President Donald Trump signed a sweeping executive order Monday demanding federal agencies repeal two regulations for every new one issued, marking the delivery of a campaign promise to cut most federal rules.
Trump’s making good on a promise to repeal 75 percent of federal regulations, including rolling back most of the $900 billion in regulations issued by agencies, like the Environmental Protection Agency (EPA), during the Obama years.
One provision in Trump’s order could have massive implications for EPA — whose methodology for crafting regulations have come under fire in recent years — by standardizing the way different agencies measure the costs and benefits of new rules.
Trump ordered the White House’s Office of Management and Budget (OMB) to issue guidances “standardizing the measurement and estimation of regulatory costs.” On top of that, OMB will control how agencies go about repealing two rules for every new one issued.
OMB will set “standards for determining what qualifies as new and offsetting regulations; standards for determining the costs of existing regulations that are considered for elimination; processes for accounting for costs in different fiscal years; methods to oversee the issuance of rules with costs offset by savings at different times or different agencies; and emergencies and other circumstances that might justify individual waivers of the requirements of this section.”
This is a big win for Republican lawmakers who had concerns Obama’s EPA was fudging the numbers to make regulations look more cost-effective than they would otherwise be.
Republicans have long criticized EPA for counting “co-benefits” of regulation towards its cost effectiveness.
The cost of EPA’s mercury rule for power plants, for example, outweigh the benefits by ratio of 1600-to-1 when looking at reductions in mercury emissions — the whole point of the rule.
But EPA claimed the $10 billion mercury rule would yield between $37 billion to $90 billion in monetized health benefits a year. Virtually all of this comes from the “co-benefits” of reducing other pollutants, like fine particulate matter.
Republicans have argued counting “co-benefits” opens up the possibility of double-counting emissions reductions.
Wyoming Republican Sen. John Barrasso accused the EPA of double-counting the co-benefits of reducing fine particulate matter in its Clean Power Plan (CPP) rule to limit carbon dioxide emissions from power plants.
Barrasso cited a statement in EPA’s draft regulatory analyses claiming “it is possible that some costs and benefits estimated in this RIA may account for the same air quality improvements as estimated in the illustrative [National Ambient Air Quality Standards] RIAs.”
EPA says the CPP will cost $8.4 billion per year in 2030 and yield public health and climate benefits of $34 billion to $54 billion per year — $14 billion to $34 billion of which come from reducing air pollutants that have nothing to do with global warming.
EPA officials, however, said they did not double-count any co-benefits.
Utah Republican Rep. Jason Chaffetz asked EPA why it massively inflated the estimate it uses for calculating its “Value of Statistical Life” (VSL) measure — the monetary value to every estimated life that would be saved by an agency rule.
EPA’s has used different VSL estimates for different rules over the past decade without any apparent explanation.
“EPA’s use of VSL appears to have changed dramatically in recent years, at a rate well in excess of inflation and inconsistently with other agencies,” Chaffetz wrote in a 2015 letter to the agency. “Since 2000, other agencies have used a variety VSLs, including $3 million and $5 million.”
“For example, for EPA’s 2015 ozone regulation, EPA assessed at least $4.1 billion in benefits and $2.2 billion in costs using a VSL of $10 million in 2011 dollars for a life saved in 2020,” Chaffetz wrote. “Applying the Department of Transportation’s 2005 VSL proportionally to EPA’s analysis, the estimated benefits decline well under $2 billion, at which point the EPA’s own analysis would indicate the regulation was not worth pursuing.”
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