Two weeks ago, the Washington Post’s fact checker pooh-poohed a study on regulatory costs by my colleague Wayne Crews. According to the Post’s ill-informed* analysis, my colleague’s excellent study is imbalanced, because it accounts only for the costs, and not the benefits, of regulation.
In this blog, I will briefly challenge an operating assumption held by the Washington Post’s fact-checker: Namely, the assumption that regulations necessarily benefit the public interest. In fact, regulation during the Obama age has been characterized by the political regulation—one whose purpose is to benefit a narrow special interest, rather than the public at large.
Consider, for example, President Obama’s EPA. In 2008 and 2012, green advocacy groups spent scores of millions of dollars to help elect Obama. In return, these special interests have been rewarded with the reins to the EPA. In this fashion, they can direct state power to persecute their political enemies. In practice, this quid pro quo relationship results in regulations whose public health justifications are highly dubious, and whose only discernible purpose is to target “dirty” fossil fuels. Mind you, these green groups have based fundraising and issue campaigns on moving “beyond coal” and “beyond gas”; as such, their institutional raison d’etre is inextricably intertwined with a fight against an abstraction of an industry. Simply put, I’m saying that the basis of these rules is politics, instead of disinterested civil service. That is why I call them political regulations, in order to distinguish them from rules that are promulgated with the public interest at heart.
After the break, I demonstrate my point with DIRECT PHOTOGRAPHIC EVIDENCE!!!
Political Regulation #1: Utility MACT
EPA’s absurd utility MACT is set to kick in this spring. By EPA’s own estimate, it would cost $10 BILLION/year. It’s also a threat to electric reliability, as it is the primary impetus for the shutdown of up to 25% of the nation’s coal-fired power plant. Utility “MACT” is jargon; it refers to the regulatory controls mandated by the rule (ultra-stringent “maximum achievable control technology”). The rule’s official name is the “Mercury and Air Toxics Standards.” As the rule’s official title would suggest, EPA justified the Utility MACT based on the threat posed to humans by mercury emissions from coal-fired power plants.
EPA actually quantified the parameters associated with a “victim” of mercury emissions from power plants. She’s a pregnant, subsistence fisherwoman who consumes hundreds of pounds of self caught fish—from exclusively the most polluted bodies of water—during her pregnancy. EPA never identified a single member of this putative population. Rather, they were modeled to exist. I submit that they don’t exist. The fate of the Utility MACT now rests with the Supreme Court, which is in the course of adjudicating whether this justification is reasonable. The case is Michigan et al. v. EPA. In an excellent amicus brief filed today, the Cato Institute and BakerHostetler make the point above–i.e., that EPA’s rationale for the utility MACT is wholly unreasonable.
Political Regulation #2: Coal Ash Regime
Between two regulations (a recently promulgated rule pursuant to the Resource Conservation and Recovery Act and a pending Clean Water Act rule), EPA is poised to regulate coal combustion residuals, a.k.a., coal ash, at a cost of $24 billion per .5 cancer cases avoided. The photo below depicts the ¼ life saved by each rule, at an average cost of $12 billion per quarter-life saved.
Political Regulation #3: Regional Haze
In many western States, EPA has staged takeovers of regulatory programs known as regional haze, whose purpose is to improve visibility at national parks. As I explain here, EPA has imposed billions of dollars in capital costs, in order to achieve visibility “benefits” that are literally invisible. Below, I’ve selected a medley of invisible people to portray the supposed beneficiaries of EPA’s regional haze regulations.
Political Regulation #4: EPA’s Regulatory Regime for Climate Change
Already, EPA has promulgated climate rules for autos and the agency requires major new stationary sources to install “best available control technology” for GHGs. Moreover, EPA is working on a suite of power plants rules that would effectively commandeer the electric industry to advance the administration’s climate policy. Finally, the Clean Air Act is structured such that regulation triggers further regulation; it’s a “belt and suspenders” approach to regulation. The unfortunate consequence is that much more regulation is on the way, and it’ll be expensive.
And yet, in September 2013, EPA administrator Gina McCarthy effectively conceded to Congress that the agency’s climate regulations won’t impact the global climate. According to one widely circulated estimate, the rules would avert sea level rise equal to the thickness of three sheets of paper. Nonetheless, EPA maintains that the rules would engender $93 billion in benefits. The agency does so by summing the present value of all cumulative damages caused by each incremental ton of CO2 emissions over an immense time span — from 2010 to 2300! As aptly explained by my colleague Marlo Lewis, “none of the rule’s alleged climate benefits will be discernible in 2030 and likely not even in 2100.”
So…we, the people of the present, would pay for EPA’s climate regulation. Yet the alleged beneficiaries exist five to fifteen generations from now. Below, I’ve depicted the people of the future who supposedly stand to profit.
There are actually a few more ridiculous regulations; for the rest, see this post.
*As an aside, the Washington Post’s fact check operation is a joke: evidently, the fact-checking reporter couldn’t be bothered with reading the report, titled “Tip of the Costberg,” at issue. The report clearly spells out its intention to isolate regulatory costs divorced from benefits, in order to draw attention to the federal government’s woeful accounting of its regulatory burdens. As such, the Washington Post’ fact checker’s focus on regulatory benefits is wholly misplaced—pursuant to the unambiguous parameters established at the outset of the report he was fact-checking.