EPA Partially Adopts OMB’s Guidance on Cost of Regulations

EPA staff accompanied Coast Guard staff on a regulatory flight in New York in 2012. EPA staff accompanied Coast Guard staff on a regulatory flight in New York in 2012. EPA file photo

Amid ongoing criticism from many Republicans and business groups, the Environmental Protection Agency should more closely follow budget office guidance as it attempts to gauge the costs of rules it issues to protect air and water, Congress’ watchdog agency found.

The Government Accountability Office reviewed seven of EPA’s regulatory impact analyses and found that while the agency adhered to Office of Management and Budget protocols to assure public communication during the rulemaking process it “generally did not use them as the primary basis for final regulatory decisions.”

“[Regulatory impact analyses] are valuable tools for helping agencies assess whether the benefits of an action justify the costs and identify the regulatory alternative that yields the greatest net benefits,” said the report released on Tuesday. The analyses provide industry, taxpayers, other agencies and Congress with important information about the potential effects of new regulations. But because the information can be complex and technical, “it is important that agencies clearly present how they arrived at their estimates and conclusions,” GAO noted.

Though EPA clearly drew on instructions in OMB circulars, it did not always clearly present technical information in ways third parties could understand, auditors found. But the regulators “did not monetize certain benefits and costs related to the primary purposes or key impacts of the rules GAO reviewed, such as reducing hazardous air pollutants and water quality effects,” the report said. Second, EPA estimated effects of its regulations on jobs by relying partially on a study using 20-year-old data, though that may be the most recent available at the time, the report added.

GAO made six recommendations, to the effect that EPA improve adherence to OMB guidance and make the analyses more useful, and that “OMB clarify the application of guidance for estimating the benefits of reducing greenhouse gas emissions.”

EPA generally agreed, but officials said that resource and data limitations limited the agency's ability to monetize the rules’ effects.

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