Why Is The EPA Denying Science In Its ‘Air’ Office?

By James Broughel of Mercatus.

"The Environmental Protection Agency is walking back a commitment to science-backed policy at its “air” office.

On May 14th, America’s biggest environmental regulator issued a notice to rescind new cost-benefit analysis requirements at its Office of Air and Radiation. It was just last December that the Trump administration finalized the regulation now being tossed out, which aimed to shore up EPA’s flailing analytical practices.

The EPA is already supposed to do cost-benefit analysis of the consequences of various air pollution regulations. The repealed “cost-benefit rule,” as it is known, would have put teeth into such requirements, which have historically been weak. And it would have required the agency to follow certain best-practices. Key effects: it would have made the agency consider multiple alternative options before settling on a final approach, and extended some analytical requirements to so-called “significant” rulemakings (which have historically flown under the radar). Perhaps most important, it would have required air rules to be based on the best available science.

None of this should be controversial. The EPA, like other executive branch regulatory agencies, is already required to produce “an assessment of the potential costs and benefits” of its significant regulatory actions under a separate Clinton-era executive order. The problem is that EPA has too often failed to comply with the order, focusing on a narrow a range of impacts or ignoring important tradeoffs.

The EPA’s self-binding rule sought to change these dynamics by creating a stronger enforcement mechanism. Some Democrats, like former Obama regulatory chief (and cost-benefit analysis supporter) Cass Sunstein, have had nice things to say about the rule. Others have remained skeptical, however. 

One provision that created controversy related to “co-benefits,” a fancy term for benefits from a regulation that are ancillary to the problem a policy is intended to address. For example, in a highly controversial Obama-era air pollution regulation targeting mercury emissions, the overwhelming majority of the benefits in EPA’s analysis came from reducing a different pollutant, particulate matter.

The cost-benefit rule would have required that different categories of benefits be identified in a summary section in the rulemaking. Despite how the regulation was sometimes represented in the media, the EPA was never going to “ignore” co-benefits. Rather, its air office would simply have to transparently report where a regulation’s benefits come from.

The irony is that the requirement for how to present benefit information was arguably one of the less important parts of the cost-benefit rule. The Biden Administration could easily have dropped that provision if it found it questionable. Then, the hard-to-argue-with parts of the rule could have remained intact.

Instead, the Administration scrapped the whole thing. The notice rescinding the cost-benefit rule stated that the Trump EPA “did not explain how the pre-existing ample public process was inadequate” and further that it “failed to articulate a rational basis for the rule, and did not explain … that an actual or theoretical problem existed.”

Actually, the problems the cost-benefit rule was addressing are myriad. Here are just a few:

To start, the “analysis” the EPA typically produces to comply with existing executive orders is based on an arbitrary, hard-to-define notion of “social welfare.” There may be value in measuring whatever EPA is measuring, but it’s not an “assessment of the potential costs and benefits,” as is required.

Second, EPA’s analysis is irrational. The EPA evaluates how a rulemaking will affect wellbeing from the perspective of the current moment in time only. It is what psychologists call “present biased,” in that it gives inordinate weight to the short term at the expense of long-run concerns. Relatedly, critical impacts of rules go systematically overlooked at EPA, such as the impacts of displaced investments over time.

For reasons like these, the EPA is not complying with existing executive orders related to regulatory analysis. Moreover, oversight from the Office of Management and Budget—tasked with enforcing the existing cost-benefit requirements—has historically been weak, as evidenced by the overall low quality of analysis. This suggests other enforcement mechanisms are needed.

The repeal of the cost-benefit rule follows another controversial action from the Biden EPA to dismiss the members of two key science advisory boards that give advice to the agency. Historically these members have been appointed to multi-year terms and have carried over from one administration to the next, so as to maintain some bipartisan balance and independence from politics. Not so this year. By taking the unusual step to dismiss the members, the Biden EPA is sending a clear message: If the science doesn’t give the Administration the answers it wants, then it will find new scientists.

By throwing out a commitment to adhere to sound analytical practices, Biden’s EPA may find it easier in the short run to justify expensive air regulations. But there will be long-run consequences. Ultimately what is at stake is the EPA’s credibility. An openly hostile attitude to science and rigorous economic analysis will not just mean worse outcomes for citizens—it will erode the public’s trust in a system that many Americans already feel is working against them."