The economic analysis that the Trump administration is using to support its repeal of an Obama-era water pollution rule has serious flaws, economists and regulatory experts told Bloomberg BNA. And legal experts told ThinkProgress that relying on a flawed economic analysis could open the Trump administration up to serious legal problems down the road.
Economists warned that the data used in the analysis of repealing the Clean Water Rule both relies on outdated, recession-era economic data, and fails to accurately account for some of the benefits of leaving the rule in place. The Clean Water Rule, sometimes called the Waters of the United States Rule, was finalized in 2015 and clarified federal protection for millions of miles of streams and wetlands.
“I am not normally this dismissive, but this is the worst regulatory analysis I have ever seen,” David Sunding, a University of California-Berkeley agricultural economist who conducted an industry-funded economic analysis of the rule in 2014, told Bloomberg BNA.
On Thursday, the Trump administration publicly proposed its two-step process for rescinding and reviewing the Clean Water Rule. Repealing the rule has been a priority for industry — including manufacturing, fossil fuel, and big agriculture — which has argued the rule constitutes government overreach that would result in higher costs and more regulatory red-tape for businesses.
But environmental groups, small business owners, farmers, conservation groups, and recreation groups have been largely supportive of the rule, as has the public at large. During the rule’s initial public comment period, the EPA received more than a million comments, 87 percent of which were in support of the rule.
The Environmental Protection Agency and Army Corps of Engineers were required to conduct a cost-benefit analysis of rescinding the rule as part of the formal process for withdrawing a finalized rule. But experts also suggested that the administration relied on out-of-date data and analyses due to political pressure, from both President Donald Trump and EPA Administrator Scott Pruitt, to repeal the rule as quickly as possible.
“Everything about this repeal is bogus and slapdash. There is virtually no reasonable explanation for why they are repealing the Clean Water Rule, and the economic analysis is symptomatic of that obviously politically-driven agenda,” Jon Devine, senior attorney with the Natural Resources Defense Council’s water program, told ThinkProgress.
The Trump administration wants to move as quickly as possible not just to benefit industry and fulfill a campaign promise, but to avoid pending litigation regarding the rule. Although the Clean Water Rule is currently under a nationwide stay ordered by the Sixth Circuit Court of Appeals, the Supreme Court is considering whether the Sixth Circuit actually has jurisdiction to hear that case. If the Supreme Court rules before the Trump administration has finalized its repeal of the rule, it’s possible that a lower court could rule in favor of the Clean Water Rule — effectively derailing the administration’s efforts to undo the rule. Moreover, if the Supreme Court finds that the Sixth District lacked jurisdiction to issue a stay of the rule, the Clean Water Rule would go into effect, which could pose a public relations problem for an administration diametrically opposed to the rule.
“If the rule goes into effect and the sky doesn’t fall, like Pruitt and others have alleged, that takes away their biggest talking point about the Clean Water Rule, that it’s somehow a dramatic overreach and difficult to administer,” Devine said. “They don’t want to see this thing work.”
But the administration’s desire to preempt the Supreme Court’s decision means forcing formal rule-making through an accelerated timeline, an approach that can cause unforced errors in requirements like economic analyses, which usually take longer than weeks to complete. Experts criticized the analysis’ reliance on economic data from 2009 and 2010, for instance, arguing that data from when the U.S. economy was in the midst of a historic recession sets an unusually low baseline for potential economic benefits of repealing the rule.
They also raised that the cost-benefit analysis focused only on the costs of the rule, while ignoring possible benefits of leaving the rule in place. The Trump administration’s economic analysis, for instance, does not consider the economic benefit gained from protecting wetlands, which the administration argued came from outdated data from 2013.
“The Trump administration is saying that those studies that indicate the benefit of wetlands are not reliable, so we’re just going to basically not have any accounting for any economic benefit of protecting wetlands,” John Rumpler, senior attorney for Environment America, told ThinkProgress. “Of course, that’s the most illogical and least science-based option you can imagine.”
Relying on flawed economic analysis could pose legal problems for the Trump administration down the road, should it have to defend its rule in court. Under the Administrative Procedures Act, which guides how agencies create and withdraw major regulations, a decision cannot be “arbitrary or capricious.”
“I would argue that defining the economic benefits of wetlands as effectively zero is as close as you come to arbitrary and capricious,” Rupler said. “I think that this is a legal problem for them.”
Devine agreed that choosing to exclude the economic benefits of wetland protection, without providing an explanation for how that data had changed since it was used by the Obama administration, could be construed as inconsistent decision-making.
“Their approach of labeling wetland benefits as too uncertain to be quantified — even though the Obama administration did just that and even though [the Trump administration] offers no new information to suggest that there is a problem — it certainly does reek of arbitrary decision-making,” Devine said.
The administration, however, may not face any public or legal scrutiny over the Clean Water Rule repeal, if a rider included in the House budget passed on Thursday becomes law. The provision allows the EPA to withdraw the Clean Water Rule “without regard to any provision of statute or regulation that establishes a requirement for such withdrawal,” meaning that it would neither need to show that the rule was not arbitrary or capricious, or open the proposed rule to public comment.
“If the House rider becomes law, then all bets are off,” Rumpler said. “The whole point of that exemption is saying that there are no legal standards for this effort to repeal the Clean Water Rule.”
Beyond potential economic consequences, repealing the rule would remove protections for the drinking water of 1 in 3 Americans. A Natural Resources Defense Council study from earlier this year found that nearly a quarter of Americans already get drinking water from sources that are either contaminated or not properly monitored.