Republican senators and business groups are questioning how the Environmental Protection Agency determines the costs and benefits of its regulations.
At a hearing Wednesday at the Senate Environment and Public Works Superfund, Waste Management and Regulatory Oversight subcommittee, some business leaders accused the EPA of overestimating the benefits of its regulations.
Diana Furchtgott-Roth, director of Economics21 at the Manhattan Institute for Policy Research, said one example is in the Clean Power Plan, which is meant to limit carbon emissions. The EPA included the limitation of substances that aren’t carbon when calculating the dollar value of the plan’s benefits, she said.
“The benefits listed for the Clean Power Plan are about $15 billion in 2025,” she said. “But, the benefits shrink to $3.6 billion if the health benefits of other substances [that are not carbon] are removed.”
Furchtgott-Roth said the EPA has previously double-counted the benefits of some regulations. She said the agency, for example, took the reduction in the effects of asthma caused by one rule and counted it toward another rule to increase the dollar amount of the new regulation’s benefits.
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She added the EPA hasn’t taken into account other costs, such as the rising cost of electricity, in the Clean Power Plan.
William Kovacs, senior vice president for environment, technology and regulatory affairs at the U.S. Chamber of Commerce, said in his written testimony the EPA relies on factual assumptions “that are speculative or unproven.” Those assumptions form the basis of the agency’s Regulatory Impact Analyses.
He added that the agency doesn’t act on the feedback business leaders and states give regulators. Instead, the EPA has to show only that feedback was considered while making the regulation.
It’s easy for the EPA to do this, he said, because most of the implementation of federal regulations are done by the states. He said state governments implement 96 percent of the EPA’s regulations.
“The states find themselves literally commandeered to simultaneously implement [the Waters of the United States rule], Clean Power Plan and ozone [rules],” he said, adding that’s difficult for state governments because “you find you have a lot of moving parts.”
Congressional Republicans are increasingly examining the EPA’s regulatory practices in the wake of the Clean Power Plan, new ozone regulations and other major environmental rules released in 2015.
Sen. Mike Rounds, R-S.D., said the tide of new EPA regulations is difficult for states to handle and the only way the EPA can get away with putting so many rules out at once is by inflating the benefits associated with the rules.
“Because of these exorbitant regulations, the EPA attempts to justify … the costs by identifying ancillary benefits, which the EPA refers to as co-benefits, to help outweigh the cost of regulations,” said Rounds, chairman of the subcommittee.
Rena Steinzor, a professor at the University of Maryland’s Carey Law School, came to the EPA’s defense.
She said the EPA’s methodology of coming up with a cost-benefit analysis is sophisticated and provides reliable numbers. It is the “gold standard” for government agencies when it comes to cost-benefit analysis, she said.
“As for the charge that the EPA regulatory tsunami will cause irreparable damage to the economy,” Steinzor said, “the truth is these rules and the civil servants who write them do not sweep industry’s money into a pile and burn it for no good reason.”
