EPA in Action: Crony Environmentalism

EPA suffers from a collective split personality. The agency is constantly torn over who it loves the most — the neo-pagan religious zealots of the environmental movement, or the crony capitalists who contribute so generously to the political class.

Mostly, the agency never chooses. It simply graces both groups according to whatever decision is at hand.

In the most recent issue of the Cato Institute’s indispensable journal Regulation, Sofie Miller describes the thinking underlying the recent rule upping the volume of biomass-based fuel by 28%, a gift to the soy bean producers:

EPA estimates that in 2013 its new biodiesel rule will incur between $263 million and $425 million in net costs while harming air and water quality. What could motivate the agency to issue a regulation that is more costly than necessary to meet its statutory obligation, increases emissions of criteria pollutants, and raises consumer prices? To answer that question, one need only look to the recipients of these price increases. The rule will deliver concentrated benefits to a very specific special interest: the soybean industry.

Enforcement of this rule will increase the production of soybean oil, from which most commercial biodiesel is produced. The agency estimates that this standard will require the production of 600 million gallons of soybean-based biodiesel and 4,530 million pounds of soybean oil, almost double the 2,550 million pounds of soybean oil produced for biofuels in 2011. The EPA’s biodiesel rule will raise the price of soybeans by 18 cents per bushel, which will yield soybean farmers a $550 million increase in revenues based on 2011 bushel-production figures. The price of soybean oil is expected to rise by 3 cents per pound, adding up to a $1.2 billion increase in revenues for soybean oil producers. Fuel users will bear only a fraction of those higher prices; many other soy products will also become more expensive.

The bottom line:

[T]he rule does not improve public health or the environment; in fact, by the EPA’s own estimate, the rule will cause environmental harm from increases in criteria pollutants. Second, the rule does not improve the performance of the economy and essentially acts as a transfer payment from the public to soybean farmers. This is crony phony environmentalism, and we all deserve better.

One ray of light can be found. Usually, federal agencies are skilled at fudging cost-benefit analysis so that even the most insane decision looks good. On this one, someone in the agency analytic shop or chain of command wanted the truth to be transparent. So a message has been sent, to the courts or the congress or even the people.

Perhaps the message is: “Stop whining! If this isn’t the government you want, do something about it.” Unfortunately, the dominant response of the polity these days is not to eliminate such crass cronyism but to elbow one’s own way to trough.



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Author: "Ending 'Big SIS' (The Special Interest State) and Renewing the American Republic" (2012) [www.SpecialInterestState.org] and "Property Matters--How Property Rights Are Under Assault and Why You Should Care" (1997). Some former jobs: Assistant Director of Consumer Protection in FTC; member of the Program Analysis Staff of the US Bureau of the Budget; Research Director of the Administrative Conference of the United States; Director of IPCentral at the Progress & Freedom Foundation; VP & GC of the National Legal Center for the Public Interest. Graduate of Harvard College and Harvard Law School, former Book Review Editor of the Harvard Law Review.

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