EPA's Benefit-Cost Analysis

Increasing Consistency and Transparency in Considering Benefits and Costs in the Clean Air Act Rulemaking Process

August 04, 2020

Download this Public Interest Comment (PDF)


Introduction

In this Notice of Proposed Rulemaking (NPRM), EPA seeks to codify procedures that will ensure adequate consistency and transparency in applying Benefit-Cost Analysis (BCA) to rulemakings under the Clean Air Act (CAA).  Note that EPA also has more detailed substantive Guidelines For Economic Analysis, which are currently under review by the agency’s Science Advisory Board.  This comment focuses on three aspects of the NPRM.  Part I responds to EPA’s question about the legal authority for the NPRM, and suggests that the agency examine several broader sources of authority in addition to the CAA.  Part II affirms the general principle that EPA should consider – consistent with the agency’s legal jurisdiction – the full range of benefits and costs that flow from its decisions, and it points out some of the “boundary drawing” challenges, including co-benefits, that can distort the results of a BCA.  Part III explores a longstanding problem with the way discounting is done in Regulatory Impact Analysis, and proposes a correction.  The discounting problem originates in OMB Circular A-4; but, while it is doing housekeeping on its BCA procedures, EPA should take this opportunity to engage with OMB and try to correct it.