Epa Compromises Consistency In Its Coastal Oil And Gas Industry Cost Effectiveness Analysis

The US Environmental Protection Agency (EPA) conducts a cost-effectiveness (CE) analysis to estimate the cost of complying with each newly proposed set of industrial effluent limitation guidelines (ELGs). CE is defined as the incremental annualized cost of a pollution control option in an industry per incremental pound equivalent (PE) of pollutant removed annually by that control options. EPA's guidelines for conducting the CE analysis require that all costs be expressed in 1981 dollars so that comparison to other industries can be done on a consistent basis. In the results of its CE analyses, EPA presents information showing $/PE values for all the industries for which it has done the CE analysis. These examples indicate that EPA is interested in maintaining consistency and comparability. EPA is not legally bound by the results of a CE analysis; however, if the $/PE for a proposed ELG is calculated to be significantly higher than the $/PEs for other comparable ELGs, EPA might reconsider its proposal. EPA's approach of using an expanded pollutant list and revised weighting factors probably generates a more accurate estimate of the PEs removed for the coastal oil and gas industry, but in doing so, EPA loses the ability to equitably compare this CE analysis to the CE analyses that have been done for other industries. This shortcoming is particularly obvious since the offshore Ce analysis, evaluating a nearly identical waste stream, was completed just two years earlier. Given EPA's concern over consistency and comparability to other industries, it may be appropriate to modify this approach for the coastal CE analysis. Another alternative that would allow EPA to reflect the newest toxicological information and still preserve consistency and comparability would be to recalculate all earlier CE analyses whenever new weighting factors are developed.