When federal agencies issue new rules to protect the air or water, the regulated industry typically demands a thorough consideration of a regulation’s industry cost to implement. But now that the Trump administration is in the business of deregulating, agencies are ignoring the costs of deregulation, which will be borne by society at large.
Eliminating regulatory safeguards will erase tangible public health and environmental benefits, making the public worse off. Rather than analyze these societal costs, President Trump’s agency heads have suspended rules in a flurry of deregulatory actions, without calculating or even acknowledging the effects. There is no rational basis to treat the societal costs of suspending a rule differently from the compliance costs of a new rule. These suspensions violate principles of administrative law and rational government decision-making.
For example, the Environmental Protection Agency recently suspended the deadlines of a common-sense rule requiring oil and natural gas producers to limit leaks of methane, a potent greenhouse gas and the primary component of natural gas itself. Before issuing the original rule, EPA released a detailed analysis of the compliance costs and benefits and determined that the rule would yield net benefits of approximately $170 million per year by 2025, as well as substantial unquantified benefits. Specifically, the rule would boost public revenue by increasing the capture of valuable natural gas, and reduce greenhouse gas emissions and hazardous air pollutants, among other benefits.
But now, after the change in administration, the agency claims that while pausing the rule will cause some loss of benefits, “a quantitative estimate of this effect is not currently available.” The agency calculated the avoided compliance costs to industry from suspending the rule, but it ignored the lost societal benefits, despite having the requisite data to calculate them. This violates standard regulatory practices followed by administrations of both political parties for decades.
In another example, EPA suspended a rule that was designed to help prevent chemical accidents at manufacturing plants. The rule would have helped save lives, prevent environmental damage, and reduce injuries, evacuations and property damage at and near the site of a chemical accident. EPA claimed that it did not need to assess the impact of lost benefits because some of the compliance deadlines were still in the future. But EPA’s longstanding guidance does not allow it to omit benefits from its analysis simply because they are going to be realized in the future.
In a separate action, EPA delayed regulation of power plant wastewater discharges, suspending benefits valued up to $565 million, without any analysis and without the required opportunity for public comment.
EPA is not alone in the rush to deregulate without justification. The Bureau of Land and Management recently suspended a different rule aimed at limiting methane leaks, which would have yielded net benefits of $50 to $204 million per year. Given that the rule was justified on the basis of significant societal benefits, the bureau should have calculated how delaying the rule would affect those benefits and explained how such a delay could be justified, if ever. Instead, the bureau did not even mention these forgone benefits when suspending the rule.
The law demands more. While a deregulatory agenda may be the prerogative of a new administration, under the Administrative Procedure Act, agencies must provide a reasoned explanation for deregulation, including an analysis of the societal costs involved.
Regulated parties have consistently argued that EPA and other agencies must take into account the costs of complying with regulations. Now that the costs of agency actions are being borne by society, in the form of forgone benefits, the requirement to consider costs should be no different. Indeed, at her confirmation hearing, Trump’s nominee to lead the White House Office of Information and Regulatory Affairs, Neomi Rao, agreed that agencies should consider both the costs and benefits of deregulation.
Several recent lawsuits have been filed challenging the new administration’s deregulatory actions, asserting that agencies improperly ignored societal costs. Many more are to be expected if this practice continues. Federal agencies should transparently disclose and address the costs of the policy changes they make, and the Office of Information and Regulatory Affairs should enforce this requirement. The federal government should not be in the business of deregulating at all costs.
Bethany A. Davis Noll is a senior attorney at the Institute for Policy Integrity and previously served as Assistant Solicitor General in the Office of the Attorney General for New York State. Jayni Foley Hein is the policy director at the Institute for Policy Integrity at New York University School of Law, where she teaches natural resources law and policy.
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