EPA proposes changes to how it measures costs and benefits of regulation

Scott Pruitt claims agency previously overestimated the benefits of environmental rules.

Scott Pruitt's EPA is proposing changes to how it measures the costs and benefits of a proposed regulation. CREDIT: Pete Marovich/Getty Images.
Scott Pruitt's EPA is proposing changes to how it measures the costs and benefits of a proposed regulation. CREDIT: Pete Marovich/Getty Images.

The Environmental Protection Agency (EPA) is seeking public comment on how it should change the way it measures the costs and benefits of its regulations. However, given Administrator Scott Pruitt’s track record of weakening regulations, the agency may not be interested in comments that place a significant value on how a regulation would benefit public health.

In formally announcing the proposal on Thursday, Pruitt claimed the Obama administration overestimated the benefits of rules while underestimating the costs for industry to comply. A cost-benefit analysis is typically legally required when an agency writes a regulation, and it can play a major role in whether the agency moves forward in implementing it.

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If the EPA adopts Pruitt’s views on measuring the costs and benefits of a regulation, the agency likely will move away from taking into account the kinds of benefits on which it is difficult to place a dollar sign, such as lives saved from reduced pollution or fewer cases of asthma in children from decreased ground-level ozone.

“Many have complained that the previous administration inflated the benefits and underestimated the costs of its regulations through questionable cost-benefit analysis,” Pruitt said Thursday in a news release. “This action is the next step toward providing clarity and real-world accuracy with respect to the impact of the Agency’s decisions on the economy and the regulated community.”

At a Heritage Foundation event in April, Pruitt offered a deeper look into one of his pet peeves — the co-benefits of a regulation. Pruitt reportedly told attendees at the event — described by one attendee as a “deniers’ convention” — that he is planning to stop counting the co-benefits of environmental protections.

Co-benefits are benefits from reduced emissions of a pollutant that are not the actual pollutant targeted by a regulation.

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According to Pruitt’s EPA, reductions in particulate matter were greatly overstated as a co-benefit by the Obama administration. “Particulate matter co-benefits accounted for more than 80 percent of the purported benefits of all of Obama’s air rules,” the EPA said in its news release Thursday

In doing cost-benefit analyses of new rules, experts account for auxiliary benefits of those rules. For example, the goal of the EPA’s Clean Power Plan  is to reduce heat-trapping carbon pollution from coal-fired power plants. But, in prompting utilities to switch away from coal to cleaner energy sources like wind and solar, the measure would also reduce emissions of particular matter, sulfur dioxide and other pollutants, saving thousands of lives. These saved lives are counted as co-benefits.

“Scott Pruitt has shown us once again that he doesn’t care about the costs of pollution to human health,” Sara Chieffo, vice president of government affairs for the League of Conservation Voters said Thursday in a statement. “His claim that benefits have been inflated in EPA regulatory decision-making is simply not borne out by the facts and in today’s far-reaching announcement, he is doing nothing short of cooking the books so that polluters always win, and people always lose.”

In the advance notice of proposed rulemaking, titled “Increasing Consistency and Transparency in Considering Costs and Benefits in the Rulemaking Process,” the EPA said it is “requesting comments regarding perceived inconsistency and lack of transparency in how the agency considers costs and benefits in rulemaking, potential approaches for addressing these concerns, and the scope for issuing regulations to govern EPA’s approach in future rulemakings.”

The Trump administration already has taken steps to revise the social cost of carbon. Under President Obama, the EPA estimated the social cost of carbon to be an average of $36 per ton of carbon dioxide emitted. Under Trump, the EPA calculated an average of $5 per ton, the agency said.

As expected, Republicans applauded the changes proposed by the EPA. Sen. John Barrasso (R-WY), chairman of the Senate Environment and Public Works Committee, stated that the Obama administration exaggerated the benefits of regulations and “misjudged” their costs on industry.

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“Now the Trump administration is taking important steps to make sure the agency can no longer abuse the cost-benefit analysis process,” Barrasso said Thursday in a statement.

The agency is accepting public comment on the proposal for 60 days.