Abby L. Harvey
GHG Monitor
10/23/2015
The Environmental Protection Agency’s inclusion of ancillary or co-benefits in impact analyses for its regulations artificially inflates the estimated benefits of agency rules, Republican members of the Senate Environment and Public Works Subcommittee on Superfund, Waste Management, and Regulatory Oversight charged at a hearing this week. “The EPA has attempted to justify their air regulations by identifying ancillary benefits, which the EPA refers to as co-benefits to help outweigh the cost of regulations. These co-benefits allow the administration to claim a dramatic increase in net benefits of the EPA regulations, regardless of the cost of the regulation,” subcommittee Chairman Mike Rounds (R-S.D.) said during the hearing.
One such case addressed at the hearing is the EPA’s recently finalized Clean Power Plan, carbon emissions standards for existing coal-fired power plants. The agency included in its regulatory impact analysis health benefits from the reduction of smog and particulates that would occur concurrently with the reduction in carbon, the regulated pollutant. This is a dishonest practice, according to Republican subcommittee members, and EPA should only be allowed to consider the benefits of the reduction of the regulated pollutant.
The Clean Power Plan sets an emissions reduction goal for each state and requires states to develop action plans to meet those targets. According to the EPA’s regulatory impact analysis, the regulation would provide the equivalent of $20 billion in climate benefits and $14 billion-$34 billion in health co-benefits.
The inclusion of such co-benefits is standard practice for all agencies, according to subcommittee Democrats, however. “It’s my understanding the Office of Management and Budget guidance for regularity impact analysis directs federal agencies to count the additional co-benefits of regulations, and the counting of co-benefits has been the long-standing practice of republican and democratic administrations alike,” panel Ranking Member Ed Markey (D-Mass.) said.
The Supreme Court recently reprimanded EPA for its failure to adequately calculate costs related to its Mercury and Air Toxics Standards (MATS). The high court in July found that the agency did not consider the cost of the rule in its decision to regulate. By the time the case was decided, the MATS rule was already in place and regulated entities had invested significant amounts of money into coming into compliance with it. Subcommittee Republicans noted this case as a prime example of why EPA’s regulatory impact analyses must be accurate and consider all costs. “Due to the EPA’s failure to clearly and accurately quantify the costs and benefits of regulations, agencies are unable to make well-informed decisions,” Rounds said. “Even more troubling, the public, American business, state and local government are prevented from understanding the real effect of the regulation.”