The Environmental Protection(?) Agency

This Post is Prepared by Donnie Dann

Earlier this year, Scott Pruitt, Administrator of the EPA, wrote in “EPA Year in Review” of the EPA having taken “22 deregulatory actions that saved Americans more than $1 billion in regulatory costs.”

No doubt there are economic costs to the implementation of regulations, and savings to be gained in eliminating them. But are there also economic benefits achieved through regulation. How do the $1 billion in savings proudly announced by Administrator Pruitt, resulting from the “22 deregulatory actions,” compare to the value of benefits lost?

Consider one example: the Clean Air Act, enacted in 1970 by a bipartisan Congress during the Nixon years.

Less than a year ago, Cost-Benefit Analysis of EPA Regulations and Clean Air, was published by the Wharton School of the University of Pennsylvania. The entire article is worth reading but it included a 2011 cost-benefit study conducted by the EPA itself, concluding that by the year 2025 “the Amendments to the Clean Air Act passed in 1990 will have prevented 230,000 early deaths, and saved the country around 2 trillion dollars.  This is compared to the costs of the amendments, which the EPA calculated to be approximately 65 billion dollars.”

Think about this: it cost $65 billion to implement the 1990 amendments to the Clean Air Act. Those regulations are estimated, by the EPA, to have saved $2 trillion and prevented 230,000 early deaths. Just in monetary terms, there was a net savings of $1,935,000,000,000 – that’s one trillion, nine hundred thirty five billion dollars. The benefit outweighed the cost by a factor of over 300.

The language of many of the deregulatory actions Mr. Pruitt announced includes phrases like “Relaxation”, “Postponement”, “Reconsideration”, “Stay of Certain Requirements”, etc. Nowhere is mention made of the savings.

An important distinction should be made here, as well. Many of the costs in implementing regulations, are borne by the businesses and industries being regulated. Meanwhile, many of the benefits are enjoyed by the public. In the deregulation actions undertaken by the EPA, Mr. Pruitt is effectively transferring the benefits back to the businesses and industries, and the costs back to the public. It could be argued there is a moral decision being made, in addition to a financial one.

In a recent column in the Wall Street Journal, conservative columnist Peggy Noonan wrote, “Regulation, you know, is good—we’re all human; business leaders will make decisions that are good for the company or shareholders or themselves, but not necessarily good for the town, state, country…..But excessive regulation….kills progress, growth, jobs, good ideas and products.” In other words, there is a balance to be achieved when it comes to regulations.

The overall question becomes; does the EPA’s deregulation spree of the last year-and-a-half remedy an onerous burden of “overregulation” that had been shouldered by businesses, or is it simply favoring corporate profits at the expense of the public interest? Without knowing the benefits of the regulations themselves, and weighing them against the cost savings of eliminating them, it will be impossible to know whether the EPA is making sound decisions, or whether Mr. Pruitt has succeeded in turning it into the Environmental Destruction Agency.

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