GAO faults cost analyses for EPA regulations

A government report made public Monday finds fault with the Environmental Protection Agency’s analyses of the costs and benefits of its regulations. 

The Government Accountability Office report concluded that information incorporated into the EPA’s Regulatory Impact Analyses (RIA) was sometimes murky. 

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Additionally, the GAO found that the agency did not always monetize the costs and benefits of proposed actions and that the EPA had estimated effects of its regulations on employment by, in part, using a study that is more than two decades old. 

“Without improvements in its estimates, EPA’s RIAs may be limited in their usefulness for helping decision makers and the public understand these important effects,” the GAO concluded. 

An EPA spokeswoman stressed that the report focused on only a "small subset" of rules and that the GAO concluded the agency generally adheres to official guidance for how the analyses are to be conducted. 

"We rely on the best available information and methods to calculate both the costs and benefits of our rules and use the public comment process to further refine that work," Liz Purchia said. 

Republicans, who have relentlessly criticized the EPA’s regulations as overly burdensome, meanwhile, seized on the report as evidence that the agency is playing fast and loose with its cost-benefit analyses. 

“Rather than using a fair and open rulemaking process, EPA pushed through regulations using sloppy analysis without sufficiently informing Congress or the public of the economic impact,” Rep. Darrell Issa (R-Calif.) said in a written statement. 

Issa, chairman of the House Committee on Oversight and Government Reform, requested the GAO probe in 2011 and Sen. David Vitter (R-La.), the top Republican on the Senate Committee on Environment and Public Works, followed suit last year.

The 53-page report looks at seven EPA regulations designated as “major rules,” meaning that they carry an annual economic impact of $100 million or more. 

Among them were rules involving the EPA’s renewable fuel standard, regulations governing Commercial and Industrial Solid Waste Incineration Units and emissions standards for heavy-duty trucks. 

The GAO examined the EPA’s analyses for each rule against 2003 guidance from the Office of Management and Budget (OMB) that lays out best practices for how agencies should evaluate the costs and benefits of rules making their way through the federal pipeline. 

The EPA’s rules lacked transparency, the GAO found. 

“Specifically, the information EPA included and presented in the RIAs was not always clear,” the report found. “According to OMB guidance, RIAs should communicate information supporting regulatory decisions and enable a third party to understand how the agency arrives at its conclusions.” 
 
EPA officials told GAO researchers that the costs and benefits cannot always be gauged, given the limits of agency resources and available data. 

The report concedes that such estimates are not always possible. 

“However, without doing so, the public may face challenges understanding the trade-offs associated with regulatory alternatives,” the GAO found. 

The report recommends that the EPA take steps to improve the agency’s adherence to the existing government guidance, but also that the OMB clarify the best way to apply that practice to the thorny process of estimating costs and benefits of reducing greenhouse gas emissions.