EPA Issues Advance Notice of Proposed Rulemaking on Cost-Benefit Analysis

The Environmental Protection Agency (EPA) issued an advance notice of a proposed rulemaking (ANPR) soliciting comment on whether and how it should promulgate regulations “clarifying” its approach to cost-benefit analysis under the Clean Air Act, Clean Water Act, and other environmental statutes. In the press release accompanying this announcement, EPA administrator Scott Pruitt stated that it was undertaking this action due to concerns that the “previous administration inflated the benefits and underestimated the costs of its regulations through questionable cost-benefit analysis.”

The proposed rulemaking has implications for how EPA will weigh costs and benefits in future climate regulations. EPA has already modified its approach to cost-benefit analysis in proposals to repeal key climate regulations, such as the Clean Power Plan. Specifically, EPA has: (i) confined its estimates of the social cost of carbon to “domestic bounds”, dramatically reducing the projected costs of greenhouse gas emissions from $36 to $5 per ton, (ii) downplayed or ignored the co-benefits of climate regulations, and (iii) increased the estimated compliance costs.