Economists warn EPA analysis will undermine agency’s air protections

A group of economists warned Wednesday that a forthcoming rule change from the Environmental Protection Agency (EPA) will not only weaken the administration’s response to mercury but could undermine the agency’s ability to regulate a wide variety of pollutants going forward.

The External Environmental Economics Advisory Committee (E-EEAC), comprised of economists from major universities, examined the cost-benefit analysis underlying the Mercury and Air Toxics Standards (MATS) proposal. Under the Trump administration, the results of the analysis shifted from saying the plan would save money due to the overall public health benefits to emphasizing the costs of pollution controls.

The group, which formed after the EPA dissolved its internal Environmental Economics Advisory Committee, say the agency isn’t rolling back the rule itself, but undermining it using a flawed cost-benefit analysis that will open up the rule to a swift legal challenge.

Under the Obama administration, the rule was projected to save between $37 billion and $90 billion dollars. Under the Trump administration, the figure ranged from $4 million to $6 million.

Matthew Kotchen, a member of the group and a professor at Yale, said the EPA’s flawed analysis essentially zeros out “co-benefits,” including the other toxins that would be removed by pollution controls at power plants that would ultimately benefit public health.

“It’s basically the value that the American public receives from this regulation that are not the main targets of the regulation,” he said.

He compared it to buying organic produce. One might choose organic products to be healthy, but those foods may also be tastier and avoid adding pesticides to the environment. The EPA is similarly required to look at the whole picture, he said.

Not doing so undermines the legal basis of the rule, as a regulation that has a greater cost than benefit may not meet the legal standard of being “appropriate and necessary.” 

“The reason why it’s important is the eventual consequences of this may be obvious as a legal strategy,” Kotchen said. “A court is not likely to uphold a regulation EPA itself does not think there’s a legal basis for.”

The EPA has stated clearly since it decided to review the rule last year that it does not think regulating hazardous air pollutant emissions meets that legal standard.

“After properly evaluating the cost to coal- and oil-fired power plants of complying with the MATS rule (costs that the Obama Administration estimated range from $7.4 to $9.6 billion annually) and the benefits attributable to regulating hazardous air pollutant (HAP) emissions from these power plants (benefits that range from $4 to $6 million annually) — as EPA was directed to do by the U.S. Supreme Court — the agency proposes to determine that it is not ‘appropriate and necessary’ to regulate HAP emissions from power plants,” the agency said.

Its rule is expected by the end of the year.

This isn’t the first time that scholars have feared a regulation from the Trump EPA could hamstring future administrations from regulating pollution.

The administration’s Affordable Clean Energy rule replaced the Obama-era Clean Power Plan, but critics say it won’t just limit what pollution controls will be installed at power plants — it also undermines the legal basis for the agency to insist on such controls. 

“If it’s upheld, this new highly constrained legal interpretation that they’ve put forward here could really hinder the use of the Clean Air Act in the future as a tool for reducing climate-changing pollution,” Lissa Lynch, an attorney with the Natural Resources Defense Council, said when it was announced.