U.S. EPA Finalizes Standardized Benefit-Cost Analyses Procedures for Clean Air Rules

The U.S. Environmental Protection Agency (EPA) finalized a rule requiring a standardized benefit-cost analysis (BCA) procedure be followed for all future regulatory actions taken under the 1970 Clean Air Act (CAA). EPA says the rule will improve the justification for, and quality and transparency of, new rules and guidance developed for clean air standards.

“[The new rules] outlines best-practice procedures for assessing benefits and costs when developing regulatory actions,” explained EPA in its rule. “This procedural rule will provide clarity for states, local communities, industry, and other stakeholders regarding EPA’s rulemaking considerations.”

Requiring a Detailed Explanation of Benefits and Costs

Many EPA statutes, including the CAA, contain language directing EPA to consider the costs of its proposed regulations, however, until now there has been no standardized internal procedure specifying what benefits and costs are to be accounted for or how. This rule aims to remedy that by directing EPA to account for and delineate specific benefits and costs, what research or analyses were considered when making the rule, and specifying how benefits and costs are reported.

Specifically, the new rule requires all new CAA rules be accompanied by a BCA using the “best available scientific information, in accordance with best practices from the economic, engineering, physical, and biological sciences.”

In particular, for new rules under the CAA, EPA will prepare a BCA for all future significant proposed and final regulations under the CAA, which includes regulations with the largest annual impact on the in general economy; “those that would disproportionately affect an industry, group, or area; or those that are novel or relevant for other policy reasons.”

To improve transparency each new CAA related regulation must contain a preamble, explaining why the rule is being proposed, meaning what problem the proposed rule is supposed to address, what considerations and research was used to make the decision and a separate report with plain language preamble explaining the welfare and public health benefits EPA believes will be gained under the rule, and what costs it will impose.

The required BCA under the new procedures will distinguish between benefits flow directly from the rule, and “co-benefits” or ancillary or indirect benefits actually arising as a result of other clean are requirements. In addition, the BCA will separate domestic benefits from any benefits the rule produces for people in other countries, and report both.

EPA’s new procedures also require the agency to explain why EPA believes market forces can’t solve the problem being addressed by the proposed rule, and detail other options it considered, explaining why those alternatives were not selected.

‘Fair, Transparent, and Consistent’

“Today’s action ensures that EPA is consistent in evaluating costs and benefits when developing broad-reaching policies that affect the American public,” said Andrew Wheeler, EPA administrator during an event hosted by the Heritage Foundation at which he introduced and explained the agency’s new internal procedural BCA requirements. “Thanks to President Trump’s leadership, we are ensuring that future rulemakings under the Clean Air Act are transparent, fair, and consistent with EPA governing statutes, the American public deserves to know the benefits and costs of federal regulations.”

“We will also require reports that distinguish between domestic and international benefits, so that Americans can see what their regulators are doing for people here in the United States,” Wheeler said.

Liberals hate EPA’s new clean air BCA rule because it is intended to prevent the kinds of CAA “abuses” past administrations’ imposed by improving transparency, said Daren Bakst, a senior research fellow with the Heritage Foundation’s Roe Institute for Economic Policy Studies, in a tweet.

“The left hates transparency in government,” said Bakst in a tweet. “Today, the left and ‘mainstream’ media attacked the #EPA for finalizing a rule that lets the pubic know how the agency makes air regulation decisions.

“Their misleading attacks on open government are scary,” tweeted Bakst.

This is a commonsense idea that will benefit the public and industry, said Karyn Schmidt, senior director of regulatory and technical affairs with the American Chemistry Council, in a statement.

“Ensuring a clear, consistent and correct appraisal of benefits and costs in the regulatory process is a commonsense idea with bipartisan support,” said Schmidt. “The ‘good government’ reforms included in the rule will improve decision-making as to where to allocate resources while supporting capital investment that drives economic growth.”

H. Sterling Burnett, Ph.D.(hsburnett@heartland.org)is the managing editor of Environment & Climate News.