Here is a great case study for your classes:
The full retreat on the smog standard was the first and most important environmental decision of the presidential campaign season that is now fully under way. An examination of that decision, based on interviews with lobbyists on both sides, former officials and policy makers at the upper reaches of the White House and the E.P.A., illustrates the new calculus on political and policy shifts as the White House sharpens its focus on the president’s re-election.
It pits industry exaggerating costs against the best case scenario of postive health effects. Here is the industry response:
The business community and its Republican allies in Congress went to war. ... They claimed the rule would cost $90 billion a year — far above E.P.A.’s estimates ...
The EPA says that costs for the 0.065 ppm standard would range from $32 billion to $44 billion in 2020 ($2006, discounted back at a 7% rate).
Here is the best case scenario of benefits presented in the NYTimes:
At 65 parts per billion, the agency calculated, as many as 7,200 deaths, 11,000 emergency room visits and 38,000 acute cases of asthma would be avoided each year.
In fact, for the 0.065 standard the range of lives saved is from 2500 to 7200 according to the EPA.
The most interesting part is how benefit-cost analysis may have actually been used appropriately:
In charge of Mr. Obama’s effort to reduce regulatory costs and burdens was Mr. Sunstein, on leave from teaching at Harvard and a onetime colleague of Mr. Obama’s at the University of Chicago Law School. One of the most respected liberal legal scholars of his generation, he is known for his at-times unconventional thinking on regulation and economic behavior.
Mr. Sunstein had his pick of jobs in the new administration. He chose the obscure regulatory affairs office as a potential laboratory for his sometimes iconoclastic views. ...
Mr. Sunstein never really warmed to the proposed ozone rule, not least because it would, by law, be subject to revision again in 2013. He also noted that in nearly half of the E.P.A.’s own case studies, the cost of the new rule would outweigh the benefits, raising additional alarms.
Here is a picture of a sensitivity analysis of the net benefits from the EPA analysis (page 9, click on the image for a popup of one that is actually readable):
Following the stories of industry and environmental/health lobbying efforts with the President's Chief of Staff, we get to the final few paragraphs of the article:
Since Mr. Obama took office, Mr. Sunstein’s agency has reviewed more than 1,800 rules. Most were approved with some changes and set into law. About 130, including 11 from the E.P.A., were voluntarily and quietly pulled back for further work.
Only one — the ozone standard — was so publicly rejected.
Mr. Sunstein would not discuss his communications with the president, but Mr. Obama is known to prefer concisely written memos to long oral briefings. The president’s brief public statement turning back the proposed ozone rule closely mirrored Mr. Sunstein’s letter to Ms. Jackson.
In an interview, Mr. Sunstein said the rejection of the rule resulted from a long and detailed analysis.
Here is a link to the letter: http://www.whitehouse.gov/sites/default/files/ozone_national_ambient_air_quality_standards_letter.pdf