Recently, the US Chamber of Commerce (Chamber) published its report Truth In Regulating: Restoring Transparency to EPA Rulemaking, criticizing EPA for not providing critical details about the regulatory intent and true costs associated with significant Agency rulemakings. The Chamber report follows on the heels of last week’s passage of H.R. 1029, the EPA Science Advisory Board Reform Act of 2015, a bill to amend the Environmental Research, Development, and Demonstration Authorization Act of 1978 to provide, in part, for Scientific Advisory Board member qualifications and public participation, and H.R. 1030, the Secret Science Reform Act of 2015, an act to prohibit EPA from proposing, finalizing, or disseminating regulations or assessments based upon science that is not transparent or reproducible. The Chamber endorsed these measures as a way to increase transparency and reliability in one of the most powerful regulatory agencies impacting environmental, health, and safety in the US.
Regulated industries have frequently expressed frustration that new, major agency rules bear little rational relation to an expressed regulatory concern. For example, this month the States of Wyoming and North Dakota along with independent oil and gas trade groups filed suit regarding the Department of Interior Bureau of Land Management’s hydraulic fracturing rule on federal and tribal land, arguing that despite a three-year long process the rule lacks scientific support and is politically driven. The Department of Interior Fish and Wildlife Service has been similarly criticized, for example in listing animal species, such as the Greater Sage Grouse, as endangered or threatened in commercial zones that are otherwise permitted to be hunted.
On the other side, environmental advocacy and other groups frequently criticize opposition to broad regulatory authority as motivated by improper purpose. For example, the Union of Concerned Scientists issued a statement criticizing H.R. 1029 and 1030 as attacking science and as motivated by a desire to protect industry from any regulation. However, the Chamber report supports findings made last year “that out of 3,500 to 4,000 new regulations finalized each year, just a tiny handful carry virtually all of the costs (and benefits) . . . [and] that the EPA issued by far the most costly and burdensome rules between 2000 and 2013 of all executive branch agencies.” In this time period, EPA issued 17 rules with regulatory impacts costing over $1 billion (USD), more than the Departments of Transportation, Energy, Labor, Health and Human Services, and Housing and Urban Development combined. These findings support that the US is in an era of high environmental regulatory activity that is uniquely expensive.
There is an important dialogue often missing on the tension between rational, informed regulation on complex matters and attempting to capture political victories in the necessarily expedient political process governed by election cycles in the US, which is why the Chamber report is significant. Focusing on EPA policy in particular, the report finds that:
EPA has in recent years denied important, basic information to the public. This pattern consists of the agency first claiming it intends to regulate one (or more) specific pollutants. EPA then writes a proposed rule that has massive costs and even more massive benefits. What the agency fails to tell the public is that almost all of the rule’s benefits actually come from purely incidental reductions of fine particulate matter (PM2.5) emissions.
Beginning in 2009, the EPA revised its assumption on the health benefits from reductions of fine particulate matter, or PM2.5, and now finds that the benefits are four times higher than the Agency had previously estimated, which quadruples the benefits EPA can claim for any regulation that also happens to reduce fine particulate matter. The Chamber reports that the impact of this revised assumption skews virtually all rulemaking cost-benefit analyses and misleads the public on the benefits of any given rule on the pollutant of concern driving the rulemaking in the first instance.
For example, prior to the EPA policy change, valuation of the benefits of Clean Air Act (CAA) rules was $177 billion (USD). After the policy change, EPA claims a benefit valuation for CAA rules of $1.46 trillion (USD). The nearly ten-fold increase in “value” of the rules does not come from reductions in targeted pollutants such as mercury, but in reductions in incidental fine particulate matter, as now highly-valued. These valuations were used to justify the 2012 Mercury and Air Toxics Standards (MATS) rule and the National Ambient Air Quality Standards (NAAQS) rule for sulfur dioxide (SO2).
Whether a particular pollutant should be reduced is one debate, but when US EPA determines that it will strive to reduce a pollutant it should not be any great debate that EPA should do so as efficiently and cost-effectively as possible, and in a transparent manner. The American public is the ultimate “consumer” of environmental regulation and bears the ultimate cost of regulation, although the first wave of impact is on businesses. This intuitive and logical policy principle was affirmed last year by the US Supreme Court in EPA v. EME Homer City Generation, L.P. The Chamber reports that several EPA policies abrogate this policy principle and calls for the following four specific changes:
- A move away from EPA’s reliance on inflated benefits estimates for purely incidentally reduced pollutants, such as PM2.5, to justify rulemaking intended to target a specific pollutant.
- A return to EPA’s former policy of telling the “consumer” about what pollutants are being targeted, and will actually be impacted, by each regulation.
- A return to EPA’s former policy of telling the “consumer” how much the reductions in those targeted pollutants will cost.
- Informing the “consumer” about how much the targeted pollutant(s) will actually be reduced and how those specific reductions will benefit the public.
Notably, as reported here, these developments follow just weeks after a US district court chastised EPA for its lack of transparency and for its “continued disregard” for Freedom of Information Act requests.