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UC-Berkley Economist: 'EPA Fails to Calculate Costs of Clean Water Act Rule'

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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EPA has failed to accurately calculate the costs and scope of its proposed Clean Water Act rule published for public comment until July 21. The proposed rule is full of errors, lacks transparency and would expand the federal government's regulatory control over land not previously regulated by the CWA, according to a new analysis by University of California-Berkley economist David Sunding.

Sunding conducted a review of the rule for the Waters Advocacy Council, a group that represents agriculture, wildlife conservation, forestry, mining, real estate, construction, manufacturing and energy industries.

Sunding's report, "Review of 2014 EPA Economic Analysis of Proposed Revised Definition of Waters of the United States," points out numerous errors and other omissions in the EPA's rule dealing with the costs and scope of the rule.

For months leading up to and following the publishing of the rule in the federal register, agriculture and other groups have loudly opposed the rule for fear that it would expand EPA's reach onto U.S. farms. The American Farm Bureau Federation recently launched a "Ditch the Rule" campaign.

"The estimates associated with section 404 compensatory wetland mitigation, which contain some of the most glaring errors, represent approximately 40% of the total costs and 85% of the total benefits," the Sunding report said. "This suggests the entire analysis is fraught with uncertainty as to render it insufficient for evaluating programmatic impacts of this scale. Estimates of economic impacts to other programs rely on an incremental jurisdiction determination that is deeply flawed. Additionally, the systematic exclusion of various costs and benefits ignores important impacts to permit applicants and permitting agencies.

"In addition to the methodological errors discussed above, EPA's analysis suffers from a lack of transparency. Explanations of calculations, basic assumptions, and discrepancies between various EPA analyses are rarely provided. This is particularly troubling given that the entire report is based on records from the Corps' (Army Corps of Engineers) internal ORM2 database, which is unavailable to outside entities. The author of this report spent considerable time replicating the calculations used in the analysis, but was unable to vet the validity of the underlying data. Any errors or inconsistencies in documentation, sample selection, or data extraction are necessarily overlooked. These shortcomings indicate that a more thorough analysis is required to properly assess the economic impacts of a definitional change."

The proposed rule would expand EPA reach to include small, isolated wetlands, ephemeral drains and ditches.

American Farm Bureau Federation President Bob Stallman said in a statement that the Sunding analysis shows a need for EPA to start from scratch on the proposed rule.

"The EPA's proposed waters of the U.S. rule is irreparably flawed from an economic standpoint," he said. "The rule is also an end run around Congress and two Supreme Court rulings, and in their official comments, farmers and ranchers across the national are calling on EPA to ditch the rule.

"The rule will dictate land use across the United States. And EPA has not been forthright about the costs to our communities and businesses, including countless small businesses."

Also on Wednesday, EPA Administrator Gina McCarthy and Assistant Secretary of Civil Works for the Army Jo-Ellen Darcy, faced additional Congressional pressure to scrap the proposed rule, from a lead Senate Republican.

In a letter to McCarthy and Darcy, U.S. Sen. David Vitter, R-La., the top Republican on the Senate Environment and Public Works Committee, said EPA has hindered environmental restoration through regulation.

"It is clear that the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers are resorting to an unfounded narrative in order to mask the hardship the rule will bring to private landowners," Vitter said. "Indeed, if finalized, the proposed WOTUS rule would result in the federal takeover of private property owned by millions of American families, farmers, small businesses and municipalities. However, as explained below, EPA and the Corps ignore the agencies' history under the Clean Water Act of shutting-down local conservation efforts as well as the likelihood that other stewardship projects could be impeded if the proposed rule is finalized."

The Vitter letter comes one day after USDA announced the launch of the Regional Conservation Partnership Program, to provide cost-share dollars to implement watershed initiatives.

Vitter cited several examples of where EPA impeded environmental improvements, including Wyoming landowner Andrew Johnson who faces fines of up to $187,500 a day for not removing a stock pond on his property. Stock ponds used for agriculture purposes are exempt from the CWA, but EPA contends that Johnson's stock pond is not used for agriculture and isn't exempt.

"As one witness recently testified before the Senate Environment and Public Works Subcommittee on Water and Wildlife, the proposed rule 'will hinder many projects that would benefit the environment' in part because it effectively precludes local implementation of best management practices and treatment controls that benefit downstream, navigable waters," Vitter said.

Read the Sunding analysis here,….

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