EPA misrepresents mercury rule benefits

If the enormous public benefits EPA predicts from these mercury standards were real, they would justify the cost to Americans of almost $11 billion per year. Unfortunately, they are not.

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According to a regulatory impact analysis released earlier this year, EPA derived the vast majority of its estimated health and economic benefits not from reducing the toxic emissions that it is statutorily obligated to address (and which its press releases tout), but by counting what it refers to as "co-benefits." These co-benefits comprise 99.996% of the total benefits EPA estimates, and arise not directly from reducing toxic emissions, but from other things that EPA thinks will happen as beneficial side effects. The only "direct" benefits EPA presents in support of the rule amount to at most $6 million per year – the upper bound value it places on reducing exposure to toxic mercury emissions, which EPA predicts will raise even the most highly exposed children's IQ by 2/10ths of one percent (or .002 IQ points). Scientists suggest even these very small effects greatly overstate the likely effects of the rules on children's health, arguing that EPA "systematically ignored evidence and clinical studies" in developing these health estimates.

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EPA gets its huge benefits by assigning high dollar values to reductions in emissions of fine particles (not air toxics or acid gases) that it models will occur as a side-effect of the required controls. These fine particles are already regulated through other EPA mandates, including standards EPA updates regularly based solely on public health considerations. (EPA is explicitly not allowed to consider implementation costs in setting national fine particle standards, but must set them at a level that is "requisite to protect public health... with an adequate margin of safety.") Yet, through what is essentially an accounting trick, EPA calculates almost all of its monetary benefits for this rule from particle reductions well below the levels it has established as safe. Contrary to EPA's claim that the rule will provide particular benefits to children, the premature deaths EPA says will be averted are modeled to accrue to people with an average age of 80 years, who would live weeks or months longer, if at all, as a result of the regulations. This modeling is also suspect, because EPA assumes causality where none can be explained, and makes other assumptions that overstate effects. Also disingenuous is EPA's claim that the "rule will provide employment for thousands, by supporting 31,000 short-term construction jobs and 9,000 long-term utility jobs." First, this estimate quantifies only the jobs necessary to comply with the new rules, and ignores jobs lost, despite EPA's recognition that "the industries that use electricity will face higher electricity prices as the result of the toxics rule, reduce output, and demand less labor." Second, a careful reading of the fine print reveals that even the employment effects EPA claims are not statistically different from zero. These new regulations will be among the most expensive regulations ever issued. Contrary to EPA's claims, the real health impact of these rules will likely be negative. They will unnecessarily raise the price of electricity, impede economic recovery, and worsen public health and welfare. Not only will the rules increase the cost of heating, air conditioning, food, and other goods and services that contribute to public health, but they will divert scarce resources from much more pressing problems and activities that could contribute to improved health and economic well-being. Susan Dudley is director of the George Washington University Regulatory Studies Center

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