Stars Aligning for EPA Change in Calculating Air Rules Benefits

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By Abby Smith

The Trump EPA wants to blunt the agency’s counting of pollution rule benefits—and changes at the EPA and the nation’s highest court could brew the perfect storm for doing so.

Long on industry’s wish list, the shift would limit or potentially eliminate the EPA’s consideration of “co-benefits,” the environmental and health improvements attributable to cuts in pollutants that aren’t directly regulated.

Supporters of such a change are positioned to make it happen: Andrew Wheeler is acting head of the EPA, Bill Wehrum serves as the agency’s air chief, and Judge Brett Kavanaugh of the U.S. Court of Appeals for the District of Columbia Circuit is President Donald Trump’s nominee for the Supreme Court, where challenges to the plan could end up.

Kavanaugh has questioned in prior rulings the practice of measuring co-benefits.

Limiting consideration of health and environmental benefits would influence many of the EPA’s air and climate programs, supporters and critics say. The agency justified several major rules during the Obama administration, including separate power-sector regulations controlling mercury air toxics and carbon dioxide emissions, in large part by citing the benefits that cutting fine particulate matter would have on human health.

But if the EPA attempts to get rid of co-benefit considerations altogether, it likely will end up in court, where judges require the agency to count co-benefits, Nathan Richardson, associate professor of law at the University of South Carolina, told Bloomberg Environment.

And for any change to stick, it would have to be upheld by the court or codified by Congress. Otherwise, a future administration could simply reverse course.

The EPA “can’t bind itself in the future,” Richardson added. “You can always revise a rulemaking.”

Multiple Fronts

Efforts to target co-benefits are playing out on multiple fronts.

The agency adjusted its consideration of particulate matter co-benefits in its Aug. 21 proposal (RIN:2060-AT67) to replace the Obama-era Clean Power Plan, which set first-time carbon controls on existing power plants.

In June, the EPA initiated a separate rulemaking (RIN:2010-AA12) to broadly alter its cost-benefit calculations and is reconsidering its power plant Mercury and Air Toxics Standards (RIN:2060-AP52, RIN:2060-AR31). Industry representatives argued that rule had been justified using the monetized benefits of reducing particulate matter, not the targeted pollutants.

Coal mining giant Murray Energy Corp., a former lobbying client of Wheeler’s, wants the EPA to reconsider its use of co-benefits as part of its MATS rule review, Cody Nett, assistant general counsel and director of media and investor relations for Murray Energy, told Bloomberg Environment in an email.

Including particulate matter co-benefits was double-counting and “an inappropriate end-run” around existing federal air quality standards for that pollutant, Nett added.

Drawing the Line

It is unclear whether the EPA will attempt to scrap co-benefits altogether or simply restrict how they are calculated.

The agency could take either approach or tailor how co-benefits are used on a case-by-case basis, Andrew Grossman, a partner at law firm Baker & Hostetler LLP in Washington, told Bloomberg Environment.

He cited the Supreme Court’s 2015 ruling in Michigan v. EPA as a turning point, portending greater court scrutiny of the agency’s approach. The Michigan ruling required the agency to account for power plants’ compliance costs when determining whether it was necessary to regulate mercury from the sector. The EPA in 2016 released a supplemental determination accounting for those costs.

Kavanaugh sat on the D.C. Circuit panel that heard the Michigan case. His 2014 dissent sharply criticized the Obama EPA for dismissing cost and inflating benefits in its determination to regulate. He identified the co-benefits issue as a “key battleground” to emerge in any future challenges to the MATS rule.

“Even if the statute doesn’t have specifications, the agency can’t adopt an approach that is entirely one-sided, unrestrained, and unreasonable that goes to the ends of the earth to identify benefits,” Grossman added. “There has to be some reasoning and rationale.”

‘The Most Commonsense Thing’

The EPA could decide to broadly apply the new approach for calculating particulate matter co-benefits in its proposal to replace the Clean Power Plan.

Under that approach, the EPA would include only the monetized benefits of particulate matter reductions that would be achieved by current federal air quality standards. Traditionally, the EPA has considered co-benefits of eliminating particulate matter entirely.

The EPA’s new method ignores real-world benefits to human health from reductions that go beyond the federal limits, Joseph Goffman, former senior counsel in the EPA’s air office during the Obama administration, told Bloomberg Environment.

Science shows that even when particulate matter concentrations are lower than federal limits, people experience negative health impacts, according to Goffman, now executive director at Harvard University’s Environmental and Energy Law Program. Thus, the EPA should be giving all those expected impacts an economic meaning, he said.

Supporters of the Trump EPA effort said it doesn’t make sense to calculate co-benefits beyond what would be achieved by the federal limits.

“It’s the most commonsense thing you’ve ever heard of,” Grossman said. He added that if environmentalists say it isn’t sufficient to look just at the federal limits, they should direct their attention to strengthening the federal standards for particulate matter.

Fundamental Science

But bucking the science on particulate matter’s health impacts could carry a legal risk, Michael Livermore, professor of law at the University of Virginia, told Bloomberg Environment.

The courts are inclined to defer to the EPA on scientific decisions. “If there’s a legitimate scientific disagreement, then the agency is at the height of its ability to make a judgment,” Livermore said.

That discretion has limits, though. The court could be skeptical if the EPA moves too far outside the scientific mainstream, Livermore said.

“Courts like deferring to agencies, but if they think the agency is untrustworthy on fundamental science, that is a huge problem for the agency,” he said. The EPA might have some discretion to adjust its co-benefit treatment, “but they might also threaten their ability to get deference in general by risking their scientific credibility.”

—With assistance from Sylvia Carignan and Amena H. Saiyid.

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