Crony Environmentalism

epa

by Sofie E. Miller, Senior Policy Analyst

April 10, 2013

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The benefits and costs that regulators highlight when announcing a rule can say a lot about a regulation’s composition—and sometimes the benefits (or costs) that are omitted are the most important part of the story. For the Environmental Protection Agency’s new biodiesel standard, the stated costs and benefits don’t even begin to tell the whole story: by the agency’s own estimates, the rule achieves neither economic efficiency nor improved environmental quality, and it leaves the public paying the price. What could have caused regulators to finalize a rule that causes harm to the environment at such a great cost to the public?

Under the Clean Air Act (as amended by the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007), the EPA sets the annual volume of biomass-based diesel required to meet the agency’s renewable fuel standard. The EPA set the 2013 standard in a new rule, “Regulation of Fuels and Fuel Additives: 2013 Biomass-Based Diesel Renewable Fuel Volume.” The rule increases the applicable volume requirement for biomass diesel fuels by 28 percent, up from the statutory baseline of 1 billion gallons.

Instead of claiming environmental improvements as the primary benefit of this rule (which might be expected from an agency premised on environmental protections), the EPA justifies the rule on the basis of increased energy security, which it values at $41.2 million. In fact, the agency explicitly did not quantify the greenhouse gas reductions that the rule is intended to effect: “While we are not quantifying the GHG [greenhouse gas] emissions impact of this [rule], qualitatively we believe that it will provide a reduction in GHGs.”

It may not be possible to quantify every benefit (or cost), as acknowledged in President Bill Clinton’s Executive Order 12866, and qualitative assessments have their place in regulatory analyses. However, this is where the EPA’s tale of benefits ends. 

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