Fault for Awful Ozone Rule Lies with Congress and the Courts (for giving all the decision making authority to CASAC)

by William Yeatman on October 2, 2015

in Blog

Yesterday the Environmental Protection Agency lowered the nationwide limit for ground level ozone, known officially as a National Ambient Air Quality Standard, from 75 parts per billion to 70 parts per billion.

It will be a painful regulation to implement. Ozone pollution is notoriously expensive to mitigate. These costs, moreover, would be completely incommensurate with the putative benefits. However, as I explain below, the Obama administration had little discretion on the matter, and, within its limited room to maneuver, the EPA chose the least among harms. Moreover, if courts remain consistent (which is by no means a certainty), there’s a good chance this rule will be rejected for being insufficiently stringent. By contrast, there is little chance that the rule would be struck down for being too onerous.

So this is the first absurd environmental regulation issued since January 2009 for which the Obama administration isn’t to blame. Rather, fault for this rule lies with primarily with the legislative and judicial branches of government. The Congress established an inapt regulatory regime for setting the ozone standard. And subsequent court rulings made this ill-suited program even worse. As a result, the ozone NAAQS is a monster, over which the president has little control.

For its part, Congress’s mistake was to preclude the EPA from considering costs in setting the ozone NAAQS. The Clean Air Act commands that the agency set the NAAQS at a level “requisite” to protect public health with an “adequate margin of safety.” In a 2001 ruling, Whitman v. American Trucking Association, the Supreme Court interpreted this language to mean that the Congress forbade the agency from considering costs in establishing a NAAQS.

Congress’s apparent directive—to render cost considerations impermissible for the nationwide ozone standard—is terrible public policy, because ozone is a “linear no threshold” pollutant. There is no threshold at which ambient air concentrations of ozone ceases to have an effect on human health. Instead, there’s evidence that ozone is a non-mortal irritant to sensitive populations in rough proportion to air concentrations. It’s a continuum, so there is no obvious line to draw at which there is zero impact. As against these static (or declining) incremental benefits, the marginal costs skyrocket. In this setting, it is insane not to consider costs.

As a practical matter, the EPA could get around this prohibition, all else being equal. There are almost 20,000 EPA employees of which many are experts in the black arts of regulatory sophistry. With EPA’s resources, it easily could render a rule at whatever level it wanted, buttressed with reasonable scientific analyses that would pass muster in the courts. That is, the agency could implicitly take into account costs, even if the final product, by all outward appearances, only considered public health. This would be an ideal end, in so far as setting a NAAQS should entail the weighing of costs & benefits.

Unfortunately, this option has been foreclosed by the D.C. Circuit Court of Appeals, which is the exclusive court of review for national ozone standards. In a 2009 ruling, American Farm Bureau v. EPA, the circuit court concluded that the EPA may not deviate from the “scientific” recommendation given by the Clean Air Scientific Advisory Committee (CASAC), an obscure body created by Congress in 1977 to provide “independent” advice to EPA on where to set nationwide air quality standards. So EPA’s decision on where to set the ozone NAAQS—a decision with hundreds of billions of dollars at stake—is bound by CASAC, an unelected body of technocrats. In this manner, the D.C. Circuit Court’s decision effectuated a massive transfer in authority, from the Executive Branch (which at least has an electoral tether to the popularly elected president) to CASAC (which again, is a body of technocrats with zero electoral legitimacy) . To be clear, CASAC’s power isn’t clearly derived from the Clean Air Act. Instead, its power rests on judicially-created rules, akin to federal common law. Worst of all, CASAC is aware of its relatively new authority, and it crafts its recommendations accordingly.

To recap: Congress made a huge mistake when it precluded consideration of costs in setting an ozone standard. This directive is wholly impractical given the nature of ozone pollution, a linear no threshold pollutant. The D.C. Circuit then compounded this mistake when it determined that the best way to achieve an objective and “scientific” NAAQS was for EPA to do whatever CASAC says.

CASAC’s vast power is troubling. It is staffed almost exclusively by public health researchers and officials, most frequently epidemiologists, and this presents an obvious conflict of interest: Their professional careers are inextricably linked to their recommendations. Bluntly put: It is career-affirming for members of CASAC to base policy on their research. And that’s precisely what we’ve seen. According to a recent report compiled by Rep. Lamar Smith, members of CASAC’s Ozone Review Panel recently cited their own work more than 700 times (an apparent violation of EPA rules). And because ozone is a linear no threshold pollutant, there will always be “scientific” case to go lower—all the way to zero. All it takes is an ambitious research regime.

Again, CASAC is aware of its power. In June 2014, CASAC gave its advice to EPA in a carefully worded letter that I wrote about in detail here. Below I’ve excerpted the key passage and added formatting:

In reaching its scientific judgment regarding a recommended range of levels for a revised ozone primary standard, the CASAC focused on the scientific evidence that identifies the type and extent of adverse effects on public health. The CASAC acknowledges that the choice of a level within the range recommended based on scientific evidence is a policy judgment under the statutory mandate of the Clean Air Act. The CASAC advises that, based on the scientific evidence, a level of 70 ppb provides little margin of safety for the protection of public health, particularly for sensitive subpopulations. In this regard, our advice differs from that offered by EPA staff in the Second Draft PA. At 70 ppb, there is substantial scientific evidence of adverse effects as detailed in the charge question responses, including decrease in lung function, increase in respiratory symptoms, and increase in airway inflammation. Although a level of 70 ppb is more protective of public health than the current standard, it may not meet the statutory requirement to protect public health with an adequate margin of safety. In this regard, the CASAC deliberated at length regarding advice on other levels that might be considered to be protective of public health with an adequate margin of safety. For example, the recommended lower bound of 60 ppb would certainly offer more public health protection than levels of 70 ppb or 65 ppb and would provide an adequate margin of safety. Thus, our policy advice is to set the level of the standard lower than 70 ppb within a range down to 60 ppb, taking into account your judgment regarding the desired margin of safety to protect public health, and taking into account that lower levels will provide incrementally greater margins of safety.

To my eyes, it certainly seems like CASAC’s letter warns against setting the ozone at 70 parts per billion, which is where the EPA set it. No doubt that’s what NRDC and Sierra Club will argue. And, in light of the D.C. Circuit’s past precedent, I suspect they’ll win.

The upshot is that the administration was boxed in. It had little choice in the matter, given the perverse regulatory regime established by the Congress and Article III Courts. Indeed, within the bounds of permissible action, the administration set the ozone NAAQS as lax as it could be. And in so doing, they’ve rendered the rule vulnerable to being checked by the courts for being insufficiently stringent.

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