwomen who eat hundreds of pounds of self-caught fish during their pregnancies from only the most polluted bodies of inland water.
  • Spring 2012: Twenty states, industry, and non-profits challenge the rule in the D.C. Circuit Court of Appeals.
  • April 2014: The D.C. Circuit upholds the regulation.
  • November 2014: The Supreme Court grants a cert petition to review the D.C. Circuit’s decision to uphold the regulation.
  • June 2015: In Michigan v. EPA, the Supreme Court reverses the lower court on the ground that the agency impermissibly failed to perform a cost-benefit analysis when it decided that it is “necessary and appropriate” to undertake the Mercury and Air Toxics Standards. No doubt the Court was galled by the regulation’s steep costs—$10 billion annually—as against its avowed benefits—the agency estimated that the value of benefitting pregnant subsistence fisherwomen accrued to $6 million to $10 million. The Court ordered the agency to perform such an analysis, and the case was sent back down to the D.C. Circuit to review the agency’s cost-benefit demonstration.
  • April 2016: In response to the Supreme Court’s decision, the EPA performs a “supplemental analysis” which purports to demonstrate the cost-effectiveness of the Utility MACT. The supplemental analysis relies on “co-benefits” of the rule, which is basically the supposed value of the pollution that is allegedly reduced as a byproduct of the rule. Simply put, the rule aims to limit mercury, but by controlling mercury, the rule also controls particulate matter and sulfur dioxide. And it is the value of these supposed “co-benefits” on which the agency relied to justify the rule in its supplemental analysis. According to the agency, the rule resulted in $37 billion in co-benefits.
  • Spring 2016: The D.C. Circuit picks the case back up, in order to review the EPA’s “supplemental analysis.”
  • November 2016: Donald Trump wins the presidency.
  • April 2017: The D.C. Circuit agrees to pause the case while the Trump administration reviews the Obama administration’s supplemental analysis.
So now the ball is back in the EPA’s court. Here’s what the agency should do: The Trump EPA should undertake its own supplemental analysis, including a review of the one performed by the previous administration. In this manner, the agency could build a rock-solid administrative record that buries once and for all the EPA’s use of irrational co-benefits.

Since the George W. Bush administration, the agency has been justifying its air quality rules by trumpeting their co-benefits. Yet there is a fatal flaw with this policymaking mechanism. In fact, co-benefits are an illusory figure based on a statutory sleight of hand.

By way of example, consider the Mercury and Air Toxics Standards. This regulation is authorized by Clean Air Act § 112, which controls hazardous air pollutants. By contrast, co-benefit pollutants are known as “criteria pollutants,” and they are regulated by the Clean Air Act §§ 108-110. Indeed, criteria pollutants are regulated at a level that is “requisite to protect public health” with “an adequate margin of safety.” That is, these pollutants are regulated by an entire statutory program at standards that go beyond what is necessary to protect public health. It is, therefore, disingenuous to claim that Regulation X (i.e., the mercury rule) engenders $37 billion in benefits by reducing pollutants that already are controlled by Regulation Y (i.e., the program that controls “criteria” pollutants, aka “co-benefits”) at a level beyond what is necessary to protect public health. According to Anne Smith of NERA Consulting, 99 percent of the Utility MACT’s claimed “co-benefits” occur in areas of the country that are currently achieving the standard that is beyond requisite to protect public health. The upshot is that these co-benefits are not real, because they occur where the air is already clean of the co-benefit pollutant.

The EPA should demonstrate the reasoning set forth above in a notice and comment process that reviews and replaces the Obama administration’s supplemental analysis. In so doing, the agency would establish an official administrative record that definitively explains why using co-benefits is unreasonable (for the reasons set forth above). Doing so would effectively kill off this practice. If a subsequent administration chose to again pick up the co-benefits baton, then it would have to explain how and why using co-benefits are reasonable in light of the administrative record established by the current EPA (if it takes my advice). For my part, I doubt such an explanation is possible, as I believe the metric is objectively unreasonable."

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