"In order for CBA cost benefit analysis to be workable, regulators need to have a relatively restricted range of possibilities." That's what OIRA Administrator Cass Sunstein wrote in a 2007 book. So how about from $82 billion to negative $251 billion, a third of a trillion dollars – is that a relatively restricted range?
Those are the estimated net benefit figures, over 50 years, in the Regulatory Impact Analysis (RIA) for EPA's "strong" coal ash regulation proposal. Do those numbers actually mean much? No. Yet there they are, trumpeted as if they have meaning. They don't.
As regular readers know, the regulation of coal ash has been quite the journey. We take the next step in the trek today, when the public comment period ends on EPA's current proposals. CPR President Rena Steinzor submitted comments on the coal ash rulemaking this morning (press release).
Let me step back a minute to explain the comments and the context. The Kingston, Tennessee, coal ash spill disaster in 2008 spurred the EPA to action; it said it would announce a specific regulatory proposal by the end of 2009. The agency submitted its proposal (which we now know was strong) to the White House's Office of Information and Regulatory Affairs (OIRA) in October. By Executive Order, OIRA has no more than 120 days to review proposed regulations, but the office went beyond its allowed limit, delaying action while it hosted some 47 meetings on the rule, mostly with industry opponents. In May of this year, the EPA was finally allowed to release a revised proposal reflecting OIRA's changes.
Documents later posted on the EPA website showed that OIRA had made more than 100 pages of deletions and edits to the EPA's original proposal, and also added dozens of pages to it. Despite its limited scientific expertise, OIRA even added entirely new proposals; the EPA's May announcement included both a modified version of the original "strong" regulation as well as additional, weaker proposals. The accompanying RIA – following OIRA's edits – is the source of the huge range of estimated cost and benefits I mentioned.
The huge negative benefits suggested in the RIA are almost entirely the result of a predicted “stigma effect,” which is estimated to cost $231 billion in losses. Companies that reuse coal ash have argued that consumers and companies would no longer buy products that incorporate recycled coal ash if coal ash disposed at power plants is regulated as a hazardous waste (or euphemistically, as a "special waste"). The EPA's "strong" proposal would treat coal ash dumped into the ground as hazardous, but would not regulate coal ash when it is reused. The $231-billion argument accepts industry’s notion that companies (largely construction companies) will use more expensive materials to avoid using the same recycled coal ash they’re using right now, while utility companies will similarly forego their economic incentives to provide coal ash for reuse – instead paying more to dispose of it, out of an overwhelming fear of liability. A "stigma" argument of this scale is unprecedented in a rulemaking, and defies the history of regulation of toxic chemicals: increasing safety requirements for the disposal of a substance nearly always increases, not decreases, the incentives to recycle more of the product.
The Regulatory Impact Analysis strongly suggests that coal ash reuse will decrease by 51 percent. So where did that number come from? Apparently it's a “reasonable approximation in the absence of information to the contrary.” That's what I call stringent economic analysis at work.
Did the RIA at least do a better job estimating the positive benefits of regulating coal ash? No. For example, what value do you give for the health benefits of regulating coal ash dumps strongly so they don't leach cadmium, lead, or mercury into the nearby water (sometimes including drinking water)? The RIA's answer was easy: value those benefits at $0. With math like that, it sounds as if regulating coal ash is a pretty silly idea.
This whole process has lost touch with reality.
It's time for EPA to retake control of a rulemaking process that was hijacked by OIRA, and time for President Obama to tell OIRA to stop serving as a conduit for industry, and to leave the scientific judgments in the hands of the agencies designated by Congress. Protecting the public health depends on it.
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Ben Somberg | November 19, 2010
“In order for CBA cost benefit analysis to be workable, regulators need to have a relatively restricted range of possibilities.” That’s what OIRA Administrator Cass Sunstein wrote in a 2007 book. So how about from $82 billion to negative $251 billion, a third of a trillion dollars – is that a relatively restricted range? Those […]
Ben Somberg | November 19, 2010
Senator Mary Landrieu released her hold on the nomination of Jacob Lew for Director of the Office of Management and Budget, and the Senate confirmed Lew by voice vote Thursday evening. Back when Lew had his confirmation hearings, CPR President Rena Steinzor wrote here about the challenges Lew will face on the regulatory front (“OMB […]
Victor Flatt | November 17, 2010
Last week the EPA released its “PSD and Title V Permitting Guidance For Greenhouse Gases.” This Guidance was designed to give the states direction in how to implement permitting requirements for new sources for other criteria pollutants that also produce greenhouse gases on January 2, 2011, and new sources of greenhouse gases following in May, 2011, […]
Rena Steinzor | November 17, 2010
One of the most powerful sleights of hand achieved by Republicans during the last election cycle was their renewed declaration of war on regulation. It’s no secret which of their interest groups are most passionate about this aspect of their agenda. Tuesday’s LATimes previewed a plan by the Chamber of Commerce, to be announced today, to further […]
Ben Somberg | November 15, 2010
The EPA announced this morning that it has finalized numeric nutrient criteria for Florida waters — specific limits on the amounts of nutrient pollutants allowed in the state’s water bodies. These criteria will in turn limit discharges by point and non-point sources. Currently, nutrient limits are set only by “narrative” water quality standards — which […]
James Goodwin | November 11, 2010
Late last month, the White House Office of Information and Regulatory Affairs (OIRA) posted on its website a document called Agency Checklist: Regulatory Impact Analysis, which, according to the document, is intended to assist federal regulatory agencies with Executive Order 12866-required cost-benefit analyses (CBAs). Such analyses have become a standard, if fatally flawed, stage in the […]
Matt Shudtz | November 10, 2010
Every year, OSHA mails a letter to about 15,000 employers who run high-hazard worksites, warning them that their most recent annual injury and illness rates were well above average. According to OSHA, For every 100 full-time workers, the 15,000 employers had 4.5 or more injuries or illnesses which resulted in days away from work, restricted work […]
Lena Pons | November 9, 2010
A new CPR white paper released today evaluates EPA’s performance in improving its database of human health information on toxic substances. The Integrated Risk Information System (IRIS) contains “profiles” with bottom-line health effects information for 540 substances; federal regulators, as well as state and local governments and regulated industry itself, rely on the assessments to make […]
Ben Somberg | November 8, 2010
In a post the other week, Celeste Monforton at The Pump Handle gives a great example of health/safety protection being evaluated the wrong way (“Contractor racks up mine safety violations and unpaid penalties, also wins safety awards.”) Monforton points to a large construction company that seems to be collecting safety awards while simultaneously being cited […]