Consistency and transparency in environmental regulation should draw support from all segments of the political spectrum. Because the meanings of “consistency” and “transparency” vary along that continuum, however, they do not.
“[Environmental Protection Agency Administrator] Scott Pruitt has shown us once again that he doesn’t care about the costs of pollution to human health,” complained Sara Chieffo, vice-president of government affairs at the League of Conservation Voters, when the EPA on June 7 issued an advance notice of proposed rulemaking on consistency and transparency in cost-benefit analyses. “His claim that benefits have been inflated by EPA regulatory decision-making is simply not borne out by the facts, and in today’s far-reaching announcement he is doing nothing short of cooking the books so that polluters always win and people always lose.”
It’s precisely because agenda-driven dogmatism such as this dominated EPA while Barack Obama was president that Pruitt’s initiative should proceed.
Vague statutes
EPA’s cost-benefit analyses are, in fact, inconsistent and opaque. Most responsibility for those faults belongs not to the agency but to vague statutes, expansionary court decisions, and the complexity that results as frequently unharmonious laws and rulings proliferate. These problems alone warrant EPA’s new appeal for guidance on:
• “The nature of potential concerns regarding perceived inconsistency and lack of transparency.”
• “Potential approaches for increasing consistency and transparency in considering costs and benefits in the rulemaking process.”
• “Potential for issuing regulations to govern EPA’s approach in future rulemakings.”
But EPA must answer for an even larger problem: By manipulating science to suit aggressive regulation in the hyperactive Obama years, the agency lost credibility. Contrary to the reflexive denials of activists, EPA’s need to regain footing is, indeed, “borne out by the facts.”
Exploiting legal ambiguity, the Obama EPA routinely gamed analysis to understate costs and overstate benefits. The new draft rulemaking cites the use of “ancillary benefits” and “co-benefits” to toughen regulation. These are estimated values of lowering emissions of pollutants not directly regulated by a proposal. The draft notes, for example, that in the Mercury and Air Toxics Standards rule of 2012, the estimated value of benefits from reductions in mercury were “significantly lower” than costs of the rule. But when the analysis encompassed estimated gains from lowering emissions of a nontarget pollutant, particulate matter, the calculated benefits outweighed costs.
Advocacy groups argue that regulation should cut emissions of all pollutants any way possible—even when an ancillary-benefit pollutant, such as particulate matter, is subject to its own regulation. But that view defeats the purpose of cost-benefit analysis. And it gives primacy to emission cuts for cuts’ sake, steering regulation toward the surest way to lower emissions: to perform no work at all. For some environmentalists, it seems, that’s the point.
That the Obama EPA defended maximum regulation with distortion of cost-benefit analysis is evident in its reliance on “the social cost of carbon” (SCC) in proposals related to climate change. SCC values come from computer models that rely on widely uncertain parameters and that therefore are very sensitive to input values. The Obama EPA inflated the SCC with selective assumptions about crucial variables such as climate sensitivity and discount rates. In a press release about the draft rulemaking, the Trump EPA noted that, for an earlier executive order, it updated its predecessor’s inputs and lowered the estimated SCC by a factor of more than 7 to $5/ton of carbon dioxide.
Skewed analysis
The Obama EPA skewed analysis in other ways. To justify greenhouse-gas regulation, for example, it related estimated domestic costs to supposed global benefits. The practice embellished the cost-benefit ratio, of course. But it also promised to burden US taxpayers disproportionately and tarnished EPA’s credibility.
Critics of EPA’s efforts to repair this damage regularly complain that the agency is undermining science. To the contrary, the agency is trying to liberate science from self-validating politics—and thus to regain confidence in its policymaking from the industries it regulates.
