The EPA’s bid to shift the way it calculates regulatory costs and benefits could spread to other agencies, and any such efforts would help the Trump administration fulfill its agenda to roll back rules, analysts say.
Limiting the positives of a rule by discounting its “co-benefits"—as the Environmental Protection Agency proposed last month with its mercury emissions regulation—allows agencies to tweak their regulations in ways that are friendlier to those covered by them.
Co-benefits are the added, indirect advantages brought on by a regulation.
“If people at EPA find it appealing, people at other agencies might find it appealing as well,” said Janet McCabe, who headed the department’s air and radiation office under President Barack Obama. “I would expect that other agencies would follow EPA’s lead in narrowing the benefits and broadening the costs of regulations that impose requirements on private-sector actors.”
Late last year, the EPA said the financial cost of forcing power plants to keep cutting their mercury emissions would far outweigh any additional health benefits.
On that basis, the EPA proposed not to toughen its mercury rules.
In other cases, though, the administration has said co-benefits are good. Last August, the EPA and the National Highway Traffic Safety Administration proposed a rule that would freeze fuel economy limits.
One of the rule’s co-benefits, according to the agencies, was that it would cut down on traffic deaths by making new, safer cars more affordable.
“This administration doesn’t shy away from co-benefits in certain circumstances when it serves the purpose of supporting their proposals,” McCabe said. “It does seem to be an outcome-oriented administration when it comes to environmental and fossil-fuel regulations.”
The EPA’s mercury proposal cuts against established practice and accepted principles of cost-benefit analysis, said Thomas McGarity, an administrative and environmental law professor at the University of Texas at Austin.
The proposal also arguably defies White House Office of Management and Budget guidance put out in 2003, which told agencies to analyze co-benefits.
That guidance is still in use, according to Richard Williams, former director of the regulatory studies program at the Mercatus Center, a market-oriented research center at George Mason University in Arlington, Va.
Some Question Broader Application
Not everyone is convinced other agencies will be able to follow EPA’s lead. For starters, the mercury proposal comes after the Supreme Court ruled in 2015 that the agency hadn’t properly considered the costs of the standards on power plants.
That put the statutory interpretation in flux, but other agencies may not have the same latitude, said Susan Dudley, who led the Office of Information and Regulatory Affairs in the George W. Bush administration.
Furthermore, the Clean Air Act doesn’t specifically require the EPA to consider the co-benefits of lower levels of particulate matter, said Dudley, who now directs George Washington University’s Regulatory Studies Center.
“EPA is, in many respects, a special case,” agreed Clark Nardinelli, president of the Society for Benefit-Cost Analysis. “Other agencies don’t have similar issues, generally have far less controversy over their benefit-cost calculations, and in any case perform benefit-cost analysis following their own or general guidelines.”
Amit Narang, regulatory policy advocate at Public Citizen, said the EPA’s proposal is “a bit unique, not necessarily easy to extrapolate to other agencies, but is part of a pattern of agencies putting out highly questionable cost-benefit numbers to support policies that defy science and agency missions to protect the public.”
But McCabe said other agencies may still be able to find paths through those obstacles. The Supreme Court’s decision didn’t tell the EPA how to look at costs and benefits, instead leaving those calculations up to the agency’s discretion, she said.
At an informal level, too, regulators from across the federal bureaucracy frequently meet to compare notes and take inspiration from one another.
Some of those meetings happen at the Office of Management and Budget, the federal government’s regulatory clearinghouse, which has an interagency review process that brings rule makers together to see what other agencies are doing.
“Agencies do look to other agencies’ analytical practices, and EPA is often held up as the gold standard,” Dudley said.
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