What’s at Risk, How to Comment and Talking Points

The Trump Administration has proposed a rule governing cost-benefit procedures for evaluating future rules issued under the Clean Air Act.  Why EPA is proposing to regulate its own economic analysis procedures is unclear; many of these procedures are already standard practice under an existing executive order and White House and EPA guidelines.  However, the proposal contains controversial provisions on presentation of information that could invite future decisionmakers to consider downplaying co-benefits – the positive side-benefits of a rule – in making regulatory decisions.  Prior to the Trump administration, the government appropriately considered all identified benefits and costs in evaluating the economic merits of a rule.

EPA Administrator Andrew Wheeler has said that the agency intends in the future to issue similar cost-benefit rules for several other environmental statutes.  This rulemaking could set precedents that affect those future proposals.

Existing Cost-Benefit Analysis Requirements

Executive Order 12866, issued by President Clinton in 1993, already requires EPA and certain other agencies to conduct cost-benefit analyses for significant rulemakings, including those issued under the Clean Air Act.

Economic guidelines issued by the Office of Management and Budget, Circular A-4 (2003), govern many specifics of these analyses. OMB staff ensure that government agencies implement both the executive order and these guidelines.  In addition, EPA's Guidelines for Preparing Economic Analyses  complements Circular A-4 by providing the Agency with hundreds of pages of more detailed, periodically updated, peer-reviewed guidance on how to conduct economic analyses.  The existing requirements and guidelines are designed to ensure that analyses are conducted in an analytically rigorous and transparent way.

For significant rulemakings, EPA makes its cost-benefit analyses for proposed rules available for public comment as part of its rulemaking proposal.  After considering public comments, EPA issues final cost-benefit analyses along with its final rules.  These economic analyses are made publicly available on EPA’s website and in the official rulemaking e-dockets.

Trump Administration Proposal

The proposed cost-benefit rule appears to be a partial response to certain conservative and industry groups who want to codify the idea that co-benefits should not be used to justify a regulation.  The proposal doesn’t go that far, but it would require the agency to summarize benefit-cost information with and without co-benefits.  This would provide ammunition for opponents of regulation and encourage agency decision-makers to downplay co-benefits in deciding whether a proposal is economically justified.

The currently proposed rule would codify a detailed set of “best practices” for cost-benefit analyses of Clean Air Act rules.  EPA would have to justify in writing any deviation from these practices.

The most controversial provisions would require EPA, in its rule preambles, to separately summarize two analyses:  the full cost-benefit analysis, and a partial analysis that excludes the co-benefits (positive side effects) of a regulation.  The first summary, consistent with past practice, would describe the overall benefit-cost analysis results including the total benefits (which include co-benefits), total costs, and net benefits.  The second summary would focus solely on the benefits that pertain to the specific objective(s) -- generally, reductions in certain targeted pollutants -- of the Clean Air Act provision(s) that provide legal authority for the rule.  Additional detail would be required in this second presentation.

Some have claimed, incorrectly, that the proposed rule would bar consideration of co-benefits in EPA decision-making.  “The EPA is not proposing to specify how or whether the results of the BCA should inform significant CAA regulatory decisions,” the proposal states.  However, the proposal does request comment on this question, so it is possible that the final rule might address it.

The co-benefits issue first arose with the Mercury and Air Toxics Standards (MATS) that EPA issued for power plants in 2012; much of the quantified benefits arose from reductions in fine particle pollution rather than the targeted hazardous air pollutants.  Earlier this year, the Trump EPA reversed the finding that was the basis for MATS, arguing that without co-benefits, the compliance costs were too great for the benefits.  

Suggested Talking Points

·      This proposed rule is unnecessary.  Executive Order 12866 already requires cost-benefit analyses for significant rules.  The executive order, OMB Circular A-4, and EPA’s Guidelines for Preparing Economic Analysis already provide for a great deal of consistency and transparency in agency cost-benefit analyses.

·      Cost-benefit regulations are not “necessary to carry out” the Administrator’s functions under the Clean Air Act; therefore EPA lacks authority to issue such a rule under its CAA general rulemaking authority [section 301(a)(1)].

·      Internal economic analysis procedures are appropriately placed in guidelines, not regulations.  The proposed guidelines are highly technical and detailed.  Putting cost-benefit procedures in regulations would encourage litigation to block Clean Air Act rules on grounds that they do not follow those procedures, despite the agency’s statement that the rule “would not affect the rights … of outside parties.”  Also, guidelines better allow for variation to address special situations and can be clarified or updated more easily.

·      Under no circumstances should EPA issue a final rule that specifies or limits how cost-benefit analyses may be used in decision-making.  Although the proposal generally requests comment on this topic, this is a complex topic and commenters cannot foresee, much less address, all of the potential positions that the agency might take.

·      EPA has not identified a problem with economic analyses for this rule to solve.  Although EPA alludes to controversy over consideration of co-benefits in the agency’s finding that it is “appropriate and necessary” to regulate toxics from power plants, the cost-benefit analysis for the rule clearly explained which benefits accompanied which pollutant reductions and what assumptions and models were used.  That document provided the information that critics of considering co-benefits used to make their points.

·      Requiring the rule preamble to include a detailed summary of benefits pertaining to targeted pollutants would give this secondary analysis equal-or-greater prominence than the summary of the overall benefit-cost analysis.  That would be inappropriate because this analysis is only a partial analysis of the benefits to society.

·      The detail specified for the targeted pollutant(s) benefits summary is inordinately prescriptive for rule preambles, and more detailed than specified for the summary of the overall cost-benefit analysis.  The agency should be free in preambles to tailor the economic analysis summary so that it can efficiently provide the public with the level of information relevant to the rule at hand.

·      This proposal implicitly suggests that EPA may be planning to give cost-benefit analyses – particularly comparisons of quantified benefits and costs -- even more importance in decision-making than these analyses already have had.  This raises several concerns.  First, EPA must make decisions according to criteria provided in the Clean Air Act.  Clean Air Act provisions do not call for making decisions according to cost-benefit analyses, and often limit how or whether costs may be considered.  Where consideration of cost-benefit analysis is appropriate, it should be one of multiple inputs to decision-making, not the sole criterion.  Second, EPA should not elevate economic efficiency considerations over all others. EPA should give substantial weight to equity considerations – including who benefits and who loses from pollution -- both in its economic analyses and in its decision-making, whenever permissible under the law.  Third, whenever permissible, the agency should give strong weight to unquantified health and environmental risks and to unquantified benefits of regulatory action.  Many important human health and environmental benefits of reducing pollution cannot be quantified.

There Is More That You Can Do

It would be great if well-reasoned, fact-based comments were enough to win the day, but in today's deregulatory environment, raising the political stakes of regulatory rollbacks is crucial to stopping or slowing them down.  Submitting comments is a good first step. For rules that are particularly important to you, please consider taking one or more of the following steps, too. These methods can help to mobilize public opinion and spur elected leaders to fight the destructive changes that the Trump Administration is promoting.

Write to your members of Congress and other elected officials.  Let them know your concerns and ask them to weigh in on this rollback and speak out publicly in favor EPA’s existing statements on this issue.  These links make it easy to write your members of Congress (your representative in the House of Representatives and your two senators).  You can use https://www.usa.gov/elected-officials/ to find your members' email contact forms or snail mail addresses.

Let your state officials know that you are concerned about this issue.  Write to your elected leaders, get involved with local activists who are encouraging local or state action.  Voice your concern and encouragement in the media, social media, at local meetings, and at every opportunity.  In the absence of federal leadership, it is vitally important that states and local governments fill the void.

Write letters to the editor and even op-eds in your local papers.  Letters to the editor should be fairly brief.

Organize or participate in campaigns to make phone calls or write letters to members of Congress and make phone calls to radio stations during call-in days, or take other actions to spread the word.

Inform your local officials about these issues and ask them to make a public statement or submit comments on a proposed rollback if your jurisdiction has a stake in these issues. Bring up these issues at town hall meetings.

Spread the word via social media.  Tag your elected officials so they know how you feel.

Join or organize demonstrations.

Talk to your friends, colleagues and neighbors and encourage them to comment and otherwise join in this effort.

Vote.

Links For More Information 

Environmental Protection Network: "EPA Alumni Present Testimony on EPA's Proposed Rulemaking for Considering Benefits and Costs in the Clean Air Act:"  https://www.environmentalprotectionnetwork.org/testimony-cba-for-caa/

 

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