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June 7, 2018

How the Obama EPA Fudged Regulatory Evaluation

Estimating “social costs” and “social benefits,” the EPA put a big price tag on doing nothing.

It isn’t necessarily news to say the Obama administration used the Environmental Protection Agency treacherously, employing deceitful methods to enact a burdensome environmental agenda. But a recent report sheds some light on one way this was accomplished — “by gaming cost-benefit analysis to downplay the consequences of its major environmental rules,” The Wall Street Journal reveals.

The Obama EPA produced an annualized average of 565 directives, “imposing the highest regulatory costs of any agency,” according to the Journal. Legally, the EPA is generally required to submit these proposals to a cost-benefit analysis. The caveat is that the agency is also afforded considerable leeway in the process. The Obama administration considered this an opportunity and proceeded to exploit the system by estimating a cost for not enacting regulations.

The Journal explains, “By introducing ‘social costs’ and ‘social benefits,’ the EPA began factoring in speculation about how regulatory inaction would affect everything from rising sea levels to pediatric asthma. EPA optimists even included their guesses about how domestic regulations could have a global impact. Meanwhile, the agency ignored best practices from the Office of Management and Budget, juking the numbers to raise the cost of carbon emissions.”

To illustrate, in the run-up to the superfluous and extremely costly Clean Power Plan, the Journal says “the EPA suddenly raised the social cost of a ton of carbon emissions to an average of $36 from $21. Before it embarked on new oil and gas regulations, the EPA put the social cost of methane at an average of $1,100 per ton.” After reexamining the claims using verifiable criteria, Scott Pruitt’s EPA came up with vastly different numbers. The result? “While the Obama Administration claimed the Clean Power Plan would yield up to $43 billion in net benefits by 2030, the Trump EPA concluded it would carry a $13 billion net cost,” the Journal notes.

Thankfully, Pruitt intends to ameliorate the cost-benefit analysis process. Earlier this year, “secret science” was banned, to which Pruitt explained, “We need to make sure [the] data and methodology are published as part of the record. Otherwise, it’s not transparent.” His rationalization to the cost-benefit analysis change is exactly the same. As the Journal concludes, “If Mr. Pruitt succeeds, future cost-benefit analyses will be more consistent and transparent.” Pruitt is both reining in the EPA and demonstrating the extent to which his predecessors went rogue.

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