EPA’s risks outweigh rewards for new mercury rule

Unfortunately, the claimed benefits are almost entirely illusory. The estimated $140 billion per year and 17,000 premature deaths avoided are derived not from reducing the toxic emissions that the EPA 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 the EPA estimates, and arise not directly from reducing toxic emissions, but from other things that the EPA thinks will happen as beneficial side effects. (The agency makes no attempt to search for “co-costs,” such as the increase in consumer prices for all goods and services that rely on electricity or a less reliable electricity grid.)

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To a large extent the 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 the EPA updates regularly based solely on public health considerations. (The EPA is 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, the EPA calculates almost all of its monetary benefits for this rule from particle reductions well below the levels it has established as safe.

The EPA’s public emphasis on reducing mercury emissions is extraordinarily misleading. Its analysis places an upper bound value on the benefits of reducing exposure to toxic mercury emissions at $.006 billion per year and predicts even the most highly exposed children will gain 2/10ths of one percent (0.2%) of an IQ point as a result of these regulations.

These are the only “direct” benefits the EPA presents in support of the rule.  Scientists suggest even these very small effects greatly overstate the likely effects of the rules on children’s health, arguing that the EPA “systematically ignored evidence and clinical studies” in developing these health estimates.

Contrary to the EPA’s claim that the rule will provide particular benefits to children, the premature deaths the 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 the EPA assumes causality where none can be explained, and makes other assumptions that overstate effects.

Also disingenuous is the 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 its 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 the EPA claims are not different statistically from zero.

These new regulations will be among the most expensive regulations ever issued. The estimated $11 billion per year in costs will be borne by all Americans who will pay more for electricity and anything that uses it.  Further, due to the EPA’s rosy assumptions and failure to consider how the requirements will make the electricity grid more susceptible to power outages, this cost may well be understated.

Contrary to the EPA’s claims, the real health impact of these rules will likely be negative. They will raise unnecessarily 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.

Dudley directs the George Washington University Regulatory Studies Center.  She served as administrator of the Office of Information and Regulatory Affairs from 2007 to 2009.

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