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US EPA chief directs agency to issue new rules for cost-benefit analyses

U.S. Environmental Protection Agency Administrator Andrew Wheeler instructed officials in four key offices to issue new rules for the way the agency calculates the costs and benefits of environmental regulations.

In a recent memo, Wheeler directed assistant administrators in the EPA's air, chemical, land and water offices to undertake notice-and-comment rulemakings that "outline how benefit-cost considerations will be applied in areas that are in need of greater clarity, transparency and consistency."

Wheeler said the push to revise the EPA's weighing of the costs and benefits of its actions is related to the Trump administration's broader effort to ease burdensome regulations on industry. But environmental groups quickly denounced the memo as the latest in a series of attempts to discount the value of public health benefits flowing from rules that reduce harmful pollution.

President Donald Trump signed Executive Order 13777 in February 2017 directing federal agencies to identify regulations that "impose costs that exceed benefits."

In response, the EPA sought comment on the potential repeal, replacement or modification of existing regulations. The memo said "a large cross-section of stakeholders" identified cases where the EPA had underestimated costs, overestimated benefits or evaluated benefits and costs inconsistently.

Asserting that the EPA's various offices have historically treated cost-benefit analyses differently, Wheeler framed the memo as the start of a package of rulemakings to correct discrepancies throughout the agency.

"This memorandum will initiate an effort to rectify these inconsistencies through statute-specific actions," he said. Wheeler added that offices should "stagger" the development of their respective proposals in order to promulgate the rules "as expeditiously as possible." The EPA's Office of Air and Radiation will be the first to act by issuing a proposal later this year, according to the memo.

Multipronged approach

The document was released the same week The New York Times reported that the EPA will include an alternative cost-benefit analysis in the final version of its Affordable Clean Energy, or ACE, rule that eliminates 1,400 additional deaths the proposal was initially projected to cause compared to the Obama-era Clean Power Plan. The new cost-benefit approach assumes that no additional public health benefits can be gained from reducing harmful airborne soot below the legal limit set under the Clean Air Act.

The EPA has also proposed to revoke the supplemental finding the Obama administration used to justify its Mercury and Air Toxics Standards for coal-fired power plants because it largely relied on public health co-benefits that flowed from soot-forming emission reductions. A February 2018 analysis by the White House's Office of Management and Budget found that the roughly $9.6 billion annualized cost of the Mercury and Air Toxics Standards rule is more than offset by the annualized benefits ranging from $33 billion to $90 billion.

Meanwhile, the EPA's Science Advisory Board is moving forward with an effort to "consider the scientific issues regarding co-benefits," according to an April 25 document on its website.

"Despite the apparent importance of co-benefits in clean-air regulation, the Science Advisory Board is not aware of any careful scientific guidance on how co-benefits should be identified, estimated, and validated in regulatory analyses," the document stated. The board has therefore proposed to offer "insight on scientific issues" related to co-benefits that the EPA may wish to address in future technical guidance or regulatory impact analyses.

In addition, the EPA plans to issue a notice of proposed rulemaking for changes to Clean Air Act cost-benefit analyses in November, according to a midyear regulatory agenda released May 22.

The agency also aims to finalize a proposal titled "Strengthening Transparency in Regulatory Science" in December, according to the agenda. Proponents of the proposed rule argue it would improve the science used in EPA rulemakings, but critics contend it would exclude important studies such as Harvard University's landmark Six Cities study, which established a causal link between exposure to airborne soot pollution and premature death.

"As we've started to see changes to cost-benefit analyses in these proposed rulemakings, we've noticed they maintain a full consideration of costs with a curtailed analysis of public health benefits," Julie McNamara, a senior energy analyst with the Union of Concerned Scientists, said in an interview. "It's hard not to see this as a handout to industry."

However, American Energy Alliance President Tom Pyle called Wheeler's memo "a welcome and appreciated move."

"Previous administrations have often gamed these calculations in order to reach whatever conclusion they desired," Pyle said in a statement. "We hope the Trump administration's forthcoming rule will help cut down on the worst abuses."