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Brooks Wilson's Economics Blog: The "Deliberative: Attorney-Client Privilege" Memo

Friday, May 15, 2009

The "Deliberative: Attorney-Client Privilege" Memo

On May 12, 2009, Senator John Barrasso of Wyoming revealed a memo he received titled "Deliberative: Attorney-Client Privilege" that was sent  by the Office of Budget Management to the Environmental Protection Agency (EPA) before it released its "endangerment findings" while questioning EPA director, Lisa Jackson.  The memo is critical of the endangerment finding, concluding that it does not provide an adequate explanation of health risk and underestimates economic costs.
The finding rests heavily on the precautionary principle, but the amount of acknowledged lack of understanding about basic facts surrounding GHGs seem to stretch the precautionary principle to providing for regulation in the face of unprecedented uncertainty. (The TSD notes several areas where essential behaviors of GHGs are "not well determined" and "not well understood" (e.g., why have U.S. methane levels decreased recently?).) This could be remedied by expanding the discussion on pp. 25-31 to articulate more clearly how the Administrator weighed the scientific evidence related to each impact or how/whether she have more or less weight to particular impacts for either the public health or the welfare finding and how she weighed uncertainty in her deliberations...

Making the decision to regulate CO2 under the CAA for the first time is likely to have serious economic consequences for regulated entities throughout the U.S. economy, including small businesses and small communities. Should EPA later extend this finding to stationary sources, small businesses and institutions would be subject to costly regulatory programs such as New Source Review.
Many bloggers have written on the climate science and political impact of the memo.  I will focus on the precautionary principle (the emphasis added in the quote is mine).  The precautionary principle states that in the absence of conclusive scientific findings on actions that may have highly negative or irreversible effects, the burden of proof rests on the party advocating the action to demonstrate that it is safe. 

In an EconTalk interview titled "Sunstein on Worst-case Scenarios," Cass Sunstein observes,  
The problem with it [the precautionary principle] is that it forbids the the very steps that it requires so that things that the precautionary principle bans are banned by the ban.  So if you say, for example, that because you have to be better safe than sorry, we can't have nuclear power, that makes sense, but banning nuclear power gives rise to probabilistic risk of various kinds including climate change.  So the ban on nuclear power violates the precautionary principle as well as being compelled by the precautionary principle. 
Using the precautionary principle to limit carbon emissions may save lives by slowing climate change, but reducing carbon emissions will make electricity more expensive, limiting people's ability to heat and cool their homes and marginally increasing climate related deaths.  The precautionary principle is a bad decision making rule.  We need another for policy that is likely to impose serous costs on taxpayers and consumers.   

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