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Sunstein Letter

Sunstein Letter

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Published by Bernice Yeung

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Published by: Bernice Yeung on Feb 10, 2012
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RALPHM.HALL,TEXAS
CHAIRMAN
EDDIEBERNICEJOHNSON,TEXAS
RANKINGMEMBER
U.S.HOUSEOFREPRESENTATIVES
COMMITTEEONSCIENCE,SPACE,ANDTECHNOLOGY
2321RAYBURNHOUSEOFFICEBUILDINGWASHINGTON,DC20515-6301(202)225-6371
November15,2011TheHonorableCassR.SunsteinAdministratorOfficeofInformationandRegulatoryAffairsOfficeofManagementandBudgetEisenhowerExecutiveOfficeBuilding1650PennsylvaniaAvenue,N.W.Washington,D.C.20403DearAdministratorSunstein:AsChairmenoftheEnergyandEnvironmentandInvestigationsandOversightSubcommitteesoftheCommitteeonScience,Space,andTechnology,wehavegrowingconcernswithtroublingscientificandeconomicaccountingpracticesintheEnvironmentalProtectionAgency's(EPA)craftingofRegulatoryImpactAnalyses(RlAs)usedtojustifynumerousCleanAirAct(CAA)rules.Inmanycases,theserequiredcost-benefitanalysesappeardesignedtoprovidepoliticalcoverforamorestringentregulatoryagendaratherthantoobjectivelyinformpolicydecisions.ThereisfurtherevidencethattheseRlAsarebasedonflawedandsometimesnontransparentscience,andhighly-questionableeconomicsthatviolatethespiritandletterof(1)executiveordersgoverningregulatoryreform,(2)EPAandOfficeofManagementandBudget(OMB)standardsforpeerreviewandregulatoryanalysis,and(3)yourownpreviousrecommendationsforbothOfficeofInformationandRegulatoryAffairs(OIRA)andEPAcost-benefitanalyses.Ourconcernswiththeseissuesareexacerbatedbyseveralrecentbaselessandirresponsiblestatementsfromsenioradministrationofficialsthatillustratethe"pressreleasescience"advancedbyEPA,particularlywithregardtotheoverestimationofregulatoryhealthbenefitsandunderestimationofactualeconomiccosts.Accordingly,withEPAregulatoryproposalscostingtensofbillionsofdollarsnowawaitingyourreview,weimploreyoutofollowthePresident'sinstructionsto"givecarefulscrutinytoallregulationsthatimposesignificantcostsontheprivatesectororonstate,local,ortribalgovernments."andyourcommentfromarecentspeechthatthisscrutinyis"especiallyimportantinaperiodofeconomicdifficulty.v'.Wefullyagreewithyourstatementthatscrutinyofregulatorycostsandbenefitsisespeciallyimportantduringaweakeconomy,andwehopeandexpectyoutoapplythisscrutinytoEPARIAs,whichserveasthefoundationusedtojustifythemyriadofpendingEPArulesthatthreatentofurtherdamageouralreadyweakeconomy.Asyouhavepreviouslynoted,"themostinformativedocument"intherulemaking
"1
http://www.whitehouse.gov/sites/defaultlfiles/ozonenationalambientairqualitystandardsletter.pdf.
2
CassSunstein,"HumanizingCost-BenefitAnalysis,"February
17,2010,
http://www.whitehouse.gov/omb/oiraspeech
02172010/.
II
 
processistheRIA.3
In
particular,weareconcernedaboutthetendencyofRlAstounderstateeconomiccostsandinflatehealthbenefitsthroughdouble-countingandothermeans,andweaskyourassistanceinclarifyingandrespondingtoquestionsassociatedwiththeseconcerns.
,
DetailedbelowaretroublingexamplesofquestionablescientificandeconomicassertionsinvolvedinEPA'sapproachtoRlAs.WeaskyoutorespondtothesespecificquestionsbyDecember6,2011:
I.PressReleaseScience
In
anefforttoportrayitsCAAregulationsasgeneratingmorebenefitsthancosts,EPAhasmassivelyinflatedhealthbenefitestimatesinthelastseveralyearswithoutanychangeintheunderlyingscientificunderstanding.TherehavebeennumerousexamplesofEPAofficialscitingbenefitfiguresthattestcredibility.Toprovideafewexamples:OnSeptember22,EPAAdministratorLisaJacksonstatedthat"ifwecouldreduceparticulatemattertohealthylevels,itwouldhavethesameimpactasfindingacureforcancer."
4
Thisclaimwouldmeanthatreducingfineparticulatematter(PM
2
.5)
couldpreventnearly600,000deathsayear,orroughly20percentofalldeathsintheU.S.Itisbaselessandunsupportedbyscience,andignoresdramaticimprovementsinairquality,includingthefactthatPM
2.5
levelshavedeclinedalmost30percentoverthelasttwodecades.'DuringarecenthearingbeforeourCommittee,EPAAssistantAdministratorGinaMcCarthypresentedOMB-approvedtestimonythattheAgency'sCross-StateAirPollutionRule(CSAPR)wouldprevent"upto34,000prematuredeaths"per
year."
Ms.McCarthycouldnotexplainthecauseoftheseprematuredeaths,didnotaccountforanyuncertaintyinthisandotherstatements,andhassubsequentlyfailedtoprovidetheunderlyingdatabehindsuchclaims.'AsyounotedinyourreviewoftheNationalAmbientAirQualityStandards(NAAQS)inthelate1990s,atthattimeEPAfoundthatloweringthePM
2.5
standardin1997wouldprevent350annualmortalities,andthatalowerozonestandardwouldprevent0to80prematuredeaths
annually."
EPA'scurrentpresumptionattributes320,000deathsin2005(roughly13percentofalldeathsintheU.S.)as"duetoPM
2.5.,,9
Similarly,EPA'srecentproposaltoreconsiderthe2008ozonestandardclaimedthatitwouldpreventupto12,000prematuredeaths(withmorethan90percentofthesedeathsactuallyassociatedwithPM
2
.5
andnotozone).Basedonasinglecalculatingtrickdevisedin2009,EPAbegancountingbenefitsassociatedwithPM
2
.5
downtothelowestmeasurablelevel,includingwellbelowtheambientstandardthathadbeendeemedadequatetoprotectpublichealthwithanadequatemarginofsafetyforsusceptiblepopulations.ThissimplechangeallowedtheAgencytoclaimthatPM
2
.5
levelsresultedin.320,000prematuredeathsin2005,comparedtotheprevioustotalof88,000undertheoldmethod.'?
3
Sunstein,"IstheCleanAirActUnconstitutional?"ChicagoPublicLawandLegalTheoryWorkingPaperNo.03,1999,pg.26.
4
5
6
http://science.house.goY/sites/republicans.science.house.goy/files/documents/hearings/091511McCarthy.pdf.
7
http://science.house.goy/press-release/chairrnan-harris-calls-transparency-epa-health-data.8Sunstein,"CleanAirAct,"pg.27.,'
9
TestimonyofDr.AnneSmith,October4,2011,http://science.house.gov/sites/republicans.science.hollse.gov/files/documents/hearings/100411smith,0.pdf.
;0
Ibid.
2
 
In
2009,theNationalResearchCouncilreleasedananalysisoftheunderlyingpricepertonforemissionsofPM2
.5
(includinghealtheffects)andfoundthattheirmeanestimatewas$9,500.11/.However,EPAusedafigureof$280,000benefitpertonforPM2.5inconductingitsnitrogenoxideNAAQSRIA.12
RepeatedDouble-CountingofHealthBenefits
TheCommitteerecentlyreceivedtestimonynotingthatEPAhasreliedalmostexclusivelyoncoincidentalPM
2.5
co-benefitstojustifyavarietyofCAAregulations.Forexample:.AccordingtotestimonyonEPA'sozonereconsiderationRlA:"...upto91
%
ofEPA'sbenefitsestimateforitspreferredstandardwasduetoEPA'spredictionsofcoincidentalPM
2.5
reductionsratherthantoreductionsinozonerisksthatwerethetargetoftherule.NotasingleoneofEPA'sbenefitsestimatesinthatRlAexceededitscostsunlessPM2.5-mortalityco-benefitswereaddedin.,,13
In
analyzingclaimsthatEPA'sMaximumAchievableControlTechnologyStandardsforHazardousAirPollutantsfromElectricUtilityGeneratingUnits(UtilityMACT)wouldsaveupto17,000livesperyearandgeneratesignificanthealthbenefits,testimonynotedthat:"...allofthosepurportedhealthbenefitsareduetoEPA'spredictionsofcoincidentalreductionsofPM2.5-whichisnotanairtoxic.Ofalltheairtoxicstargetedbythisrule,EPAhasestimatedbenefitsfor
only
one-mercury-andEPA'shighestestimateofthosemercurybenefitsisonly$6millionperyear,comparedtoEPA'sestimateof$10.9billionincostsperyear.
In
theUtilityMACT'sRlA,over99.99%ofthebenefitsthatEPAhasattributedtotheruleareduetoPM
2.5
co-benefitsratherthantotheairtoxicsthatareitspurpose.,,14Over90percentofthebenefitsfromtheCSAPRrulecomefromPM2.5-relatedestimates.Theseexamplesdemonstrate
a
broadertrendinEPAcost-benefitanalysis:EPAhasjustifiednearlyallCAArulesonthebasisofparticulatematterco-benefits,raisingsignificantconcernsaboutdouble-countingofallegedPM
2
.5benefitsaswellOIRA'soversightoftheRlAprocess.EvenOIRArecognized'thisphenomenoninits2011
ReporttoCongressontheBenefitsandCostsofFederalRegulationsandUnfundedMandatesonState,Local,andTribalEntities
("OIRAReporttoCongress"),whichstatedthat,"ItisimportanttoemphasizethatthelargeestimatedbenefitsofEPArulesaremostlyattributabletothereductioninpublicexposuretoasingleairpollutant:fineparticulate
matter.t'".
3
AppendixAillustratestheextentofthisprobleminaCongressionalResearchServicechartshowingthat,ofthe28,CAARlAsforrulesproposedorfmalizedsince2004thatmonetizedbenefits,25ofthemclaimedmorethan50percentoftotalbenefitsfromPM2.
5
-related
benefits."
In
nearlyallofthesecases,fmeparticulatematterwasnotbeingregulatedandthesebenefitsarecoincidental"co-benefits."Mostoftheseruleswouldnothavepassedabasiccost-benefittestiftheyhadnotincorporatedPM
2
.5co-benefits.Justifyingdisparaterulesonthebasisoftheseco-benefitscompoundsissueswiththeAgency'sprocessofprioritization.Asyoustatedin2002,"EPA'sownstudiessuggestthatitisnotdevotingresourcestothemostseriousproblemsandindeedthatinadequatepriority-settingisaparticularproblemforclear[sic]air
11
NationalResearchCouncil,
HiddenCostsofEnergy:UnpricedConsequencesofEnergyProductionandUse,
2009,Washington,DC:NationalAcademiesPress.
I
12
Arthur
G.
FraasandNathanRichardson,"PublicInterestCommentonthe
Environmental
ProtectionAgency'sProposedCleanAirTransportRule,"EPA-HQ-OAR-2009-0491-2573,September28,2010,pg.38.
13
Smithtestimony..
14
Ibid.
15
16
Inthreecases,thisincludesrulesinwhichtherangeofPM
2
.5
-relatedbenefitsextendabove50percent.

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