August 23, 2010

Public Interest Comment on Notice of Proposed Rulemaking to Set National Emission Standards for Hazardous Air Pollutants for Area Sources: Industrial, Commercial, and Institutional Boilers

  • Mark Adams

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The Regulatory Studies Program (RSP) of the Mercatus Center at George Mason University is dedicated to advancing knowledge of the impact of regulation on society. As part of its mission, RSP conducts careful and independent analyses employing contemporary economic scholarship to assess rulemaking proposals from the perspective of the public interest. Thus, this comment on the Environmental  Protection  Agency’s  (EPA) Notice of Proposed Rulemaking does not represent the views of any particular affected party or special interest group, but is designed to assist EPA in improving the quality of the Regulatory Impact Analysis used for decision making.

The Environmental Protection Agency (EPA) has proposed new regulations setting emissions standards for boilers for some 30 hazardous air pollutants. While the Regulatory Impact Analysis submitted by the agency finds an overall benefit to the proposed rule, the agency does not use the analysis to maximize net benefits. Only 5 of the 30 pollutants EPA expects to reduce will be regulated, and EPA only presents quantified benefits for one pollutant which is not directly regulated. The analysis performed by the agency does not identify the benefits associated with reductions in individual pollutants or the changes in benefits and costs associated with varying levels of stringency. As a result, the economic analysis for this rule cannot serve its purpose of presenting policy makers with a menu of alternatives.

EPA has proposed new emissions standards for boilers operated by businesses and institutions such as schools and churches as part of a series of actions setting emissions standards for heating and incineration devices. The proposed rule will establish separate measures for new and existing boilers, including mandating technology to capture airborne pollutants released by boilers and setting operating standards aimed at improving energy efficiency and reducing the emissions of pollutants. The rule establishes existing technologies as a benchmark for performance, but other technologies which are equally effective at reducing emissions may also be used.

Although the rule is aimed at reducing levels of some 30 Hazardous Air Pollutants (HAP), the proposed regulation will set emissions standards for only five pollutants: particulate matter, carbon monoxide, mercury, hydrogen chloride and dioxins/furans. The predicted benefits are expected to come from reducing emissions of only one narrow groups of pollutants which are not directly regulated (fine-grained particulate matter). To achieve the benefits predicted, EPA is assuming that reductions in the regulated pollutants will lead to reductions in other pollutants. For this reason, the agency may have overestimated net benefits.

EPA was unable quantify the direct benefits associated with reducing carbon monoxide emissions or mercury emissions. All of the calculated benefits of the proposed rule will come from expected reductions in fine-grained airborne particulate matter known collectively as PM2.5 (2.5 refers to the size of the emitted particles). The regulation only addresses emissions of PM2.5 indirectly, assuming that emission of PM2.5 will be reduced by reductions in overall particulate matter and by reductions in other pollutants.

Current scientific literature used by EPA finds that the benefits of reducing particulate matter emissions vary greatly depending upon the type of particulate matter and also on the location of the reductions. In the Regulatory Impact Analysis prepared by the agency, emissions are assumed to be reduced by a constant amount, across emissions types and location. This reduces the ability of the agency to make accurate determinations about the scale of benefits generated and may lead to an overestimation of total benefits.

If benefits have been overestimated then an alternative approach may be justified, but EPA does not consider a full range of alternatives. Rather than using benefit-cost analysis to justify the proposed rule, as the agency has done, the analysis should weigh various alternatives, allowing policy makers to determine which of these alternatives should become the rule. The analysis should consider the benefits of regulating each type of pollutant separately and show policy makers the costs and benefits of a range of options, including options which may require actions by Congress or by the states. By following best practices in this way, the agency may be able to increase total net benefits.

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