McCarthy ‘Can’t Answer’ Question on EPA’s Monetary Formula

Published February 6, 2012

U.S. Environmental Protection Agency Assistant Administrator Gina McCarthy said she “can’t answer” a question on how EPA calculates the monetary value it assigns to each life the agency allegedly extends through regulation. 

Asserted Economic Benefits

During a presentation McCarthy gave on Jan. 30 at the Energy, Utility & Environment Conference (EUEC) in Phoenix, Arizona, she presented several estimates of how much money EPA is providing in societal benefits through power plant regulations.

She claimed, for example, EPA’s proposed Cross States Air Pollution Rule will provide between $120 billion and $280 billion in benefits each year. She also claimed EPA’s new Mercury and Air Toxics Standards (MATS) will provide between $37 billion and $90 billion in benefits each year. McCarthy said for every dollar energy producers spend to comply with MATS, society will gain between three and nine dollars in health benefits.

Calling out energy providers and consumer watchdogs who have protested the high costs of EPA regulations, McCarthy defiantly challenged, “If you are worried about whether this will benefit the economy, read those figures.”

Federal Agencies Disagree

Much of EPA’s asserted benefits accrue through the agency’s calculation that each life it extends through regulations provides $9.1 million in societal value. EPA’s $9.1 million figure is higher than that asserted by any other federal agency.

For example, the Food and Drug Administration (FDA) asserts a life extended is worth $7.9 million, and the Department of Transportation (DOT) assumes a life extended is worth $6 million. EPA itself asserted as recently as three years ago a life extended is worth $6.8 million.

‘I Can’t Answer the Question’

During a press conference at the EUEC, this reporter asked McCarthy how EPA arrives at its $9.1 million figure and why it differs from the value assigned by other federal agencies.

McCarthy said she could not give a specific answer. Instead of providing a formula or specific considerations EPA took into account when arriving at its $9.1 million valuation, McCarthy said EPA “works in close consultation with the White House” to arrive at its figure. 

“We work very hard to come up with the proper number,” said McCarthy.

Following up, this reporter asked McCarthy if her answer meant EPA does not have a specific formula it utilizes.

“I didn’t say that,” McCarthy responded. “I said I can’t answer the question.”

EPA ‘Misleading at Best’

Emergency medical physician John Dale Dunn, a policy advisor for the American Council on Science and Health, says regardless of whether EPA inflates the value it assigns a human life, it is misleading for the agency to claim its regulations are providing economic benefits.

“The costs that energy producers pay to comply with EPA regulations are certainly economic, and these economic costs certainly get passed down to consumers in the form of higher prices,” said Dunn. “EPA’s asserted benefits, however, are not economic. The asserted benefits are largely the subjective value that EPA places on a person allegedly living a little bit longer due to EPA regulations.

“When EPA bureaucrats say their regulations will ‘help the economy,’ they are being misleading at best,” Dunn explained. “Even if, for the sake of argument, EPA is not inflating the value it places on a life extended, its asserted benefits are noneconomic in nature. The economy pays dearly for EPA regulations, even if EPA says the noneconomic benefits are worth the price.

“You can say, ‘I think the subjective value people place on having their life extended is $9.1 million,’ but that certainly doesn’t mean the economy grows by $9.1 million each time a life is extended,” Dunn observed. “EPA is comparing economic apples to noneconomic oranges, and the agency is being misleading at best when it claims its regulation benefit the economy.”

Minimal Life Extension

This reporter also asked McCarthy how much time is added, on average, to each life allegedly extended by EPA regulations.

McCarthy said she could not answer that question, either.

“There is a good reason why Assistant Administrator McCarthy said she could not answer the question: the answer is embarrassing for EPA,” said Dunn. “EPA is not preventing an army of twentysomethings from dying grossly premature deaths. Instead, even if we accept EPA’s highly suspect data-mining, EPA regulations add mere hours or days per life extended.”

“To say that adding a few hours or days to an elderly person’s life is worth taxpayers spending $9.1 million is quite a bold statement,” said Dunn. “And to say that adding a few hours or days to an elderly person’s life provides $9.1 million in economic value is simply preposterous.”

“It is also curious that EPA claims a higher monetary value per life saved than the Food and Drug Administration and the Department of Transportation,” observed Dunn. “DOT regulations are designed to prevent sudden tragedies that strike people of all ages. DOT is saving many more years of life per accident avoided than the few days of life extended by EPA regulations, yet EPA has the audacity to claim a higher benefit value than DOT.”

“EPA is cooking the books when it claims the benefits of its new and proposed regulation outweigh their extremely high costs,” Dunn summarized.

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