EGU MACT Rule’s Benefit-Cost C

and EPA’s Reliance on Co-BenePrepared on behalf of UARGWashington DCDecember 8, 2011Anne E. SmithSenior Vice President
Example of EPA Statements about the EGU MACT Benefits outside of Its RIA

“When these new standards are finalized, they will in preventing 11,000 heart attacks, 17,000 prematdeaths, 120,000 cases of childhood asthma symptapproximately 11,000 fewer cases of acute bronchamong children each year. Hospital visits will be reand nearly 850,000 fewer days of work will be missto illness.”

-- Administrator Lisa Jackson(EPA Air News Release extending public comment pon EGU MACT Rule, June 21, 2011)
Synopsis of Benefits and Costs Presented in the EGU MACT RIA I
The RIA Finds that “Total” Benefits Exceed 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 d

toxics:

 $52 billion to $142 billion are due to “co-benefits” f

reductions

- Almost entirely due to the monetized value of 6

17,000 avoided premature deaths due to reducinhalation of PM2.5

 $0.6 billion are due to “co-benefits” from reduced c

change risk

 <$0.006 billion are due to air toxics 

- These are the only “direct” benefits in the RIA
What Did EPA Estimate as Direct Benefits from the Hg MACT?

 511 lost IQ points spread across 244,000 childre

each year

– Average IQ loss = 0.002 points– 95th percentile IQ loss = 0.007 points

 Assumes risks extend linearly below the Hg Refe

Dose (“RfD”)

– The RfD is, by definition, an exposure that is considere

with a large margin of safety

 Assumes there is lost earning power that can be 

attributable to such small IQ differences

 Total monetized benefits estimated $500,000 to 

$6 million per year (less than 0.01% of Rule’s tot
What Did EPA Estimate as Direct Benefits of Acid Gases MACT?

 HCl accounts for the vast majority of acid g

emitted by EGUs

 The highest HCl exposure that EPA found 

modeling of air toxics from EGUs was only the level that EPA considers safe

 No risks were identified, and so the quanti

benefits are $0
What Did EPA Estimate as Direct Benefits of Non-Hg Metals MAC

 EPA identified 4 units in the U.S. for which 

lifetime cancer risk for the most exposed individual exceeds one-in-a-million (10-6

)

 EPRI provided a more extensive analysis 

found that no units exceed one-in-a-millio

 EPA did not quantify any benefits for this 

metals MACT
Disaggregation of the RIA’s Benefit-Cost Case

 (a) 

Benefits from 

air toxics 

reduction 

(billions/yr) 

(b) 

Co-benefits 

from nontoxics 

(billions/yr) 

(c) 

Costs 

(billions/yr) 

(d) 

Net Benefit

without

co-benefit

(billions/yr

Mercury MACT < $0.1 $0.6 to $1.5 $2.3 - $2.3 Acid Gases MACT $0 51.7 to 136.9 $5.4 - $5.4 Non-Hg Metals MACT 

$0 0.7 to 1.6 $3.2 - $3.2 

Organic HAPs Standard 

$0 $0 >$0(*) <$0 

Total < $0.1 $53 to $140 $10.9 - $10.9 

Source: Table 1 in A. Smith, Technical Comments on EGU MACT RIA, prepa

UARG, Attachment 13 in Docket Reference # EPA-HQ-OAR-2009-0234-1777

Almost all the EGU MACT benefits are due to acid gases M

forces some SO

2 reductions not needed to meet the PM2.5 
Reliance on PM2.5 Co-Benefits 

Not Confined to the EGU MACRIA
EPA Is Reliant on PM2.5 Co-Benefits In 

Most of Its Non-PM2.5 RIAs for Air Rule

1997 Ozone NAAQS (.12 1hr=>.08 8hr) X1997 Pul

p & Pa

per NESHAP 

1998 NOx SIP Call & Section 126 Petitions1999 Re

gional Haze Rule 

X

1999 Final Section 126 Petition Rule

X

2004 Stationar

y Reci

procatin

g Internal Combustion En

gine NESHAP

X

2004 Industrial Boilers & Process Heaters NESHAP

X

2005 Clean Air Mercur

y Rule 

X

2005 Clean Air Visibilit

y Rule/BART Guidelines

X

2006 Stationar

y Com

pression I

gnition Internal Combustion En

gine NSPS

2007 Control of HAP from mobile sources

X

2008 Ozone NAAQS (.08 8hr =>.075 8hr) X2008 Lead (Pb) NAAQS 

X

2009 New Marine Com

press'n-I

gn En

gines >30 L 

per C

ylinder X

2010 Reci

procatin

g Internal Combustion En

gines NESHAP 

– Com

p. I

gnition 

X

2010 EPA/NHTSA Joint Li

ght-Dut

y GHG & CAFES

2010 SO2 NAAQS (1-hr, 75 pp

b) X 

2010 Existin

g Stationar

y Com

pression I

gnition En

gines NESHAP

X

2011 Industrial, Commercial, and Institutional Boilers NESHAP

X

2011 Industrial, Commercial, and Institutional Boilers & Process Heaters NESHAP 

X

2011 Comm'l & Indus'l Solid Waste Incin. Units NSPS & Emission Guidelines 

X

2011 Control of GHG from Medium & Heav

y-Dut

y Vehicles

2011 Ozone Reconsideration NAAQS

X

2011 Utilit

y Boiler MACT NESHAP

X 

2011 Mercur

y Cell Chlor Alkali Plant Mercur

y Emissions NESHAP

X

2011 Sewa

ge Slud

ge Incineration Units NSPS & Emission Guidelines

X

PM2.5 co-bens 

>50% of 

total benefits

P

Note: Table includes only RIAs for major, non-PM CAA rules in which at least some benefits were quantified. 
Because It Is Separately-Regulated, PM2.5 Should Not Serve as Justificatio

for Regulating Other Pollutants

 Scares the public into believing that new rules ar

absolutely essential for their health.

 Gives EPA a shield to build a complex web of ma

different rules, when EPA could provide almost athose purported health-protective benefits with jusingle rule: the PM2.5 NAAQS. 

– That EPA does not take this simple, streamlined approa

at the degree to which it realizes that its co-benefits caldo not reflect true public health risks. 

 Is just plain bad policy: This approach cannot po

result in a cost-effective path to addressing a natclean air needs.

The Problems with EPA’s Use of Co-Benefits:
What is the scientific basis for EPA’s PM2.5 health risk estimate

.... and why have they becom

large?
The Epidemiological Basis for EPA’s PM2.5 Mortality Estimates

C

PM

% Increase in 

Mortality Risk Stat

“concen

10 20

ILLUSTRATIVE ONLY

0

Annual 

NAAQS 

level

 Statistical methods attempt 

to control for other mortalityrisk factors (smoking, income level, etc.) but ability to do so is quite imperfect

 Every individual within a city 

is assumed to have same exposure to PM2.5 (based on average monitor reading for 

the entire area)

 Other pollutants that are 

correlated with PM2.5 are not accounted for in EPA’s 

calculations, and all types of PM2.5 are assumed equally 

potent
The Epidemiological Basis for EPA’s PM2.5 Mortality Estimates

C

PM

Stat

“concen

10 20

ILLUSTRATIVE ONLY

0

Reduced mortality rate 

predicted for all people

in City E due to rule

City E’s

PM2.5

change 

due to rule

The same calculation is applied to populations in every location in th

and added up,

...resulting in the # of statistical deaths reported as rule’s bene

Annual 

NAAQS 

level % Increase in Mortality Risk
EPA’s Estimates of 2005’s Deaths “Duto PM2.5” Increased Abruptly Using 

Same Epidemiological Study

 RIAs 2006-2009: 68,000 

(Pope 2002

 RIAs since 2009: 120,000 

(Pope 2002

In 2009, EPA started extrapolating risk estimates

to PM2.5 levels as low as modeled,

well below the lowest measured level (“LML”) in the stu
The Epidemiological Basis for EPA’s Abruptly Increased PM2.5 Mortality 

Estimates

C

PM

Stat

“concen

10 20

ILLUSTRATIVE ONLY

0

Annual 

NAAQS 

level

Extrapolation Zone

below LML

Extrapolation below 

“LML” means 

assuming risks 

exist below the 

range of observed 

correlation

PM2.5changesnowadded

% Increase in 

Mortality Risk
85- 97% of mortality due to PM2.5 below

11 to 13 μg/m3

Most of the EGU MACT Co-Benefits Are Due to Extrapolation Below the LML

Source: Figure 6-15 in EGU MACT RIA)
Implications of EPA’s Figure 6-15

 This means that about 14,500 to 16,500 

of EGU MACT’s 17,000 “lives saved” are from reductions in PM2.5 that occur below 

range recommended by EPA staff and CASAC for a revised PM2.5 NAAQS

 The remaining 500 to 2,500 lives would 

be “saved” by a revised PM2.5 NAAQS, 

and belong in that rule’s benefits ledger

 Effectively all of the EGU MACT’s 17,000 

“lives saved” are due to exposures below the level of the 15 μg/m

3 standard 

currently deemed protective of the public health

Source: Figure 6-15 in EGU MACT RIA)

85- 97% of mortality due to PM2.5 below 11 to 13 

μg/m3
Distribution of PM2.5 Mortality 

Risk in 2005

Source: Figure C-2, EGU MACT RIA

The Fine Pr

This figure 

with the 6

estimate in t
Distribution of PM2.5 Mortality 

Risk in 2005

This is the 

consistent w

deaths estim

M

(not prov

2% to 7%

7% to 10%

10% to 13%13% to 16%16% to 22%

imp320in 2

Source: Figure C-2, EGU MACT RIAwith scale adjusted to apply the risk coefficient from Laden et al. (2006), which is basis for EPA’s 17,000 deaths
Implications of EPA’s High End Risk Estimates: Is this Credible?Using PM2.5 concentrations in 1979-1983:

25% of all deaths nationwide average~40% of deaths in highest PM cities

Numbers would probably have been even h

ca. 1970 (earliest national SO

2 emissions 
RIAs for PM2.5 Rules Are Also Subject 

to Overstatement of “Lives Saved”

 1997 PM2.5 NAAQS 4,000 to 1

(from PM10 only to P

 2005 Clean Air Interstate Rule (CAIR) 17,00

(to help attain 15/

 2006 PM2.5 NAAQS (15/35) 1,200 to 

(from CAIR/CAMR/C

 2011 Cross-State Air Pollution Rule 13,000 to 

(CSAPR) (to help attain NA

without CA

“Lives Saved

-- Approximately doubled 

by extrapolation below LML

-- Double-counts much of the above
EPA’s Increase in Deaths “Due to PM2.5” Is Not Part of Its PM2.5 Review 

Documents

 RIAs 2006-2009: 68,000 

(Pope 2002

 RIAs since 2009: 120,000 

(Pope 2002

 Quantitative Risk Analysis 

in Current PM2.5 NAAQS Review 63

(Krew

The QRA (reviewed by CASAC) does not 

extrapolate below the “lowest measured level”

(LML)

In 2009, EPA started extrapolating risk estimates

to PM2.5 levels as low as modeled

well below the lowest measured level (“LML”) in the studies
Illustration of How the Use in RIAs of PM2.5 Co-Benefits Leads to Excessive 

Regulation

Note: While EPA estimates large PM2.5 benefits such as this illustration suggests, many consider these larg

speculative because they are based on uncertain epidemiological methods, and are mainly attributable to re

well below current or future “safe” NAAQS levels.

PM2.5 Ozone EGU

MACT

BenefitCost Benefit Benefit Cost Cost

PM2.5 Ozone 

M

BenefitCost Benefit Ben

Cost 

PM2.5 Benefits Shared 

PM2.5 benefits moved f

non-PM rules’ ledgers a

3 rules all appear to pa

Only Direct Benefits Are Counted

PM2.5 rule is only 1 of 3 illustrative rules 

that passes a benefit-cost test 
Recap of Limitations of EPA’s PM2.5Benefits Estimates (for Both Direct and Co-Benefits)

 Based on statistical correlations that are highly limited by:

– Inability to fully control for many key mortality risk facto– Inability to identify actual PM2.5 exposures

– Failure to control for other potential culprit pollutants– Lack of clearly identified physiological mechanism

 Assumes all types of PM2.5 have identical potency

 Assumes that there is no decreasing marginal benefit as P

zero

 Most (or all) of the PM2.5 benefits are from changes in PM2

already in the “safe” zone under the NAAQS