Monetization, Myopia, and MATS

The U.S. Supreme Court yesterday heard oral argument in the consolidated cases challenging the Environmental Protection Agency’s rule regulating mercury and other toxic emissions from coal- and oil-fired power plants.  These utilities remain by far the largest domestic source of mercury emissions, contributing more than half of the mercury releases nationwide.   Mercury emissions are at the root of widespread methylmercury contamination in the nation’s fish.  Fish consumption is the primary way by which humans are exposed to what is, after all, an “extremely poisonous neurotoxin,” as the attorney for those industries that joined EPA as respondent reminded the justices. (Transcript at 84). The exchange captured by the transcript may not permit a confident prediction as to how the Court is likely to rule (an assessment shared by Lyle Denniston at SCOTUSblog ).  But it provides a glimpse of precisely how monetized costs and benefits can hijack deliberation.  Once dollar values are available, these numbers tend to dominate a discussion of what is at stake in regulation.  For mercury, the costs are readily quantified, whereas many facets of the benefits resist monetization.  So the case for regulation will not only get short shrift – it may be profoundly misunderstood.

This window into how the cost-benefit frame can recast debate is of no small moment, given that the question before the Court was whether the EPA must consider costs – and, specifically, weigh the costs against the benefits – before deciding whether the regulation of mercury and other hazardous air pollutants (HAPs) emissions from utilities is “appropriate and necessary” under the Clean Air Act (CAA). The state and industry petitioners argued that EPA must undertake such a cost-benefit analysis (CBA) at this initial step in the process, i.e., that of “listing” utilities as a source category that warrants regulation because it emits HAPS that pose a “hazard to public health.” EPA, as respondent, argued that it need not make this threshold decision on the basis of a cost-benefit accounting – rather, under the CAA’s statutory scheme, costs were to be considered as part of a second step.  In this second step, EPA delineates subcategories (designating for separate treatment, for example, those utilities that burn bituminous coal from those that burn lignite coal from those that burn oil) and sets a feasibility-based standard by reference to the level of emissions reductions being attained through pollution control technologies already installed at a certain percentage of those facilities.  

Although EPA did not conduct a CBA as part of its determination whether to regulate utilities, it did provide a separate assessment of the costs and benefits of the standard it ultimately issued, commonly referred to as the MATS (Mercury and Air Toxics Standards) rule, as part of its required Regulatory Impact Analysis.  In this analysis, EPA was able to monetize only a single benefit of the rule – the dollar value of expected lifetime earnings attributable to the IQ losses avoided by reducing mercury emissions.  EPA calculated this figure to be $4 to $6 million.  EPA explained, however, that “these calculated benefits are a small subset of reducing mercury emissions.  A whole host of “important” mercury-related benefits of the rule, EPA emphasized, were not quantifiable. 

What are some of these benefits? 

The National Congress of American Indians (NCAI), federally recognized Indian tribes, and inter-tribal fish commissions are, as they observed in their amicus brief, uniquely positioned to explain the myriad and substantial benefits of reducing mercury emissions.  For the fishing tribes, methylmercury contamination’s harms have interrelated physical, cultural, social, and economic dimensions – many of which resist monetization.  First, methylmercury’s adverse impacts on human physiological health are broader that those captured by IQ decrements; they include other “neurodevelopmental disorders, cardiovascular disease, autoimmune deficiencies, and other adverse health effects.” (NCAI brief at 4). While these health impacts are the same as those imposed on the general population, the burden is disproportionately visited on the tribes, given that – today as in the past – tribal members eat fish at much higher rates than those in the population at large.  Second, methylmercury contamination “threatens traditional Indian lifeways – lifeways that make individual tribes distinct” as peoples. (NCAI brief at 13). The cultural dimensions impact not only the health of individuals but that of the tribe as a whole.  As one tribe, the Forest County Potawatomi Community, explained this facet of methylmercury contamination to EPA in its comments on the MATS rule:

  The Tribe and its members are left with a Hobson’s choice of ingesting materials that may  ultimately injure Tribal members’ health, or forgoing cultural practices that are essential to our   individual and Tribal spiritual well-being and way of life.  (NCAI brief at 14).

Another tribe, the Minnesota Chippewa Tribe, has decried the adverse impacts of methylmercury contamination to fish-eating wildlife such as loons and mink, which are important clan symbols for tribal members.  Third, methylmercury contamination imperils the tribes’ social health in myriad ways.  As the Great Lakes Indian Fish and Wildlife Commission has noted, “fishing and eating fish provide important occasions for the intergenerational transfer of knowledge (including ecological, historical, and social knowledge) that forms a central part of the inheritance of each succeeding generation.” (NCAI at 14).  The Aroostook Band of Micmacs has lamented that “the loss of our cultural ceremonies, language, and songs associated with fishing represents a significant impact on our Tribe.” (NCAI at 15).  Fourth, methylmercury contamination impairs the exercise of tribal fishing rights.  Because of the importance of fish and fishing to the tribes – as a source of food, a livelihood, and as a matter of cultural identity – many tribes secured legal protections for these lifeways through treaties and other means.  Relatedly, methylmercury contamination frustrates the ability of the U.S. government to honor these rights.  By significantly reducing mercury emissions at their source, the MATS rule addresses these and other harms that methylmercury contamination imposes on the fishing tribes. 

In attempting to belittle the benefits of the MATS rule, the petitioners and their amici characterized them as “minimal,” “negligible,” and “de minimis.”  (Michigan brief st 46, the U.S. Chamber of Commerce brief at 13, Cato Institute brief at 5) They then described the benefits as beginning and ending with those that could be monetized – repeatedly referencing only the $4 to $6 million worth of quantified benefits and neglecting to mention the unquantified benefits.  Never mind that the latter comprised the larger share of the rule’s value. 

Because one cannot price a polluted clan symbol or a lost fishing song, the multi-faceted and multi-generational benefits go unregistered in a cost-benefit accounting – a “zero” value on the ledger that petitioners would have EPA employ to determine whether to regulate.  Yet most of the costs are readily described in dollars and cents.  And, so, we can see that the asymmetric outcome of requiring a cost-benefit tally will be what Frank Ackerman and Lisa Heinzerling have recognized amounts to a “complete cost-incomplete benefit analysis.”   It is this quantified bottom line, moreover, that will tend to “stick” – in people’s minds, in media accounts, and, as it turns out, in debate at the High Court. 

Thus, for example, we have Chief Justice Roberts questioning the Solicitor General about “the” benefits to be garnered from regulating utilities’ mercury emissions: 

                  “The benefit from the mercury is, what, 4 million?” (Transcript at 63).

Although the Solicitor General attempted to direct the Court’s attention to the EPA’s qualitative description of the many public health benefits that EPA “didn’t try to quantify” – some thirty pages in the record, including “page after page of charts in which EPA has listed the other benefits that come from regulating mercury and the other hazardous substances” (transcript at 64) – the justices relentlessly stuck to the numbers in depicting what was at stake.  If only $4 million in benefits is attributable directly to reducing mercury, but an additional $30 to $90 billion will result from other pollutants that are reduced by the technologies used to control mercury emissions, the Chief Justice inquired, isn’t this “bootstrapping”?  (Transcript at 61). The numbers made it seem so to Roberts:  “when it’s such a disproportion, you begin to wonder whether it’s an illegitimate way of avoiding the different – quite different limitations on EPA that apply” under the portions of the CAA that are directed not to HAPs but to these other pollutants. (Transcript at 63-64).  But the relative contributions of the benefits appear disproportionate only if they are compared – as they will be once dollar values have been affixed – in monetized terms.  Nor will the non-quantified benefits hold their own against an account of the costs, as virtually all of the costs are readily susceptible to monetization.   

Petitioners proffered a weighing of costs and benefits as a means of enhancing EPA deliberations – a “common-sense” tool that can only improve agency decision making.  (Michigan brief at 30). But, as I have argued at length elsewhere and as the exchange before the Court yesterday illustrates, once a dollar value has been assigned to the costs or the benefits, it is this number that will be quoted again and again.  This number will be taken to represent the benefits of reducing methylmercury contamination, to be what we stand to gain from regulation – with only the most occasional nod to the non-quantified benefits, in all their richness.  This number will be cited, as petitioners and their amici did, to portray the total benefits as trivial, even when the non-quantified benefits may in an “important” sense dwarf those that have been monetized. 

To require that the inquiry into whether mercury regulation is “appropriate and necessary” proceed through a cost-benefit lens is to hinder, rather than aid, agency decision making.  When the benefits have largely been rendered invisible, leaving only the “negligible” fraction that can be monetized in view, deliberation is sure to be myopic.