Energy

Rep. Chaffetz Worries EPA Is Fudging The Numbers To Justify Costlier Regs

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Michael Bastasch Energy Editor
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Utah Republican Rep. Jason Chaffetz is asking the Environmental Protection Agency (EPA) why it dramatically increased key assumptions used to calculate the benefits of federal regulations.

“The Committee would like to better understand why key parameters within the cost-benefit analysis for major EPA regulations appear to be dramatically changing without apparent explanation,” Chaffetz wrote in a letter to EPA Administrator Gina McCarthy Thursday.

Chaffetz is talking about EPA’s “Value of Statistical Life” (VSL) measure, which assigns a monetary value to every estimated life that would be saved by an agency rule. In the past decade, EPA has used different VSL estimates for different rules with no apparent explanation.

For example, the agency’s 2005 Clean Air Mercury Rule valued a statistical life saved at $6.8 million, but in its 2015 ozone regulation pegged the value of a statistical life at $10.7 million. EPA’s ozone rule relies heavily on the agency’s VSL estimate — Chaffetz noted nearly all the benefits of the rule come from a high VSL.

“EPA’s use of VSL appears to have changed dramatically in recent years, at a rate well in excess of inflation and inconsistently with other agencies,” Chaffetz wrote. “Since 2000, other agencies have used a variety VSLs, including $3 million and $5 million.

“For example, for EPA’s 2015 ozone regulation, EPA assessed at least $4.1 billion in benefits and $2.2 billion in costs using a VSL of $10 million in 2011 dollars for a life saved in 2020,” he wrote. “Applying the Department of Transportation’s 2005 VSL proportionally to EPA’s analysis, the estimated benefits decline well under $2 billion, at which point the EPA’s own analysis would indicate the regulation was not worth pursuing.”

Chaffetz is demanding EPA hand over documents on why it changed its VSL figures over years by the end of July.

Chaffetz is not the first lawmaker to question EPA’s cost-benefit calculations. Republicans have increasingly calling into question EPA’s regulatory methodology.

Wyoming Republican Sen. John Barrasso asked a top EPA official in 2015 if the agency was double-counting the benefits of its regulations in order to increase the estimated beneficial impact they’d have on public health.

“I asked if EPA was double counting health benefits, because it sure seems that way to me,” Barrasso said to Janet McCabe, who heads the EPA’s air office, regarding the agency’s global warming rule for power plants.

McCabe told Barrasso no such double-counting was happening, but the Wyoming senator pointed to the EPA’s own draft regulatory impact analysis (RIA) for its global warming rule, which says “it is possible that some costs and benefits estimated in this RIA may account for the same air quality improvements as estimated in the illustrative [National Ambient Air Quality Standards] RIAs.”

“The same air quality improvements, that’s what the EPA is saying, the same air quality improvements for previous regulatory impact analyses are being counted again,” Barrasso said. “To me that means double counting.”

“To me, this sounds like Volkswagen accounting and I think government ought to be held to a much better standard than what we’re seeing coming from this agency and this administration,” he added.

The oil industry-backed group Energy In Depth (EID) have also taken aim at EPA’s regulatory accounting. EID questioned the assumptions behind EPA’s ozone rule in 2015 — the very same rule Chaffetz is questioning.

EID dug into the numbers and found EPA’s monetized benefit calculation is 3,100 percent higher than what the agency calculated in 2011 for the same ozone standard.

“EPA’s ozone rule could very well be the costliest regulation in U.S. history,” said Steve Everley, spokesman for EID. “If a rule of this magnitude is to be imposed, then the EPA should consider providing a far more scientifically robust ‘public health’ basis — one that doesn’t rely on inflated health benefits or a lack of appreciation for the very real economic costs.”

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