EPA’s New Cost-Benefit Rule — Are Both Sides Misrepresenting What It Says?

Last week, EPA released its proposed rule regarding Increasing Consistency and Transparency in Considering Benefits and Costs in the Clean Air Act Rulemaking ProcessAs much as I hate to give aid and comfort to this Administration, I have to say that the rule does not herald the end of western civilization.  The biggest controversy surrounding the rule is its impact on consideration of “co-benefits”.  Supporters of the rule are trumpeting its elimination of the consideration of co-benefits.  Opponents are pointing to that very same conclusion as evidence of how wrongheaded the rule is.

There’s only one problem with all the commentary.  I’ve read the rule three times and, as far as I can tell, it does not preclude consideration of co-benefits.  In fact, here’s what the proposed rule does say:

The key elements of a rigorous regulatory BCA include: 1) a statement of need; 2) an examination of regulatory options; and 3) to the extent feasible, an assessment of all benefits and costs of these regulatory options relative to the baseline (no action) scenario. (My emphasis.)

EPA proposes that, to the extent supported by the scientific criteria, as discussed above, as well as practicable in a given rulemaking, (1) BCAs will quantify all benefits; (2) BCAs will monetize all the benefits by following well-defined economic principles using well-established economic methods; and (3) BCAs will qualitatively characterize benefits that cannot be quantified or monetized. (My emphasis.)

So, why does everyone think that the rule would preclude assessment of co-benefits?  This is what the preamble does say:

Disaggregating benefits into those targeted and ancillary to the statutory objective of the regulation may cause the EPA to explore whether there may be more efficient, lawful and defensible, or otherwise appropriate ways of obtaining ancillary benefits, as they may be the primary target of an alternative regulation that may more efficiently address such pollutants, through a more flexible regulatory mechanism, better geographic focus, or other factors. This may be relevant when certain benefits are the result of changes in pollutants that the EPA regulates under a different section of the CAA or under another statute.

And from the proposed rule itself:

The Agency must, to the extent supported by scientific literature as well as practicable in a given rulemaking:

(i) Quantify all benefits.

***

(b) The Agency must provide an additional presentation in the preamble of the public health and welfare benefits that pertain to the specific objective (or objectives, as the case may be) of the CAA provision or provisions under which the rule is promulgated.

(1)This presentation must list the benefit categories arising from the environmental improvement that is targeted by the relevant statutory provision and report the monetized value to society of these benefits.

To me, there’s nothing wrong about this.  Where pollutants are regulated or potentially regulated under multiple programs, double counting (of both costs and benefits) is possible.  Disentangling the effects of one program from another is important.

I understand the concern that this administration will misuse the cost-benefit analysis.  However, I think that this EPA has already demonstrated that it does not need this rule to do so.

If I’ve missed something here, please do let me know.  If you just don’t trust cost-benefit analysis, however, then I don’t need to hear it (and your complaint is not really with this rule, but with 50 years of efforts by presidents of both parties to strengthen cost-benefit analysis).

2 thoughts on “EPA’s New Cost-Benefit Rule — Are Both Sides Misrepresenting What It Says?

  1. I need to download and read in detail. The Trump administration specifically used this approach in its over-rule of the Obama era reductions in mercury emissions from coal fired plants. It specifically rejected including in the cost-benefit analysis the well proven and documented health impact of reductions in the co-emissions of particulate matter (PM 2.5 microns or smaller) . We now know from the Harvard study that the exposure of poor and people of color communities to higher PM2.5 emissions is a significant cause of the higher death rates of COVID-19 exposure. So if this regulation in any way codifies ways to reduce or make more difficult the inclusion of such co-benefits it will be a vey large impact on health and safety, especially of communities more exposed to such pollutants

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