Guidelines For Cost-Benefit Analysis -- So It Begins
Three months ago I said that cost-benefit analysis was at the heart of the environmental debate between Republicans and Democrats. Two months ago I said that the United States Supreme Court granting unfettered discretion to EPA to define the applicability and scope of cost-benefit analysis was an extraordinary gift to our new EPA administrator. Three days ago I said that we could expect this administration to make wholesale revisions to the administrative rules and guidelines governing regulation of the environment.
So what happens? EPA begins to modify the guidelines it uses to undertake cost-benefit analysis when analyzing environmental regulations. The best description I’ve seen is by Michael Livermore. He writes:
The Guidelines [for Preparing Economic Analysis] is little known outside of EPA, but used regularly by the agency to design every major environmental regulation. Before any rule is adopted, it must go through an economic analysis according to the Guidelines . . . .
The draft changes to the Guidelines are under discussion now and will hopefully be adopted this fall. These revisions would create a major shift in the status quo at EPA.
I have to agree with Michael when he says it will create a major shift in the status quo. He argues that that shift will be a good thing for environmental regulation. While I don’t agree with this conclusion, I do think it is very interesting, and telling, that this EPA is acting so quickly to change even the most fundamental rules governing environmental regulation.
