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US EPA proposes to give less weight to co-benefits tied to Clean Air Act rules


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Essential Energy Insights - January 2021

US EPA proposes to give less weight to co-benefits tied to Clean Air Act rules

The U.S. Environmental Protection Agency on June 4 released a proposed rule that would limit the consideration of real-world public health co-benefits that flow from Clean Air Act rulemakings.

The proposal is part of a broader effort by the Trump administration to prevent environmental rules from being justified by accounting for reductions in pollutants that are not directly targeted by the regulation at issue. It follows a June 2018 advanced notice of proposed rulemaking in which former EPA Administrator Scott Pruitt cited complaints that the agency has inflated the benefits and underestimated the costs of its rules.

The proposed rule would require the EPA to report separately the co-benefits from Clean Air Act rules, such as those tied to reductions in fine particulate matter, or PM 2.5, which has been linked to respiratory problems and premature death.

Under the Obama administration, the EPA justified the 2012 Mercury and Air Toxics Standards rule with a cost-benefit analysis that found the regulation would produce between $37 billion and $90 billion in annual public health benefits compared to $9.6 billion in yearly compliance costs.

Now the agency is facing a legal battle over its move to withdraw the legal justification for the Mercury and Air Toxic Standards rule because nearly all of the benefits were tied to PM 2.5 reductions, even though recent research indicates the rule's annual direct benefits are in the billions instead of millions of dollars.

"We will still calculate and consider co-benefits, but it will be separated out," EPA Administrator Andrew Wheeler said on a call with reporters. He said the change means that co-benefits cannot be used to justify Clean Air Act rules, but "it will still be important for those calculations to occur." The Clean Air Act proposal will be followed by similar proposed rules from the EPA's water, land and chemical offices, Wheeler said.

In 2018, the White House's Office of Management and Budget released a review of 39 EPA actions taken between 2006 and 2016 that found benefits ranging from $195.8 billion to $705.7 billion compared to costs of $54.1 billion to $64.8 billion in 2015 dollars.

Janet McCabe, assistant administrator of the EPA's Office of Air and Radiation during the Obama administration, said the proposal is an attempt to reconfigure the EPA's cost-benefit analyses practices in a way that favors industry.

"The EPA is already transparent with regulatory impact analyses, which now accompany major new regulations and include estimates of the projected public health benefits as well as compliance costs and broader economic benefits," McCabe said in a statement. "The proposal is not about transparency; it's about what benefits this administration thinks should be allowed to be counted."

The EPA is issuing the proposed rule under Section 301 of the Clean Air Act, which authorizes the administrator "to prescribe such regulations as are necessary to carry out his functions." The agency is also taking comments on whether additional or alternative sources of authority are appropriate bases for the proposed regulation.

Comments on the proposal are due 45 days after it is published in the Federal Register.