Thursday, January 7, 2010

EPA Proposes New Smog Standards

The EPA yesterday proposed a new national ambient air quality standard (NAAQS) for ozone (a precursor to smog) that reduce allowable concentration levels over any 8-hour period from 75 parts per million (under current regulations) to somewhere between 60 and 70 parts per million. The proposed rule is here; a fact sheet describing the proposed changes is here.

The historical context of the proposed change in standards is interesting. As this article in today's Washington Post explains, in 2008 the Bush Administration tightened up the national ambient air quality standards for ozone, but less than was unanimously recommended by the EPA's own Clean Air Scientific Advisory Committee. The new proposal would reset the 8-hour standard as that Committee originally recommended.

When setting national ambient air quality standards, the Clean Air Act prohibits the EPA from considering the regulatory costs; the standards are to be set based solely on public health effects. See, e.g., Whitman v. American Trucking Association, 531 US 457 (2001). However, the EPA is required by other statutes and by Executive Order of the President to prepare regulatory impact analyses (a.k.a., benefit-cost analyses or BCAs)  for all major regulations, including those that would set or amend national ambient air quality standards. Thus, EPA is legally required to prepare BCAs that it is legally prohibited from considering in its decision-making process. In this case, the BCA for EPA's proposed revision of the ozone standard is reported (here) to entail regulatory costs of between $19 billion and $90 billion, and health benefits of between $13 billion and $100 billion. Using central estimates, the proposed regulation barely passes a cost-benefit test. But it is important to note that the agency's benefit calculation included only health benefits, excluding a number of other potential benefits, including environmental benefits. So, the net benefits of the rule could be even greater. In addition, having not viewed the actual regulatory impact analysis, I do know know what valuation EPA attached to the value of a human life - the proposed rule is predicted to avoid thousands of premature deaths by 2020 - or what discount rate(s) it used for reducing future costs and benefits to present dollars.

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