by Richard Belzer

in Regulatory Science, Regulatory Economics

On July 11, 2008, EPA published for public comment an advanced notice of proposed rulemaking on the question whether, and if so, how, EPA should regulate carbon dioxide as a criteria air pollutant under the Clean Air Act. EPA simultaneously published a letter from Susan Dudley, Administrator of OMB's Office of Information and Regulatory Affairs, publicly distancing the Bush administration from EPA's proposal. Comments sent to EPA by other federal agencies also were made public.

This set of events may be unprecedented in the annals of federal regulatory poliicy. Today we begin a series providing a policy-neutral examination of the documents and the issues presented.

21 Mar 2008

The Revised Ozone Standard:
Simple math and simple constitutional law

by Richard Belzer

in Regulatory Policy, Regulatory Science

The Washington Post's environment reporter says EPA has weakened the national ambient air quality quality standard for ozone. Given that the standard is going down, what does she mean? More...

6 Mar 2008

Energy Star Compact Fluorescent Light Bulbs:
EPA's savings calculator exaggerates savings

by Richard Belzer

in Regulatory Economics

Following up on yesterday's post, we now look at compact fluorescent (CFL) light bulbs. June Fletcher of the Wall Street Journal reported that the payback period for CFLs is "about four months." She provided no source for this figure. More...

5 Mar 2008

Energy Star Appliances:
EPA's savings calculator exaggerates savings

by Richard Belzer

in Regulatory Economics

Wall Street Journal reporter June Fletcher says (link temporarily available to nonsubscribers) it's not easy being green at home because a lot of heavily-promoted household renovations and products cost more that they deliver in environmental benefits, including energy savings. "Most homeowners like the idea of going green," she writes, " -- until they get the bill.

With home sales slumping and consumers rethinking their remodeling budgets, building contractors and suppliers are dangling green upgrades. They hope that energy-efficient systems and products made from sustainably harvested materials will hook consumers concerned about global warming, pollution and natural resources.

Yet with a few exceptions, green materials and construction cost extra, making them a hard sell. Enermodal Engineering, a Canada-based consulting firm, estimates the premium at 5% to 10%, depending on how extensively a builder uses recycled materials and water- and energy-efficient products. When Specpan, an Indianapolis research firm, surveyed builders recently for Building Products magazine, the greatest number estimated a 10% to 19% cost increase when going green.

27 Jul 2007

Who Pays the Cost of Regulation?
Insights from corporate income tax incidence

by Richard Belzer

in Regulatory Economics

Regulation is widely understood as a tax on the activity or person being regulated. Where these activities repair genuine market failures, benefits from regulation may result. If there are benefits from, say, automobile safety regulation, one would expect the beneficiaries to be persons who otherwise would have been killed or injured at the pre-regulatory safety level.

But what about the costs of regulation? Who bears them? More...

29 Jun 2007

Distinguishing Risk Assessment from Risk Management:
Telling them apart can be hard

by Richard Belzer

in Information Quality, Peer Review, Regulatory Science

Experts in risk analysis often distinguish between risk assessment and risk management. But sometimes they don't, and that can leave the public confused about the difference.

Today's example is trichloroethylene, commonly called TCE. More...

27 Jun 2007

New Motor Vehicle Fuel Economy Standards, Part 5:
the evolving mission of 'high occupancy vehicle' (HOV) lanes

by Richard Belzer

in Regulatory Policy

The Washington Post recently carried a story on motor vehicle air pollution. Part of the story concerned carpooling, which normally is required for access to "high occupancy vehicle" (HOV) lanes on urban interstate highways. The story shows how the original purpose of HOV lanes -- reducing rush hour traffic congestion -- is evolving into the entirely different purposes of air pollution control and fuel efficiency. This is the predictable result of extending HOV lane privileges to solo drivers of hybrids. More...

30 Apr 2007

Why Revealed Preferences Beat Stated Preferences:
The case of compact fluorescent light bulbs

by Richard Belzer

in Regulatory Economics

Both "revealed" and "stated" preferences find their way into benefit-cost analysis. "Revealed" preferences are obtained from real-world data showing what people actually do. "Stated" preferences" are obtained from surveys showing what people say. It's an old maxim that what people say isn't what they actually do. That's why economists are In benefit-cost analysis, stated preferences are useful only if they adequately mimic revealed preferences.skeptical of pubic opinion polls. So surveys that measure, even accurately, what people say are only useful if they mimic what people actually do -- or would do, if there were markets.

The battle of the sexes over compact fluorescent light bulbs confirms that economists' bias in favor of revealed preference is justified. More...

16 Apr 2007

How Not To Reduce Diesel Emissions:
L.A. ports use environmental protection to reduce competition

by Richard Belzer

in Regulatory Economics, Regulatory Policy

The Los Angeles Times reported on April 14 that the ports of Los Angeles and Long Beach "are proposing an 'unprecedented' overhaul of dockside trucking that officials say would slash diesel pollution from trucks by 80% in five years while improving domestic security and working conditions for drivers." Based on the Times report, the plan is light on environmental protection and rich with measures that protect large companies and unionized labor from competition. More...

8 Jan 2007

Overstated Risk Perception
The Publisher's Clearing House sweepstakes

by Richard Belzer

in Regulatory Economics

It's that time of year, again. Time for the Publisher's Clearing House sweepstakes. You may have won $10 million.

Sweepstakes are subject to extensive (and apparently ineffective) regulatory oversight by the Federal Trade Commission. Their sponsors still lure customers by overstating the risk of winning and understating the risk of participating.

These risks are financial, but they have clear parallels to human health risk assessment. Health risks are often represented in terms that significantly overstate their likely magnitude; sometimes this practice is defended on the ground that it's "better to be safe than sorry." But the same reasoning is never used to justify the risk of winning a sweepstakes. For financial risks, a "better safe than sorry" risk assessment policy would require that sweepstakes promoters, for example, severely understate the value of winning.

9 Nov 2006

Regulation After the Election, Part 1
Strange bedfellows on Election Day +2

by Richard Belzer

in Legislation, Regulatory Economics, Regulatory Policy

Now that the mid-term election is over, what does it mean for federal regulation? A good economist is never wrong as a prognosticator. The answer to every question is, "It depends." Today we start scanning the entrails of the election to map out the new regulatory environment and answer the follow-up question, "Okay, Mr. Smartypants: depends on what?"

Today we venture into the always dangerous terrain (if you will) of carbon dioxide. Take a deep breath, but hold it. It may cost you to exhale.

20 Oct 2006

Gas Tax Economics
Reviewing Mankiw's proposal

by Richard Belzer

in Regulatory Economics, Regulatory Policy

Harvard economics professor and former Bush administration chief economist Gregory Mankiw says in the Wall Street Journal (subscription required) that Congress should raise the gas tax.

With the midterm election around the corner, here's a wacky idea you won't often hear from our elected leaders: We should raise the tax on gasoline. Not quickly, but substantially. I would like to see Congress increase the gas tax by $1 per gallon, phased in gradually by 10 cents per year over the next decade.

He gives seven arguments for his proposed $1 per gallon increase in the gas tax: (1) carbon dioxide abatement, (2) reducing road congestion, (3) relief from counterproductive regulations, (4) balancing the federal budget, (5) burden-sharing with oil producers such as Saudi Arabia and Venezuela, (6) a preference for consumption over income taxes, and (7) enhanced national security.

Which of these arguments stands up to elementary economic scrutiny?

19 Sep 2006

Agency Responses to NAS Questions on Risk Assessment Practice

by Richard Belzer

in Information Quality, Regulatory Science

In June, the ad hoc National Academy of Sciences committee empaneled to review OMB's proposed risk assessment guidance asked several affected federal agencies to provide comments.

Neutral Source has copies of these comments in our Library.

14 Sep 2006

October 17-18:
Research Seminar on Market-Based Methods for Environmental Protection

by Richard Belzer

in Events, Regulatory Economics

On September 11 EPA announced a research meeting to review progress on Agency-funded academic research related to market mechanisms for environmental protection.

The meeting will be held October 17-18 in Washington DC. Registration is free.

12 Sep 2006

Are Fireworks a Serious Environmental Threat?

by Richard Belzer

in Litigation, Regulatory Policy, Regulatory Science

An increasing number of communities have canceled fireworks displays because of concerns about perchlorate contamination. Perchlorate is the oxidizing agent used to make fireworks rockets blast off.

Several news outlets have reported that San Diego's SeaWorld has canceled its regular fireworks shows. According to the NBC affiliate in San Diego: A group called California Coast Keepers has threatened a lawsuit alleging the amusement park needs a water quality permit for the fireworks displays. Sea World is located on Mission Bay, an estuary of the Pacific Ocean.

 “There are pollutants being discharged and the law says you need a permit,” said Marco Gonzalez, an attorney for Coastkeeper.

SeaWorld has had fireworks shows for many years, but previously no one -- including the state's regional water quality regulator -- has thought that a permit was required.

 “The implications of this are very significant,” said John Robertus, executive officer of the San Diego Regional Water Quality Control Board, the agency that will weigh the merits of SeaWorld's application.

While fireworks firms routinely obtain permits from local fire departments, pyrotechnics have not been regulated by water-quality agencies.

“It has not been done anywhere in the U.S. that I am aware of,” Robertus said. “Locally, we have not seen a need to regulate that.”

On June 26, it filed a 60-day notice of intent to "bring litigation to enforce the Clean Water Act’s mandate that a permit be obtained for displays that release potentially dangerous chemicals into Mission Bay."