EPA Proposes Change to Cost Benefit Analysis With Major Potential to Reduce Regulation

CC BY 2.0. Becker1999

Donald Trump ran on a campaign promise to "get rid of" the Environmental Protection Agency (EPA). There was even a bill introduced, H.R. 861, which states in its entirety:

"The Environmental Protection Agency shall terminate on December 31, 2018."

That bill won't make it to a vote but serves mainly to generate talking points. It certainly indicates the direction some legislators would like to go. Much of the talk focuses on Trump's EPA budget proposal for 2019 (pdf), which aims to cut EPA's budget 23% (from $8.7 billion to $6.1 billion). It would also slash headcount to 12,250 from the current level of 15,408 (if you believe EPA) or 14,140 (if you credit numbers being circulated by the EPA union, the American Federation of Government Employees (AFGE).

To put this in perspective: the EPA budget is 0.1% of the total Federal budget in 2018. So the problem some people have with the EPA isn't what it costs to operate the agency with the mission to ensure we have clean water, healthy air, and proper waste management. The problem is that the regulations are perceived as too burdensome.

In that context, a new threat bigger than budget cuts and brain drains has now become apparent. A Notice of Proposed Rulemaking just published seeks input on changes to how the EPA calculates the costs and benefits of their regulations. This suggests that while Trump may not get rid of the EPA (which turns out to be not so easy), but the agency could end up losing the power to get regulations passed.

To understand what is at stake, it is important to know that the government has controls in place to evaluate and balance the burden of regulations on businesses with the benefits - the cost-benefit analysis requirement. In order to pass new regulations, the EPA must show that the cost of the regulation is lower than the benefits.

Currently, the EPA considers ALL of the benefits of a regulation. This may include so-called co-benefits, which are advantages that may not related specifically to the contaminant(s) being regulated but will still contribute gains for human health or the environment or economy.

For example, when the EPA sought to set limits on sulfur emissions to stop acid rain, it was clear that removing sulfur from the emissions would also significantly decrease the release of fine particulate matter, which can get into people's lungs and is a well known contributor to early deaths. Rather than regulate the particulate separately, EPA recognizes the two-for-the-price-of-one gains in the sulfur rule and the benefits calculated show a tremendous gain over the costs of installing sulfur scrubbers to clean up the air.

The proposal suggests that including co-benefits in cost-benefit calculations should not be allowed. If this change is implemented, it will significantly curtail the ability of the agency to accurately assess the full benefits gained when industry responds to a new regulation.

Of course, there is the opposing viewpoint as well. Read the Wall Street Journal's editorial for an opinion suggesting that EPA has been rigging the numbers to support regulations.

Regardless of which side of the argument you take, the time to make your voice heard is now. Until the 13th of July, EPA will accept comments on this proposal. The proposal and process comments are found in the Federal Register. Or if you don't know enough to weigh in constructively yourself, look for comments being supported by your local environmental organization or business bureau and sign your weight onto their comments.