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Draft OMB FY14 Regulatory Report Highlights Impacts Of EPA Air Rules
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Draft OMB FY14 Regulatory Report Highlights Impacts Of EPA Air Rules

On October 26, the White House Office of Management and Budget’s (OMB) announced the release of its draft annual report to Congress on new regulations’ costs and benefits. The report credits EPA’s air rules with nearly all of the impacts from major federal rules in fiscal years 2004-2014.

The draft report fulfills a statutory mandate for the executive branch to each year quantify the impacts of regulations that took effect over a rolling 10-year period. For rules promulgated in the decade ending in FY14 it finds $160.2 billion to $787.7 billion worth of benefits, measured in 2010 dollars, against $37.6 billion to $45.4 billion in costs, nearly all of which come from EPA rules for controlling air pollution.

Air regulations are credited with creating $157.4 billion to $777.9 billion in benefits and $36.6 billion to $44.1 billion in costs. The draft report also lists negative costs for the agency’s waste rules in that time period, claiming that they saved the economy $300 million to $400 million while producing as much $300 million in benefits, although the minimum benefits are listed as zero. The water office is credited with $1.1 billion to $4 billion in benefits and $600 million to $700 million in costs.

In assessing impacts of past years’ rules, OMB struggled to assign specific benefits to EPA’s Cross-State Air Pollution Rule (CSAPR), a rule designed to curb interstate air pollution as a replacement to the George W. Bush-era Clean Air Interstate Rule (CAIR). “We recognize that the attribution and accounting raises some complex questions, and that on one view, not taken here, our approach greatly understates the net benefits of CSAPR -- on that view, it does so by tens of billions of dollars. For the purposes of this Report, we have attributed the benefits and costs of the two rules on an incremental basis. A certain amount of equipment has been installed under CAIR, and we attributed both the costs and benefits due to those controls to CAIR. For CSAPR, which is about 30% more stringent than CAIR, we attributed its costs and benefits only due to the additional equipment required over and above the requirements of CAIR,” the report says.

The report is likely to become a fresh data point in the ongoing debate over the accuracy of agencies’ assessments of their rules’ costs and benefits. Critics have argued that EPA’s methods in particular dramatically underestimate the economic costs of agency rules. A new agency Science Advisory Board panel is reviewing “economy-wide” models in an effort to resolve such criticism.

OMB is taking comment on the draft through December 21. To see the report, go to https://www.whitehouse.gov/sites/default/files/omb/inforeg/2015_cb/draft_2015_cost_benefit_report.pdf.
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