EPA’s New Approach to Cost Benefit Analysis: Charles Dickens or Alice in Wonderland?

I’ve only now had the opportunity to catch up with EPA’s proposed reconsideration of its approach to cost-benefit analysis for the Mercury and Air Toxics Standards.  I don’t know whether I’ve gone down a rabbit hole or it’s just that the law is an ass.  Either way, it’s not good news.

As far as I can tell, EPA today does not really challenge the analysis performed in 2016 in response to Michigan v. EPA.  Instead, EPA simply takes the position that the Clean Air Act does not authorize EPA to consider the ancillary benefits of the rule, i.e., the reductions in particulate matter emissions that would result from implementation of the rule, in assessing costs and benefits.

For my entire career, I’ve challenged my environmental friends, siding with the bad guys and supporting cost-benefit analysis.  Now, the new administration comes across a rule that it doesn’t like, so EPA concludes, not that the analysis was wrong, or that cost-benefit analysis is bad, but simply that it can ignore benefits of the rule as ancillary and therefore not within the scope of the cost-benefit analysis.

The simple proposition is that we should regulate when a regulation’s benefits exceed its costs and not regulate when its costs exceed its benefits.  If the law precludes EPA from considering certain benefits of a regulation, then the law is an ass.  If EPA is pleased that the law precludes it from doing its job to implement regulations that provide a net benefit to the public, then we’ve truly fallen down a rabbit hole.  I’m sure that the people who develop fatal illnesses as a result of PM exposure from power plants will be comforted by knowing that the illness wasn’t caused by exposure to hazardous air pollutants.

One thought on “EPA’s New Approach to Cost Benefit Analysis: Charles Dickens or Alice in Wonderland?

  1. Has anyone thought to prohibit consideration of ancillary costs? Sure, power plants put on improved baghouses, FGDs, or whatever to comply with the rule – but that’s really ancillary to the purpose of the rule (to reduce HAP emissions). Further, many could have chosen to fuel switch instead – and likely will have to anyway in the mid- to longer-term due to market pressures. Finally, at least some of the limits imposed by MATS would have needed to be imposed as RACT eventually with the ongoing SO2 designations process anyway.

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