Study: EPA Botched Analysis of Great Lakes Initiative

Published September 1, 1998

Heralded by environmental groups as an example of cost-effective regulation, the Environmental Protection Agency’s Great Lakes Initiative (GLI) will cost U.S. businesses and taxpayers an astounding $1 million for every $5.00 in benefits it produces. With a cost-benefit ratio of 185,000 to 1, the initiative strengthens the case of Congressional leaders working to require independent, external review of EPA regulatory proposals.

The GLI, which tightens pollution controls across the Great Lakes, was issued by EPA in 1995. Boasting that it had used cost-benefit analysis throughout the GLI development process, the agency presented a favorable cost-benefit analysis with the rule.

But an independent examination of that benefits analysis, released today by the Chicago-based Heartland Institute, concludes that EPA’s analysis is “based on a number of incorrect, unlikely, and even impossible assumptions that dramatically inflate predicted benefits.”

“The errors are not random,” writes Daniel W. Smith Ph.D. , author of the Heartland report, “but show evidence of a systematic bias that consistently over-estimates benefits.” Smith is senior limnologist for the Exton, Pennsylvania office of Conestoga-Rovers & Associates, a worldwide engineering, environmental, and construction services firm headquartered in Waterloo, Ontario.

EPA’s benefits analysis projected the GLI would prevent between 25 and 47 cancers over the next 70 years across 30 million residents in the Great Lakes basin. But Smith finds that “at most, only one cancer is likely to be averted in the next 6,000 years or so.” He adds, “On average, we cannot expect any benefit at all until about half-way to that point, sometime in the fifth millennium.”

Smith identifies five flaws in EPA’s GLI Benefits Analysis, which together produce an astounding 312,000 percent error:

  • EPA assumed a rate of fish consumption roughly three times higher than possible given the actual fish catch from Lake Michigan;
  • EPA assumed that all fish are as contaminated as lake trout, thus over-estimating the chemical concentrations in fish, the risk of fish consumption, and the benefits of avoiding those risks by approximately 250 percent;
  • EPA assumed that point sources contribute between 5 and 10 percent to the pollution loading in the Great Lakes watershed–an estimate too high by at least 630 percent;
  • EPA assumed that chemical concentrations in fish would respond immediately to reductions in loading, thus over-estimating the GLI’s impact by about 200 percent; and
  • EPA relied on cancer slope factors–conservative estimators of cancer risk–and thus over-estimated by 3,200 percent the cancer risk that would be reduced by implementing the GLI.

Smith’s analysis raises concerns not only about the magnitude of EPA’s errors, but also their nature. Smith notes that EPA used values widely known to be inaccurate; failed to verify its estimates using readily available data; used methods of analysis that violate its own policies; and used data contradicted by its own studies.

The new report is the most recent in a series of charges against EPA for its misuse of science. In July, citing EPA use of invalid and biased scientific methods, U.S. District Court Judge William Osteen over-ruled the agency’s decision to classify second-hand smoke as a Class A carcinogen. On June 10, The Washington Times published a letter signed by over a dozen EPA scientists and contractors, charging the agency with stifling dissent and misusing science. Charges of political bias and abuse of science by EPA scientist/whistle-blower David L. Lewis have led Congress to begin hearings on the agency’s conduct.

Without independent, external review of EPA proposals, Smith warns, error-ridden and biased analyses will continue to work against the adoption of “scientifically defensible and demonstrably sensible” regulations.

“As regulations become ever more costly and controversial,” concludes Smith, “we need an EPA with a reputation for competence, veracity, and common sense. Analyses such as those developed to support the GLI only lend substance to accusations that the agency twists the science and data to fit politically driven policies and squanders large amounts of society’s resources on minor ecosystem threats.”