EGU MACT Rule’s Benefit-Cost Caseand EPA’s Reliance on Co-BenefitsPrepared on behalf of UARGWashington DCDecember 8, 2011Anne E. SmithSenior Vice President1Example of EPA Statements about theEGU MACT Benefits outside of Its RIA“When these new standards are finalized, they will assistin preventing 11,000 heart attacks, 17,000 prematuredeaths, 120,000 cases of childhood asthma symptoms andapproximately 11,000 fewer cases of acute bronchitisamong children each year. Hospital visits will be reducedand nearly 850,000 fewer days of work will be missed dueto illness.”-- Administrator Lisa Jackson(EPA Air News Release extending public comment periodon EGU MACT Rule, June 21, 2011)2Synopsis of Benefits and CostsPresented in the EGU MACT RIA Itself3The RIA Finds that “Total” BenefitsExceed Costs by up to 14-to-1Estimated cost of rule: $11 billionEstimated “total” benefits: $53 billion to $143 billion–The vast majority of the total benefits have nothing to do with airtoxics:$52 billion to $142 billion are due to “co-benefits” from PM2.5reductions-Almost entirely due to the monetized value of 6,800 to17,000 avoided premature deaths due to reducedinhalation of PM2.5$0.6 billion are due to “co-benefits” from reduced climatechange risk<$0.006 billion are due to air toxics-These are the only “direct” benefits in the RIA4What Did EPA Estimate asDirect Benefits from the Hg MACT?511 lost IQ points spread across 244,000 children borneach year–Average IQ loss = 0.002 points–95thpercentile IQ loss = 0.007 pointsAssumes risks extend linearly below the Hg ReferenceDose (“RfD”)–The RfD is, by definition, an exposure that is considered safewith a large margin of safetyAssumes there is lost earning power that can beattributable to such small IQ differencesTotal monetized benefits estimated $500,000 to$6 million per year (less than 0.01% of Rule’s total costs)5What Did EPA Estimate asDirect Benefits of Acid Gases MACT?HCl accounts for the vast majority of acid gasesemitted by EGUsThe highest HCl exposure that EPA found in itsmodeling of air toxics from EGUs was only 5% ofthe level that EPA considers safeNo risks were identified, and so the quantifiedbenefits are $06What Did EPA Estimate asDirect Benefits of Non-Hg Metals MACT?EPA identified 4 units in the U.S. for which thelifetime cancer risk for the most exposedindividual exceeds one-in-a-million (10-6)EPRI provided a more extensive analysis thatfound that no units exceed one-in-a-millionEPA did not quantify any benefits for this non-Hgmetals MACT7Disaggregation of the RIA’sBenefit-Cost Case(a)Benefits fromair toxicsreduction(billions/yr)(b)Co-benefitsfrom nontoxics(billions/yr)(c)Costs(billions/yr)(d)Net Benefitswithoutco-benefits(billions/yr)(e)Net Benefitsincludingco-benefits(billions/yr)Mercury MACT< $0.1 $0.6 to $1.5 $2.3 - $2.3 - $1.7 to -$0.8Acid Gases MACT$0 51.7 to 136.9 $5.4 - $5.4 $46.2 to $131.5Non-Hg MetalsMACT$0 0.7 to 1.6 $3.2 - $3.2 - $2.5 to -$1.6Organic HAPsStandard$0 $0 >$0(*) <$0 <$0Total< $0.1 $53 to $140 $10.9 - $10.9 $42 to 129.1Source: Table 1 in A. Smith, Technical Comments on EGU MACT RIA, prepared forUARG, Attachment 13 in DocketReference # EPA-HQ-OAR-2009-0234-17775.Almost all the EGU MACT benefits are due to acid gases MACT, whichforces some SO2reductions not needed to meet the PM2.5NAAQS.8Reliance on PM2.5Co-Benefits IsNot Confined to the EGU MACTRIA9EPA Is Reliant on PM2.5Co-Benefits InMost of Its Non-PM2.5RIAs for Air Rules1997 Ozone NAAQS(.12 1hr=>.08 8hr)X1997 Pulp& Paper NESHAP1998 NOx SIP Call & Section 126 Petitions1999 Regional Haze RuleX1999 Final Section 126 Petition RuleX2004 StationaryReciprocatingInternal Combustion Engine NESHAPX2004 Industrial Boilers & Process Heaters NESHAPXX2005 Clean Air MercuryRuleX2005 Clean Air VisibilityRule/BART GuidelinesX2006 StationaryCompression Ignition Internal Combustion Engine NSPS2007 Control of HAP from mobile sourcesXX2008 Ozone NAAQS(.08 8hr =>.075 8hr)X2008 Lead(Pb)NAAQSX2009 New Marine Compress'n-Ign Engines >30 Lper CylinderX2010 ReciprocatingInternal Combustion Engines NESHAP–Comp. IgnitionXX2010 EPA/NHTSA Joint Light-DutyGHG & CAFES2010 SO2 NAAQS(1-hr,75ppb)X>99.9%2010 ExistingStationaryCompression Ignition Engines NESHAPXX2011 Industrial,Commercial,and Institutional Boilers NESHAPXX2011 Industrial,Commercial,and Institutional Boilers & Process Heaters NESHAPXX2011 Comm'l & Indus'l Solid Waste Incin. Units NSPS & Emission GuidelinesXX2011 Control of GHG from Medium & Heavy-DutyVehicles2011 Ozone Reconsideration NAAQSX2011 UtilityBoiler MACT NESHAPX> 99.99%2011 MercuryCell Chlor Alkali Plant MercuryEmissions NESHAPX2011 Sewage Sludge Incineration Units NSPS & Emission GuidelinesXXPM2.5 co-bens>50% oftotal benefitsPM co-bens areonlybenefitsquantifiedNote: Table includes onlyRIAs for major, non-PM CAArules in which at least some benefits were quantified.10Because It Is Separately-Regulated,PM2.5Should Not Serve as Justificationfor Regulating Other PollutantsScares the publicinto believing that new rules areabsolutely essential for their health.Gives EPA a shieldto build a complex web of manydifferent rules, when EPA could provide almost all ofthose purported health-protective benefits with just asingle rule: the PM2.5NAAQS.–That EPA does not take this simple, streamlined approach hintsat the degree to which it realizesthat its co-benefits calculationsdo not reflect true public health risks.Is just plain bad policy: This approach cannot possiblyresult in a cost-effective path to addressing a nation’sclean air needs.The Problems with EPA’s Use of Co-Benefits:11What is the scientific basis forEPA’s PM2.5health risk estimates?.... and why have they become solarge?12The Epidemiological Basis forEPA’s PM2.5Mortality EstimatesCity’s AnnualAveragePM2.5(μg/m3)% Increase inMortality RiskStatistically fitted“concentration-response”function10 20ILLUSTRATIVE ONLY0AnnualNAAQSlevelStatistical methods attemptto control for other mortalityrisk factors (smoking,income level, etc.) but abilityto do so is quite imperfectEvery individual within a cityis assumed to have sameexposure to PM2.5(based onaverage monitor reading forthe entire area)Other pollutants that arecorrelated with PM2.5are notaccounted for in EPA’scalculations, andall types ofPM2.5are assumed equallypotent13The Epidemiological Basis forEPA’s PM2.5Mortality EstimatesCity’s AnnualAveragePM2.5(μg/m3)Statistically fitted“concentration-response”function10 20ILLUSTRATIVE ONLY0Reduced mortality ratepredicted for all peoplein City E due to ruleCity E’sPM2.5changedue to ruleThe same calculation is applied to populations in every location in the USand added up,...resulting in the # of statisticaldeaths reported as rule’s benefitsAnnualNAAQSlevel% Increase inMortality Risk14EPA’s Estimates of 2005’s Deaths “Dueto PM2.5” Increased Abruptly UsingSame Epidemiological StudyRIAs 2006-2009: 68,000 – 88,000(Pope 2002) (Laden 2006)RIAs since 2009: 120,000 – 320,000(Pope 2002) (Laden 2006)3.6xIn 2009, EPA started extrapolating risk estimatesto PM2.5levels as low as modeled,well below the lowest measured level (“LML”) in the studies15The Epidemiological Basis for EPA’sAbruptly Increased PM2.5MortalityEstimatesCity’s AnnualAveragePM2.5(μg/m3)Statistically fitted“concentration-response”function10 20ILLUSTRATIVE ONLY0AnnualNAAQSlevelExtrapolation Zonebelow LMLExtrapolation below“LML” meansassuming risksexist below therange of observedcorrelationPM2.5changesnowadded% Increase inMortality Risk1685- 97% of mortalitydue to PM2.5below11 to 13μg/m3Most of the EGU MACT Co-Benefits AreDue to Extrapolation Below the LMLSource: Figure 6-15 in EGU MACT RIA)17Implications of EPA’s Figure 6-15This means that about14,500 to 16,500of EGU MACT’s 17,000 “lives saved” arefrom reductions in PM2.5that occur belowrange recommended by EPA staff andCASAC for a revised PM2.5NAAQSThe remaining 500 to2,500 lives wouldbe “saved” by a revised PM2.5NAAQS,and belong inthatrule’s benefits ledgerEffectivelyallof the EGU MACT’s 17,000“lives saved” are due to exposures belowthe level of the 15 μg/m3standardcurrently deemed protective of the publichealthSource: Figure 6-15 in EGU MACT RIA)85- 97% of mortality due toPM2.5below 11 to 13μg/m318Distribution of PM2.5MortalityRisk in 2005Source: Figure C-2, EGU MACT RIAThe Fine Print in the RIA:This figure is consistentwith the 6,800 deathsestimate in the EGU MACT19Distribution of PM2.5MortalityRisk in 2005This is the figure that isconsistent with the17,000deaths estimate in the EGUMACT(not provided by EPA)2% to 7%7% to 10%10% to 13%13% to 16%16% to 22%implies that320,000 deathsin 2005 (13%)Source: Figure C-2, EGU MACT RIAwith scale adjustedto apply the riskcoefficient from Ladenet al.(2006), which isbasis for EPA’s 17,000 deaths20Implications of EPA’s High EndRisk Estimates: 

# Is this Credible?Using PM2.5concentrations in 1979-1983:25% of all deathsnationwide average~40% of deaths in highest PM citiesNumbers would probably have been even higherca. 1970 (earliest national SO2emissions data)21RIAs for PM2.5Rules Are Also Subjectto Overstatement of “Lives Saved”1997 PM2.5NAAQS4,000 to 16,000(from PM10only to PM2.5at 15/65)2005 Clean Air Interstate Rule (CAIR)17,000(to help attain 15/65 NAAQS)2006 PM2.5NAAQS (15/35)1,200 to 13,000(from CAIR/CAMR/CAVR to 15/35)2011 Cross-State Air Pollution Rule13,000 to 34,000(CSAPR)(to help attain NAAQS of 15/35withoutCAIR/CAMR)“Lives Saved” in RIA-- Approximately doubledby extrapolation below LML-- Double-counts much of the above22EPA’s Increase in Deaths “Due toPM2.5” Is Not Part of Its PM2.5ReviewDocumentsRIAs 2006-2009: 68,000 – 88,000(Pope 2002) (Laden 2006)RIAs since 2009: 120,000 – 320,000(Pope 2002) (Laden 2006)Quantitative Risk Analysisin CurrentPM2.5NAAQS Review 63,000(Krewski 2009)3.6xThe QRA (reviewed by CASAC) does notextrapolate below the “lowest measured level”(LML)In 2009, EPA started extrapolating risk estimatesto PM2.5levels as low as modeledwell below the lowest measured level (“LML”) in the studies23Illustration of How the Use in RIAs ofPM2.5Co-Benefits Leads to ExcessiveRegulationNote: While EPA estimates large PM2.5benefits such as this illustration suggests, many considerthese large benefits to bespeculative because theyare based on uncertain epidemiological methods, and are mainly attributable to reductions in PM2.5well below current or future “safe” NAAQS levels.PM2.5Ozone EGUMACTBenefitBenefit BenefitCostCostCostPM2.5Ozone EGUMACTBenefitBenefit BenefitCostCostCostPM2.5Benefits Shared Out as Co-Benefits”PM2.5benefits moved from PM2.5ledger tonon-PM rules’ ledgers as“co-benefits”: same3 rules all appear to pass a benefit-cost testOnly Direct Benefits Are CountedPM2.5rule is only 1 of 3 illustrative rulesthat passes a benefit-cost test24Recap of Limitations of EPA’s PM2.5Benefits Estimates(for Both Direct and Co-Benefits)Based on statistical correlationsthat are highly limited by:–Inability to fully control for many key mortality risk factors–Inability to identify actual PM2.5exposures–Failure to control for other potential culprit pollutants–Lack of clearly identified physiological mechanismAssumes all types of PM2.5have identical potencyAssumes that there is no decreasing marginal benefit as PM2.5falls tozeroMost (or all) of the PM2.5benefits are from changes in PM2.5levelsalready in the “safe”zone under the NAAQS