The Environmental Protection Agency is planning a major overhaul of its use of cost-benefit analysis for air pollution regulations, a move that environmentalists say will tilt the scales against regulations to reduce pollution.
In a proposal released Thursday, the EPA said it would conduct a cost-benefit analysis for every major air pollution rule-making and, to the extent possible, would make the data available to the public. The proposal would also require the EPA to report separately the public health and welfare benefits specific to the section of the Clean Air Act under that it is regulating, according to an agency fact sheet.
“Thanks to President Trump’s leadership on fixing broken regulatory mechanisms, today’s proposed action corrects another dishonest accounting method the previous administration used to justify costly, ineffective regulations,” EPA Administrator Andrew Wheeler said in a statement.
Environmentalists and former Obama EPA officials slammed the proposal as another attempt by the Trump administration to limit the types of pollution reduction benefits the EPA is able to count when justifying regulations.
“By arbitrarily devaluing and marginalizing significant direct benefits of these policies, Wheeler is trying to rig the process to justify the weaker rules he’s always advocated,” said Rachel Cleetus, policy director of the Union of Concerned Scientists’s climate and energy program.
“If finalized, these changes will enable powerful industries to pollute more under the pretense that it’s less harmful,” she added.
The proposal would preclude the EPA from considering so-called co-benefits when setting pollution limits. Those are secondary benefits accrued from reductions in pollutants not directly regulated.
The EPA plans wouldn’t scrap the calculation of co-benefits entirely, but it would limit the agency to only be able to consider direct benefits when setting air pollution limits.
Environmental economists have said the Trump administration is attacking the EPA’s ability to quantify the benefits of air pollution regulations comprehensively, which would hamstring the agency from setting stricter standards.
In a separate action in April, the EPA tossed out the legal justification for Obama-era mercury limits for power plants, arguing the prior administration had relied too heavily on so-called co-benefits. Those are secondary benefits accrued from reductions in pollutants not directly regulated.
Wheeler, in remarks to reporters, said the Obama administration was “playing a shell game” with how it calculated co-benefits in the mercury rule and other policies.
It would be “intellectually dishonest to target the exact same [particulate matter] particle under three different regulations and to claim all three regulations are reducing that particle” when only the national ambient air quality standards directly regulate fine particle pollution levels, Wheeler said.
Industry groups, though, are widely supporting the EPA’s new proposal, which they say increases transparency and public confidence in the agency’s regulations.
Previously, when the EPA quantified the benefits from a regulation, “you could count on one hand the number of people who understand what the number means and how they arrived at it,” said Dan Byers, vice president for policy at the U.S. Chamber of Commerce’s Global Energy Institute.
“One of the things we want to see is better transparency on a.) what goes into it, and b.) the sensitivities and uncertainties that are layered into it,” Byers told the Washington Examiner.
Byers said a good model could be how the EPA addressed costs and benefits in its Affordable Clean Energy rule-making, which replaces the Obama-era Clean Power Plan with narrower carbon emission standards for power plants. In that analysis, the EPA included a broad range of calculations for benefits and costs, laying out estimates using multiple different discount rates and methods for counting co-benefits.
Environmentalists criticized that approach, though, arguing the EPA was manipulating the numbers, downplaying the effects of reducing fine-particle pollution, and undercounting the benefits of cutting carbon emissions.
The EPA already performs economic analysis to accompany many major rule-makings, though not all sections of the Clean Air Act require the agency to factor compliance costs into its decision-making.
Some sections specify that the EPA shouldn’t consider cost and should only weigh public health effects when making a decision. For example, the Supreme Court in 2001 held the Clean Air Act “unambiguously bars cost considerations” from the EPA’s process to set national ambient air quality standards for pollutants such as ozone and fine particles.
For the most part, the EPA’s proposal wouldn’t reinvent the wheel on cost-benefit analysis but instead would require already vetted economic practices in a standardized way, said Jeff Holmstead, a partner at Bracewell who served as the EPA’s air chief during the George W. Bush administration.
Potentially the most important aspect of the EPA’s proposal is it would set up an “effective enforcement” regime for cost-benefit calculations, giving industry and other parties an avenue to challenge agency regulations if the economic justification isn’t clear, Holmstead said.
“It allows outside parties to enforce those requirements, so that if EPA takes an action that violates its own rules, that would be a basis for striking down” a regulation, he added.
Industry groups say they ultimately hope that will lead to less costly regulations from the agency.
“These reforms help to avoid federal rules that could otherwise hurt American workers, businesses, and our economy,” said Anne Bradbury, CEO of the American Exploration and Production Council, which represents large independent oil and gas producers.
