Wednesday, June 01, 2011

The EPA doesn't need no stinkin' cost-benefit analysis

According to the head of EPA, the EPA isn't supposed to take into account the cost to the economy when passing a regulation.
The Environmental Protection Agency informed Rep. Vicky Hartzler (R-Mo.) in a recent letter that it considers itself “prohibited” by law from considering costs when setting National Ambient Air Quality Standards (NAAQS).
Hmmm/ Perhaps Lisa Jackson, the head of the EPA, missed the fact that President Obama issued an executive order this year that regulations "must take into account benefits and costs, both quantitative and qualitative."

Or better yet, the EPA doesn't think that the order applies to them because of the way that Obama phrased the order. As the WSJ noticed at the time, he inserted a provision that, while agencies are supposed to consider costs and benefits they should also take into consideration values.
Among many others, the Environmental Protection Agency said in a statement that it was "confident" it wouldn't need to alter a single current or pending rule. "In fact, EPA's rules consistently yield billions in cost savings that make them among the most cost-effective in the government."

Perhaps the EPA's confidence owes to a little-noticed proviso in Mr. Obama's order. When the agencies weigh costs and benefits, the order says, they should always consider "values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts."

Talk about economic elasticities. Equity and fairness can be defined to include more or less anything as a benefit. Under this calculus, a rule might pass Mr. Obama's cost-benefit test if it imposes $999 billion in hard costs but supposedly results in a $1 trillion increase in human dignity, whatever that means in bureaucratic practice. Another rule could pass muster even if it reduces work and investment, as long as it also lessens income inequality.
And Lisa Jackson has been determined to implement what she calls "environmental justice."
One of Administrator Lisa Jackson's top priorities is "explicitly integrating environmental justice considerations into the fabric of the EPA's process," as a July 2010 memo to all senior regulators put it.

"Environmental justice" is the left-wing grievance movement that claims pollution has a disproportionate effect on minorities and the poor. Ms. Jackson's memo introduced new regulatory guidance—that is, rules about how to make rules—so every EPA action has "a particular focus on disadvantaged or vulnerable groups."

Ms. Jackson wrote that a new goal for rulemaking, enforcement and permitting is to have "a measurable effect on environmental justice challenges." But these amorphous concepts are not measurable at all. According to this guidance, EPA must nonetheless consider them when estimating the "economic impacts of regulations," and even its scientific analysis should "encompass topics beyond just biology and chemistry." So put on your lab coat and complete a randomized controlled experiment in politics.

Sure enough, EPA justifies its 2009 carbon "endangerment finding" by noting that climate change will "add further stress to an existing host of social problems that cities experience, including neighborhood degradation, traffic congestion, crime, unemployment, poverty, and inequities in health and well-being." Oh, and it will "accentuate the disparities already evident in the American health care system, as many of the expected health effects are likely to fall disproportionately on the poor, the elderly, the disabled, and the uninsured."

So while Mr. Obama wants the country to think a new rigorous empiricism is guiding his government, his appointees can justify any rule that fits their ideological goals. This sounds more like the end of cost-benefit analysis than the beginning.
So that is why the EPA figures that it doesn't need to consider the costs to the regulations that it imposes on the American economy. It's all about justice and such talk of cost-benefit would just be too, too tawdry when there is human dignity to establish.