In the News

With U.S. EPA suddenly putting the brakes on several air regulations, what’s the impact on industry and the states? During today’s OnPoint, Michael Livermore, executive director of the Institute for Policy Integrity at New York University School of Law, discusses EPA’s sudden shift on air regulations and the challenges to finalizing these rules.

Maximizing net benefits for the American public is the most important factor that the Environmental Protection Agency should consider in deciding whether to delay clean air regulations.

The rules in question would all generate vast benefits to individuals and families. As I’ve mentioned on these pages before, rules like these generate large economic benefits because, as air becomes cleaner, incidences of asthma, heart attacks and other ailments are reduced. Fewer negative health effects mean fewer days taken off of work, fewer doctors’ visits, hospital stays and a smaller chance of untimely death. This all translates into economic value for the American public.

From Michael Livermore of the Institute of Policy Integrity, a nonpartisan environmental policy think tank:

“At a time when the price of gasoline is causing pain at the pump, EPA’s decision to forego clear, letter-grade fuel efficiency labels is a missed opportunity.At no additional cost, the simplified labels would convey information in a way that consumers can easily understand, helping them save money over the life of their vehicle. The makers of gas-guzzlers may not like having their products graded for fuel efficiency performance, but consumers benefit from the clearer presentation.”

“At a time when the price of gasoline is causing pain at the pump, EPA’s decision to forego clear, letter-grade fuel efficiency labels is a missed opportunity,” said Michael Livermore, director of the Institute for Policy Integrity at New York University School of Law, a nonpartisan think-tank on law, environment, and consumers. “At the next opportunity, the agency should correct this error, reflect the latest studies on consumer behavior and select the clearer, letter-grade label design,” he said in a statement.

The Institute for Policy Integrity at New York University School of Law also criticized the lack of letter grades on the new labels, saying, “At no additional cost, the simplified labels would convey information in a way that consumers can easily understand, helping them save money over the life of their vehicle. The makers of gas-guzzlers may not like having their products graded for fuel efficiency performance, but consumers benefit from the clearer presentation.”

Of course, a simple letter grade would have been simpler, and there’s already some disappointment at the path not taken. Michael Livermore of the Institute of Policy Integrity, for one, isn’t happy with the decision to scrap the grades:

“At a time when the price of gasoline is causing pain at the pump, EPA’s decision to forego clear, letter-grade fuel efficiency labels is a missed opportunity. At no additional cost, the simplified labels would convey information in a way that consumers can easily understand, helping them save money over the life of their vehicle. The makers of gas-guzzlers may not like having their products graded for fuel efficiency performance, but consumers benefit from the clearer presentation.”

In an ideal world, our nation’s energy markets would be unbiased—no one would get subsidies or tax breaks, and prices on air pollution would make sure that health and environmental costs were not externalized onto the public.

But that is not the world we live in today. Giveaways for oil and other fossil fuels, estimated to be on the order of $4 billion per year or more, distort the economics of how we power our homes, businesses and cars, often in ways that are not beneficial to the American public.

In his vision of an America transitioning away from fossil fuels, Jon Wellinghoff, the chairman of the Federal Energy Regulatory Commission, sees information technology as the basis for tremendous financial and employment opportunities. And with the right policies and incentives, this could happen soon. But in our current political reality, it feels like light years away.

Speaking on the future of American energy in the United States at Princeton recently, Wellinghoff got into the details of the technologies, many sitting on the shelf today, that could change individuals’ use of electricity and fuel — and would change some of how America does business for the better.

The BP disaster was a stark reminder of the risks involved in accessing America’s oil reserves. One year later, too little action has been taken by the government to prevent a similar incident.

While incorporating a “safety case” methodology into the laws and regulations governing offshore drilling may be helpful, a regulatory scheme that grants permission to drill too soon is fundamentally problematic. Even if an oil company were to identify all the risks of a drilling operation and implement safety plans to address them, the relatively less developed safety technology available today coupled with the more advanced (and more risky) drilling technology keeps the potential for disaster higher than necessary.

NYU Law School’s Institute for Policy Integrity has an important paper out today, explaining that the US is using a crazy system to determine whether to allow offshore oil drilling.

Under something known as the Revised Program Outer Continental Shelf Oil and Gas Leasing Program 2007-2012, the Bureau of Ocean Energy Management, Regulation and Enforcement does a very basic cost-benefit calculation when deciding whether or not to allow drilling in a certain spot: it looks at the costs, and then at the benefits, and then if the benefits outweigh the costs, it gives the go-ahead.