New Incinerator Rule Implementation Postponed By EPA: Obama’s New Conservative Environmental Approach
Michael J. Lynch
Department of Criminolgoy and
School of Global Sustainability
University of South Florida
The G.W. Bush Administration is widely regarded as having established the worst environmental record of any Administration since the founding of the EPA during Nixon’s presidency. The election of Obama brought great hopes for a redirection in environmental policies in the US. In some ways, the Obama Administration has delivered on those hopes revising, for example, the outdated and fairly stagnant fuel economy standards.
Since the midterm election cycle in which Republicans gained a large number of seats in the US House of Representatives, however, environmental guidance from the White House has weakened. On May 16th, for example, the EPA postponed instituting a rule that would have strengthened air pollution standards incineration at major industrial facilities. This postponement follows a series of deferred rulings involving coal ash management, mountain top removal mining and a proposed reconsideration of stricter regulations imposed on cement manufacturing facilities. In addition, just last week, the Obama Administration announced plans to expand oil exploration and natural gas drilling on previously excluded lands.
Action on industrial on site incineration regulations had been delayed throughout the Bush Administration. On February 21, 2011, the EPA issued its final ruling on this issue. That ruling was induced by court review by the District Court of Washington D.C.. The February ruling sought to reduce emissions of air pollutants at on-site incinerators referred to as existing and new Boilers, Commercial and Industrial Solid Waste Incinerators (CISWI), and Sewage Sludge Incinerators (SSI). These provisions relate to sections 112 and 129 of the Clean Air Act.
As the EPA notice of final ruling notes (EPA FINAL RULING) the final rule is designed to reduce harmful air pollution emissions by industrial facilities including fine particle, ozone, mercury, hazardous air pollutants (HAPS), and dioxin. The EPA estimates that the health benefits to the American public amount to between $22-$54 billion annual (beginning in 2014).
The final rules apply to a variety of incinerators. As noted in the final rule statement by EPA, the rules affect 13,800 boilers at large facilities, 187,000 small source boilers, 88 commercial and municipal incinerators, and 200 sludge incinerators. In total, the rule is estimated to affect 201,088 incinerators.
In describing the benefits of the rule, the EPA noted that decreasing pollution from these sources will: (1) directly benefits communities near these facilities; (2) reduce the occurrence of health effects associated with these pollutants including heart disease, developmental disabilities, cancer and premature death; (3) specifically, the rule is estimate to prevent 2,600 premature deaths annually, 4,100 heart attacks, and 42,000 asthma attacks annually; and (4) produce $10-$24 in health benefits for every dollar spent on meeting the standard.
As evident in the rule making notice, the health care outcomes associated with reducing these forms of pollution are significant. In financial terms alone, the savings are significant. The EPA estimates that meeting the rule will require an investment of $1.9 billion. Spread out across the more than 200,000 affected facilities, the cost average appears insignificant — $10,000 per facility. To be sure, there are variations in costs across small and large polluters, but the per facility cost is hardly large.
As noted, EPA estimates that health costs savings are between $10-$24 dollars for each dollar spent on achieving compliance with the rule. The EPA states that annual savings from compliance are between $22-54 billion. Since achieving compliance costs are minimal and health care costs are long term, the economic benefit of this rule making change is highly understated.
Empirical Evidence: The Effect of Environmental Rules on the Economy and Jobs
The Obama Administration’s new environmental policies seem to be driven by criticisms from conservatives and business leaders that enhanced environmental regulations will slow business growth and lead to further job loses. Given the shape of the economy, the Administration has chosen to sacrifice improving the health of Americans through enhanced environmental regulation to political rhetoric on the effects of environmental regulations on job markets and the economy.
Empirical studies of the effect of environmental regulations have not focused much attention on job market conditions, but rather have examined the broader claim that environmental regulations impact the location and expansion of industry. In a 1996 study in the Journal of Public Economics, (“Environmental Regulations and Manufacturers’ Location Choices”), Arik Levinson found that variation in environmental regulations did not affect industrial location. In an article in the Journal of Regional Sciences (“Effects of Environmental Regulations on State-Level Manufacturing Capital Formation,” 2006), the authors found that environmental regulations had small effects on net capital formation, and that these results varied by region and state. These results are confirmed by an earlier (1988) study by Bartik in Growth and Change: A Journal of Urban and Regional Planning. Specifically, Bartik examined the effect of state environmental regulations on the location of Fortune 500 corporations, and found no relationship.
In an article directly addressing the employment-environmental regulation effect debate, Berman and Bui’s 2001 analysis of air pollution regulation on employment in the Los Angeles area (Journal of Public Economics) found only small effects for air pollution regulations on employment. Moreover, these effects were found to be related to the capital intensive nature of affected industries where employment has already been reduced through mechanization. In addition, the authors discovered that the affects of new air pollution regulations had a large impact on air pollution and air quality. One can conclude from this study that these two effects – the large effect on air quality and the small effect on employment — need to be considered side by side and weight appropriately against one another since a larger portion of the population is impacted and protected by increased pollution regulations than is negatively affected.
In a more recent study, the first to examine the environmental regulation-employment effect outside the US, Cole and Elliot found no effect of environmental regulations on employment in the UK (“Do Environmental Regulations Cost Jobs? An Industry Level Analysis of the UK,” 2007, The B.E. Journal of Economic Analysis and Policy). This study’s findings, while not from the US, indicate that protecting the environment and employment are not necessarily competing interests.
While the analysis referred to above report non-significant or small effects, there are studies, largely from privately funded research groups but which also include some academic work, which find that enhanced environmental regulations do impact job loss. As more recent research suggests, however, the results of many of those studies are limited by their use of cross-sectional rather than panel data. Panel data, by their very nature, control for some of the effects that occur over time, though their ability to do so may also depend on the length of the series.
One of the issues that has not been addressed in prior studies is cotemporaneous employment gains in industries that provide equipment and technology related to pollution control. For example, it is likely that the small losses in employment attributed to environmental regulation in some studies may be entirely offset by employment gains in pollution control industries that provide technology required by extended, enhanced or new environmental regulations. This issue has not been directly addressed in empirical studies on pollution regulation in the US, though this argument is recognized in more general terms in the environmental literature.
One study in Europe published as a working paper by the Centre for European Economic Research (ZEW Discussion Paper No. 01-08; “The Employment Impact of Cleaner Production on the Firm Level Empirical Evidence from a Survey in Five European Countries,” 2001, by Rennings and Zwick) examined the issue of job lose and creation related to environmental regulations. The data employed in that study were collected from 1500 European firms. The researchers found that environmental regulations that produce service innovations in response to environmental regulations create jobs in small firms. In contrast they found that regulations requiring technological innovation had no net effect on employment. The researchers also noted that cleaner technology regulation enhanced employment compared to end-of-pipe regulations.
Ironically, the researchers also discovered that firms that experienced cost reductions as a result of adapting to new environmental regulation by employing environmental innovation saw a decline in employment. One can concluded form these results that environmental regulations may reduce employment due to the positive effects of environmental regulations for firms. In other words, while job loses may occur, they result from labor saving environmentally related innovations that saved firms money and consequently increase profitability.
Conclusion: Obama, Public Health, Environmental Protection and Jobs
In contrast to the position of industry on the association between expenditures on meeting environmental rules that protect public health and jobs, and considering the large health impact of CISWI and SSI rules on public health and their economic benefits, an alternative interpretation can be offered. First, dead people don’t need jobs. In their efforts to undermine rule making that preserves public health, those who have an economic interest in weakening these standards are valuing a small investment over the lives of the American public – and noted in the EPA report, 4,200 lives each and every year these rules are not met. Moreover, given that the new rules are not as stringent as they might be to protect public health, the estimate of 4,200 saved lives could be higher if the proposed rules were stronger and protected the public better.
Second, the interests that favor undermining the proposed rule clearly over-estimate the effect of pollution laws that protect public health on the economy and on job loss. If, as estimated here, the average investment across the more than 200,000 facilities affected by this rule is a mere $10,000, this should not lead to significant job loses. Moreover, those loses would need to be balanced against the 4,200 lives saved annually and the economic health related benefits to the average American which are 10-24 times higher than the investment cost and last, in effect, forever as opposed to the one time expenditures required by facilities to meet these new standards.
The economic problems in the US economy have been a long time in the making and are not the result of environmental regulations that protect the general public. Moreover, what is not considered by opponents of these rules are the costs savings for them in terms of declining health care premiums that would result from cleaning up the environment.
There is little reason to oppose environmental safety rules except as these are related to business profit. It is a crass society and a crass presidential administration that prefers profits to people’s lives and the health of the American public.