EPA to Tackle Costs, Benefits in Rules

Pruitt: Changes to Provide 'Clarity,' 'Real-World Accuracy' on Impact of Agency's Decisions

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
Connect with Todd:
The EPA will be asking for public comment on a proposal to change how it calculates the economic effects of rules. (DTN file photo)

OMAHA (DTN) -- The EPA on Thursday announced it will seek public comments on a plan to adjust the way the agency calculates costs and benefits in regulatory decision-making, according to a news release.

The EPA faced heavy scrutiny during President Barack Obama's administration for how it evaluated the costs and benefits of its rules.

Most notably, agriculture groups, states and other interests cried foul in 2015 when EPA claimed the final waters of the United States rule, or WOTUS, would result in greater economic benefits than costs. At the heart of opposition to the rule was an expected dramatic expansion of jurisdictional waters and the increased costs to comply.

"The economic analysis estimates that incremental annual costs for scenario one will range from $158 million to $307 million and incremental annual benefits will range from $339 million to $350 million and, for scenario two, costs will range from $237 million to $465 million and benefits will range from $555 million to $572 million," the agency wrote in the final WOTUS rule.

In July 2015, then-South Carolina Attorney General Alan Wilson said in a news release the final rule would be costly to his state. "Road project mitigation costs alone could range from $180,000 to $2.8 million or fines of $37,000 per day," he said.

On Thursday, EPA Administrator Scott Pruitt announced what the agency calls an advance notice of proposed rulemaking to consider changes.

"Many have complained that the previous administration inflated the benefits and underestimated the costs of its regulations through questionable cost-benefit analysis," Pruitt said in a news release. "This action is the next step toward providing clarity and real-world accuracy with respect to the impact of the agency's decisions on the economy and the regulated community."

Sen. John Barrasso, R-Wyo., chairman of the Senate Environment and Public Works Committee, said in a statement the change is needed.

"During the Obama administration, the Environmental Protection Agency exaggerated the benefits of Washington regulations and misjudged how costly they are to the economy," he said. "Now the Trump administration is taking important steps to make sure the agency can no longer abuse the cost-benefit analysis process."

EPA and other federal agencies often are required to perform cost-benefit analyses on proposed rules to identify segments of the economy likely to be most affected.

The agency said in the news release that many EPA statutes refer to costs and benefits, but that implementation has been inconsistent. "As a result, EPA has created a risk of uncertainty and confusion for states, local communities and industry," the agency said. "EPA is now considering ways to codify common-sense, best practices for cost-benefit analysis in rulemaking."

Once the rule publishes in the Federal Register, EPA said it will be taking public comments for 60 days.

President Donald Trump's administration has asked federal agencies to take steps to improve cost-benefit calculations.

As an example, shortly after taking office, Trump signed an executive order that required EPA to update its social cost of carbon.

"While the Obama EPA estimated the social cost of carbon to be an average of $36 per ton of carbon dioxide emitted, this EPA calculated an average of $5 per ton," the news release said.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

(AG/BAS)

Todd Neeley