House Testimony: EPA Grossly Overstates Economic Benefits of Regulation

Published July 13, 2012

The U.S. Environmental Protection Agency is grossly overstating the economic benefits of its various environmental restrictions, environmental expert Richard Trzupek told the Energy and Environment Subcommittee of the House Committee on Science, Space, and Technology.

Trzupek, a chemist and environmental consultant, told the House subcommittee in June 6 written testimony that EPA routinely claims enormous economic benefits are created by its regulations. Those benefits, Trzupek explained, rest on far-fetched claims regarding “premature deaths avoided” and gains in worker productivity.

EPA asserts each premature death avoided creates approximately $9 million in societal economic gains, although the average U.S. worker earns less than $2 million in 40-plus years of work. 

“The Agency applies this value to each premature death avoided claimed, whether the theoretical death avoided involves extending an octogenarian’s life by two weeks or a newborn’s by seventy-five years,” Trzupek explained in his testimony. “The EPA, to my knowledge, has never said how much the average theoretical life is theoretically extended by the issuance of a new regulation. They simply claim the full value of the ‘statistical life’ for each ‘premature death avoided’.”

EPA Ignores Most Costs

“Even more dubiously, EPA Director Lisa Jackson has claimed the Clean Air regulations are an investment that returns forty dollars in revenue for each dollar spent on regulating sources of air pollution,” said Trzupek.

“In considering the cost side of the cost-benefit analysis, the Agency typically considers only the capital cost of control equipment, operating and maintenance costs associated with the equipment, and the man-hour costs of compliance activities,” Trzupek observed. “The Agency does not consider other economic, societal, and health costs associated with each regulation and with the body of regulatory activity as a whole. Examples of these costs include:

“• Job loss

“• Heath effects associated with job loss and reduced income

“• Opportunity costs associated with facilities not built in the US because of the regulatory burden

“• Costs passed on to the consumer and the effects that has on quality of life and health

“• Facilities that move to other countries in whole or in part because the regulatory environment.”

‘A Ludicrous Claim’ by EPA

The combination of EPA’s understatement of compliance costs and overstatement of economic benefits produces preposterous claims, Trzupek observed. 

“According to EPA logic, the Clean Air Act alone was responsible for 35% of [U.S. Gross Domestic Product between 1970 and 1990] ($22.2 trillion), and perhaps as much as 78% of it ($49.4 trillion)! It is a ludicrous claim,” Trzupek noted.

“The EPA continues to have a greater and greater effect on industry, energy production, and economic activity in general, with increasingly smaller environmental returns. It’s been 22 years since Congress has taken a fresh look at the Clean Air Act. It’s time to do so again,” Trzupek concluded.

James M. Taylor ([email protected]) is managing editor of Environment & Climate News.