EPA Considering Methods to Assess Economywide Costs of Air Regulations

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By Jessica Coomes

Feb. 5 --The Environmental Protection Agency is soliciting public input on how to assess the economywide costs and benefits of air pollution regulations (79 Fed. Reg. 6,899).

The agency has posed a series of questions about the merits and limitations of economywide modeling, and a panel of advisers, which hasn't yet been formed, will consider the charge questions and advise the agency.

The EPA posted the draft questions online Feb. 5 and will accept comment on them through April 7.

The EPA said it typically bases its cost-benefit analyses on sector-based models and said economywide models pose “serious technical challenges.”

The agency said such models may be appropriate to evaluate a rule that is implemented over years and affects multiple sectors of the economy. Among the charge questions was the question of how a rule's implementation time horizon and the number of regulated sectors would affect an economywide model.

Sen. David Vitter (R-La.) called the EPA's action “a significant first step in the process to implement whole-economy modeling methods at EPA that would ultimately offer a true picture of the full economic impact of rules on businesses, workers, and families.” In a Feb. 5 news release, Vitter said the EPA's existing economic analyses focus on benefits and ignore costs.

Bob Perciasepe, then-acting EPA administrator, formally asked the Science Advisory Board to convene an expert panel on economic modeling in a July memo .

Also in July, House Republicans, including Reps. Fred Upton (R-Mich.) and Ed Whitfield (R-Ky.), faulted the agency for limiting its estimates for costs of rules to sector-specific modeling, despite the capacity to use economywide estimates.

In a letter to Perciasepe, the lawmakers said the agency failed to fully consider the economywide effects of its regulations and underestimated regulatory effects on jobs.

Social Costs, Benefits

The EPA's Feb. 5 questions acknowledged that “[p]olicy makers and the public also have a keen interest in the distribution of social costs and benefits across households and sectors (i.e., economic impacts) through mechanisms such as energy prices or labor market impacts.”

The EPA will accept comments on the charge questions at http://www.regulations.gov in Docket ID No. EPA-HQ-OA-2014-0129.

To contact the reporter on this story: Jessica Coomes in Washington at jcoomes@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

The charge questions are available at http://op.bna.com/fcr.nsf/r?Open=jcos-9g2saq.

The Feb. 5 Federal Register notice is available at http://www.gpo.gov/fdsys/pkg/FR-2014-02-05/pdf/2014-02471.pdf.