When It Comes to Environmental Regulations, When Does Value Get Assigned to Human Life?

A couple of weeks ago we blogged about the U.S.  Environmental Protection Agency’s revision of the New Source Performance Standards (NSPS) for natural gas-fired combustion turbines. In that blog, we noted EPA’s decision not to quantify human health benefits that might accrue from reductions in such turbines’ emissions of oxides of nitrogen (NOx) and fine particulate matter PM2.5”) under the new standards as part of the cost-benefit analysis that it performed for the standards. 

EPA’s decision drew protests from environmentalists (one headline, from the New York Times:  “Trump’s E.P.A. Has Put a Value on Human Life: Zero Dollars”) and, for the revision of an NSPS, a very unusual amount of media coverage.

We committed to examining the EPA's decision to determine its validity and provide an update. Here’s what we found.

As we blogged earlier, NSPS are promulgated pursuant to section 111 of the Clean Air Act.  Section 111, as amended in 1977, does not require that expected human health benefits from a revision of an NSPS be quantified and worked into a cost-benefit analysis. Rather, the Act only requires EPA to take into account the cost of implementation and the “nonair quality health and environmental impact and energy requirements” when it revises or promulgates an NSPS.  

Thus, you could argue that if EPA’s recent change of course places the value of human life at zero, the 95^th Congress beat them to it when they revised section 111 in 1977. Indeed, it appears that before 1993 (more on that date below) EPA did not quantify and consider quantified human health benefits that would follow its proposed revisions to the NSPS; nor did the courts that reviewed EPA’s new or revised NSPS.   

You could even argue that when EPA quantified health impacts from NSPS and worked them into its cost-benefit analyses in the past, it effectively rewrote section 111.

Which got us wondering: If EPA’s practice of performing cost-benefit analyses for new or revised NSPS does not come from the Clean Air Act, where does it come from?

The answer is Executive Order 12866, which President Bill Clinton issued in 1993. 

Executive Order 12866 generally requires that when a federal agency (including EPA) promulgates or revises a regulation, the agency must assess the anticipated costs and benefits of the regulation and may adopt them only when the anticipated benefits from the regulation exceed the anticipated costs. 

Executive Order 12866 also requires that for any “significant regulatory action” (meaning, one that will have an impact on the economy of at least $100 million), the agency proposing the regulation must submit a written cost-benefit analysis to the Office of Management and the Budget.

Executive Order 12866 does not require that all, or even any, expected benefits from a regulatory action be quantified and even acknowledges that some expected benefits from a regulatory action might not be able to be quantified.

That means that, strictly speaking, the Clean Air Act does not require that EPA do a cost-benefit analysis at all when it promulgates or revises an NSPS. But the Act does not prohibit it either. If EPA does such an analysis pursuant to Executive Order 12866, it can quantify the human health benefits from the new or revised NSPS or not, as it sees fit, in its analysis. 

All of this gives EPA a lot of leeway. 

How has EPA used that leeway, you wonder?  Naturally, it depends on who’s in charge. 

We went back through several years’ worth of NSPS revisions (all the way back to the second half of the Obama Administration) and found that EPA has been inconsistent, not only about what quantified health benefits it includes in its cost-benefit analyses for new or revised NSPS, but also about whether or not it conducts such analyses at all. 

The first thing we learned was that when EPA has proposed new or revised NSPS that are not “significant regulatory actions” within the meaning of Executive Order 12866 it has not included quantified human health benefits in the cost-benefit analyses that it performed for those NSPS, regardless of who the President was. 

Was EPA placing the value of human life at zero when it promulgated those new or revised NSPS? 

Not really.

 It was only performing the assessments that were required of it by the Clean Air Act, and to a lesser extent, Executive Order 12866. The dollar value of the human health benefits that would be created, if any, were beside the point.

Second, we learned that even in the context of cost-benefit analyses done for NSPS that qualify as “significant regulatory actions,” EPA’s consideration of quantified human health benefits (as well as “climate benefits”) has been inconsistent. 

When we looked at the analyses for recent NSPS, we found:

• Under President Biden, EPA quantified human health benefits from reduced emissions that would follow revised NSPS and included them in the cost-benefit analyses it performed for NSPS that qualified as “significant regulatory actions.”

• During President Trump’s first term, EPA did not promulgate or revise any NSPS so did not trigger Executive Order 12866’s cost-benefit analysis requirement.

• Under President Obama, when EPA promulgated new rules for municipal solid waste landfills in 2016 to require the collection of methane they produce, it quantified and considered the “global social benefits” of reductions in direct methane emissions; it did not quantify or consider the costs or harms that would come from burning that methane.

• When EPA promulgated new rules for residential wood heaters, hydronic heaters, and forced air furnaces in 2015, it considered quantified human health benefits of reduced PM emissions, but not the quantified benefits of reduced NOx emissions or climate benefits that would flow from the rules.

• When EPA promulgated new rules for oil and natural gas wells in 2012, it determined that the benefits that would flow from reduced emissions of PM, NOx, hazardous air pollutants, and methane under the rules could not be quantified in a “defensible way.”  Nevertheless, it finalized the rule.

“One conclusion that may be drawn here is that EPA’s regulatory agenda drives its cost-benefit analyses; the analyses do not drive the regulatory agenda,” said GASP Senior Attorney John Baillie.  “A pro-industry administration will find a way to promulgate less restrictive Clean Air Act regulations, and a pro-environment administration will find a way to regulate more aggressively.  Until Congress or the Supreme Court clarifies exactly what factors must be considered in a cost-benefit analysis for a Clean Air Act regulation, this will continue to be the case.”