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Rethinking Health-Based Environmental Standards

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Rethinking Health-Based Environmental Standards Rethinking Health-Based Environmental Standards By Michael A. Livermore and Richard L. Revesz Working Paper No. 2014/3 NEW YORK UNIVERSITY SCHOOL OF LAW PUBLIC LAW & LEGAL THEORY RESEARCH PAPER SERIES WORKING PAPER NO. 13-58 LAW & ECONOMICS RESEARCH PAPER SERIES WORKING PAPER NO. 13-30 Rethinking Health-Based Environmental Standards Michael A. Livermore and Richard L. Revesz January 2014 Electronic copy available at: http://ssrn.com/abstract=2313134 Forthcoming 89 NYU L. REV. __ (2014) Draft of January 13, 2014 RETHINKING HEALTH-BASED ENVIRONMENTAL STANDARDS * ** MICHAEL A. LIVERMORE & RICHARD L. REVESZ Under the Clean Air Act, the U.S Environmental Protection Agency (EPA) is required to determine the stringency of the National Ambient Air Quality Standards (NAAQS), arguably the most important federal environmental program, without considering the costs of achieving these standards. Instead, it must rely exclusively on health-related criteria. This Article argues that health-based standards, which are one of the principal approaches to setting the stringency of environmental requirements in the United States, exhibit two serious pathologies: the stopping point problem and the inadequacy paradox. The stopping point problem arises because there is no coherent, defensible way for EPA to set the permissible level of pollution based on health considerations alone. Moreover, contrary to the commonly accepted view, the NAAQS have generally been set at levels that are less stringent than those that would result from the application of cost-benefit analysis, giving rise to the inadequacy paradox. We urge a reinterpretation of the Supreme Court’s important decision in Whitman v. American Trucking Associations to avoid the inadequacy paradox. INTRODUCTION ........................................................................................................ 2 I. SETTING THE STAGE ............................................................................................. 6 A. Approaches to Environmental Standard Setting ......................................... 6 B. Arguments for Health-Based Standards ..................................................... 9 C. Regulatory Programs Prohibiting the Consideration of Costs ................ 11 D. NAAQS and American Trucking ............................................................... 13 II. STOPPING POINT PROBLEM ................................................................................ 14 A. Original Lead Standard ............................................................................ 16 B. Continuous Spectrum of Risk for Threshold Pollutants ............................ 20 C. Stopping Point Problem in Recent NAAQS .............................................. 24 *Associate Professor of Law, University of Virginia Law School. **Lawrence King Professor of Law and Dean Emeritus, New York University School of Law. The generous financial support of the Filomen D’Agostino and Max Greenberg Research Fund at the New York University School of Law is gratefully acknowledged. Paul Balik, Elspeth Faiman Hans, Zachary Kolodin, Thomas Sosnowski, and Shaun Werbelow, and, especially, Yael Lifshitz-Goldberg, who worked on this project since its genesis, provided excellent research assistance. We are very grateful for the comments of Robert Ahdieh, Ryan Bubb, Kevin Cromar, Roderick Hills, Jr., Richard Stewart, Cass Sunstein, and Katrina Wyman, and of the participants at faculty workshops at Duke, Emory, and NYU. Revesz was the counsel of record for an amicus brief on behalf of environmental groups in the American Trucking litigation, which is discussed in this Article. See Brief of Envtl. Defense et al. as Amici Curiae Supporting Petitioners, Browner v. Am. Trucking Ass’ns, 531 U.S. 457 (2001) (No. 99-1257), 2000 WL 1014316. 1 Electronic copy available at: http://ssrn.com/abstract=2313134 1. Lead....................................................................................................... 26 2. Ozone .................................................................................................... 27 3. Nitrogen Dioxide ................................................................................... 29 4. Sulfur Dioxide ....................................................................................... 31 5. Carbon Monoxide ................................................................................. 34 6. Particulate Matter ................................................................................. 35 III. UNDERSTANDING THE PROBLEM ...................................................................... 38 A. Threshold Contaminants ........................................................................... 38 B. Justice Breyer and Health-Wealth Tradeoffs ............................................ 39 C. Surreptitious Consideration of Costs ........................................................ 41 D. Obstruction of Reason Giving .................................................................. 43 IV. INADEQUACY PARADOX .................................................................................. 45 A. Methodology.............................................................................................. 46 B. Socially Optimal Level of Pollution .......................................................... 48 2. Nitrogen Dioxide ................................................................................... 50 3. Sulfur Dioxide ....................................................................................... 52 4. Particulate Matter ................................................................................. 53 5. Ozone .................................................................................................... 54 V. EXPLAINING THE PARADOX ............................................................................... 55 A. Ancillary Benefits ...................................................................................... 56 B. Uncertainty Aversion ................................................................................ 59 C. Role of Interest Groups ............................................................................. 61 VI. TOWARD A NEW APPROACH ............................................................................ 63 A. Failures of the Status Quo ........................................................................ 64 B. Cost-Benefit Analysis as a Regulatory Floor ............................................ 65 C. Health-Based Standards Revisited ............................................................ 70 CONCLUSION .......................................................................................................... 72 INTRODUCTION Whitman v. American Trucking Associations, Inc., is understood across the political spectrum to hold that the U.S. Environmental Protection Agency (EPA) may not consider costs when setting National Ambient Air Quality Standards (NAAQS) under the Clean Air Act.1 This decision was lauded by protection-oriented groups as a major victory for public health and the environment,2 and severely criticized by regulated 1 531 U.S 457 (2001). 2 See, e.g., Editorial, Clean Air–and Congress–Wins, WASH. POST, Feb. 28, 2001, at A24 (“[T]he court handed public health a major victory . .”); Clean Air Wins, EARTH ISLAND J., Autumn 2001, available at http://www.earthisland.org/journal/index.php/eij/article/positive_notes3/; Earthjustice Legal Defense Fund: Supreme Court Upholds Clean Air Standards Against Industry Attack, U.S. NEWSWIRE, Feb. 27, 2001 ("The Supreme Court has upheld the Clean Air Act's central mandate to protect the public health against pollution that kills tens of thousands of people each year . .” (quoting Howard Fox of Earthjustice Legal Defense Fund)); Frank Murray, Clean-Air Ruling Hits Big Business Supreme Court Says EPA Standards Not Limited by Cost, WASH. TIMES, Feb. 28, 2001, at A1 (“‘The Supreme Court has agreed 2 Electronic copy available at: http://ssrn.com/abstract=2313134 industry and anti-regulatory groups for imposing burdensome costs in pursuit of unrealistic levels of environmental safety.3 Both sides therefore seem to agree that were the EPA to engage in cost-benefit analysis of its proposed air quality standards, the results would be more industry-friendly and less environmentally protective. This conventional account is widely shared in the academic literature. Advocates of cost-benefit analysis have decried heath-based standards as an “absolutist commitment to a zero-risk level” that can be not only “unduly expensive” but also “counter- productive.”4 On the other side, “cost-blind” standards have been praised for putting “a thumb on the scale in favor of the weaker party.”5 Despite their many differences, both academic camps share the view that cost-benefit analysis would act as a check on regulation that would otherwise provide stronger levels of environmental protection. This conventional account gives rise to two interrelated pathologies. We call the first the stopping point problem. Environmental pollutants often lack ambient concentrations below which there is no risk of negative health consequences.6 As a result, the complete elimination of health risks for these pollutants could be accomplished with the fundamental principle that the Clean Air Act is designed to protect people's health without regard to cost.’” (quoting Frank O’Donnell of the Clean Air Trust)). 3 See, e.g., Defeated in Court, U.S. Industry Strikes a “Never Say Die” Pose,
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