EPA to Take Action to Improve Cost-Benefit Analyses for Agency Rulemakings

On Tuesday, the United States Environmental Protection Agency (EPA) published an internal memo outlining new agency efforts to improve the consistency and transparency of cost-benefit analyses performed in conjunction with agency rulemakings.

EPA Administrator Andrew Wheeler’s memo directs the agency’s offices of Air and Radiation, Chemical Safety and Pollution Prevention, Land and Emergency Management, and Water to develop reforms—including new rulemakings—for performing cost-benefit analyses. The memo outlines four principles for these reforms: (1) ensuring that EPA balances benefits and costs in its regulatory decision-making; (2) applying consistent interpretations of key terms and concepts; (3) providing transparency as to the weight assigned to various factors in regulatory decisions; and (4) adhering to best practices for technical analyses. Each individual office will implement its own proposal for reforming its cost-benefit analyses, with the Office of Air and Radiation’s proposal due sometime in 2019.

EPA’s memo is one product of President Trump’s “Enforcing the Regulatory Reform Agenda” executive order (82 FR 12285), which directed agencies to identify regulations that “impose costs that exceed benefits.” Following this executive order, EPA sought public feedback on its rulemaking process including issuing an “Advanced Notice of Proposed Rulemaking” seeking input on approaches for increasing consistency and transparency for cost-benefit analyses.

EPA’s efforts to improve its rulemaking cost-benefit analyses likely will be welcomed by many in the regulated community. For years, many stakeholders—both regulated companies and some states—have argued that certain agency rulemakings imposed an unreasonable and significant burden while providing little, if any, actual benefit to the environment or public health. For example, in 2017 the State of Arizona and private companies argued that EPA’s regional haze standards—designed to reduce visible haze at federal parks and forests—imposed unnecessary and excessive compliance costs while providing no actual perceptible benefits to visibility. Regardless, it could take years before the positive or negative impacts of EPA’s proposed cost-benefit reforms are felt by the regulated community.