Will Scott Pruitt Decide We've Been Reducing Pollution Too Much?
EPA Administrator Scott Pruitt has announced several plans, the latest on June 13, to revise the economic analysis that undergirds the nation’s limits on pollution, including the emissions of greenhouse gases that are warming the planet. Pruitt’s basic assumption in the agency’s rulemaking seems to be that the United States has reduced pollution too much, because government analysts have overestimated its adverse effects.
The administrator’s expansive views on the perks of his office have drawn heavy media attention. But the esoteric wrangling over the legal framework that governs the protection of our water, ambient air, and atmosphere will have much greater historic impacts than how little he paid for his rental condo or how much the taxpayers paid for a sound-proof booth in his office.
Applying new and improved cost-benefit analysis to the regulation of pollution — the stated goal of the administration — would seem, on its face, to be a good idea. But such calculations, even when consistent with professional norms and the best of intentions, can sometimes produce results that run counter to common sense.
For instance, the pioneering work of scientists in the 1960s that established the foundation for the momentous environmental legislation of the 1970s emphasized the moral hazard of dumping garbage in a public space such as a river or in a neighbor’s private yard. Yet, cost-benefit analysis in recent decades might conclude that it is cost-effective (and therefore allowable) in some instances to dispose of waste in a neighbor’s yard, negating a basic rule of civic decency.
In addition, peer-reviewed economic analysis generally requires that the costs of actions to mitigate environmental damages account for the time value of money by applying a compounded “discount rate” on future benefits. This practice discriminates against environment protections with high initial expenses and benefits that are long-term. Global warming provides a classic example of the problem, since carbon dioxide, the most important greenhouse gas, stays in the atmosphere for over a century. But damage that far into the future tends to get factored out by discounting, particularly if the administration’s wish to use a rate of 7 percent proves successful.
The potential for analytic mischief becomes much greater in the hands of an administration that resists the consensus of scientists on climate change and adopts a zealous resistance to just about any protection of the environment that involves government regulation. The issue for the courts of law and public opinion will be whether the current leaders at EPA are launching an effort to streamline rules or simply trying to weaken them altogether.
One clue to Pruitt’s intentions is his notice of June 13, which suggests he will look at the criticism of Obama-era rule for including “ancillary benefits” (sometimes called “co-benefits”) of reducing pollutants like carbon dioxide. Cutting the emissions of one pollutant often leads to the reduction of others. Pruitt seems to be signaling that these side benefits should no longer be considered. Why a class of benefits should be remove from a cost/benefit analysis has not yet been explained. What is clear, however, is that Pruitt appears to want to slow actions that could combat global warming.
Similarly, Pruitt has indicated he would like to remove benefits outside U.S. borders in EPA’s analysis of global warming, a position that may be difficult to maintain since greenhouse gases are the ultimate example of global pollution. How global impacts should be handled in evaluating domestic policies is a complex matter. Since the previous administration made some of them part of the cost of carbon, however, evidence has mounted that action by one nation contributes to peer pressure on other nations to take similar actions. China, for example, has gone far beyond what outside observers were expecting several years ago to reduce its carbon emissions. Arguably, China has been encouraged to do so by agreements with and the examples of other nations (and, in the case of the United States, state and city governments) that committed to reduce their emissions. Just as their carbon pollution affects us, ours affects them.
Pruitt’s attempts to weaken environmental protection laws have strong support both in the current administration and in the Congress. Successful efforts to remove large classes of benefits from the government’s analysis of environmental protection could create major hurdles in even maintaining current levels of environmental protection. It will likely fall to the courts to decide whether the changes preferred by Pruitt and others in the administration are based on sound analysis or are simply an attempt to defang the cost of carbon rule the courts have already upheld.
Behind these legal controversies lies a long-term plan by anti-regulation think tanks to pit environment protection against economic growth. This conflict ignores the genuine contributions of environmental protection to the quality of life and the value it creates.
Years ago, on a trip abroad, I joined a dinner with executives from international oil companies, one of whom (not an American) spent a good part of the evening complaining about environmental regulation. Since he had mentioned that his retirement was not far off, I asked near the end of the meal where he planned on settling. At first, he said he wanted to go back to his home country. But then he paused, looked at his wife and reversed course. Actually, he explained, they would more likely to retire in America, because the air there was so much cleaner. Environmental protection, it turned out, provided a value to American life that was the envy of the world.
Those trying to provoke an artificial war between the environment and the quality of life would do well to remember the words of a Republican who ranks high among presidents for environmental protection. In his 1970 State of the Union address, President Richard Nixon strongly emphasized the positive relationship between the economy and the environment:
In the next 10 years, we shall increase our wealth by 50 percent. The profound question is: Does this mean we will be 50 percent richer in a real sense, 50 percent better off, 50 percent happier? Or does it mean that in the year 1980 the President standing in this place will look back on a decade in which 70 percent of our people lived in metropolitan areas choked by traffic, suffocated by smog, poisoned by water, deafened by noise, and terrorized by crime?
Restoring nature to its natural state is a cause beyond party and beyond factions. It has become a common cause of all the people of this country. It is a cause of particular concern to young Americans, because they more than we will reap the grim consequences of our failure to act on programs which are needed now if we are to prevent disaster later … Refusing to pit environmental protection and the economy against each other …Continued vigorous economic growth provides us with the means to enrich life itself and to enhance our planet as a place hospitable to man.
The president who created the Environmental Protection Agency, not surprisingly, well understood its mission.
Jay Hakes is a historian specializing in energy and the American presidency. He is the author of A Declaration of Energy Independence: How Freedom from Foreign Oil Can Improve National Security, Our Economy, and the Environment.