NCPA - National Center for Policy Analysis

GAO: EPA Needs Better Regulatory Analysis

August 14, 2014

The Washington Examiner is reporting that the Environmental Protection Agency (EPA) needs to make its analyses of regulations more clear and transparent.

A new report from the Government Accountability Office (GAO) discloses that while the agency adhered to some federal guidelines for regulatory analysis, it was not always clear in its presentation of information. The GAO report is the result of a 2011 request by Rep. Darrell Issa (R-Ca.).

The GAO study examined seven EPA rulemakings issued from 2009 to 2011, delving into the agency's Regulatory Impact Analyses (RIAs) that accompany each rule. RIAs are economic analyses of proposed regulations, and they contain the EPA's costs and benefits calculations. Agencies are required by Executive Order 12866 to assess the economic consequences of rules that have a minimum annual economic impact of $100 million.

According to the GAO, the EPA's economic analyses have been insufficient. For example:

  • Information quality ranged across different RIAs. Some RIAs explained costs and benefits clearly, while others only listed (but did not explain) the economic effects and costs of rules.
  • Sometimes, the EPA would direct readers to more detailed support information, yet that information was difficult to find and identify.
  • The EPA did not always provide enough information for a RIA reader to understand the agency's analysis. For example, in a RIA related to its Lead Opt-Out regulation, the EPA did not include supporting information for its estimate of benefits.
  • When analyzing regulatory alternatives, federal guidance directs agencies to identify alternatives and explain why one option was chosen over others. Several RIAs, however, did not explain why the EPA chose a particular regulatory option.
  • The EPA did not always identify the baseline from which it measured the costs and benefits of a regulation, making it difficult for the public to evaluate the agency's analyses.
  • The EPA's employment analyses made assumptions that were unreasonable. For example, most of the EPA's RIAs assumed that the economy was operating at full employment, resulting in regulatory analyses indicating that its rules would displace few workers and that those displaced would easily find new jobs. In fact, the United States was in the midst of a recession and weak recovery during the time of these rules, with a 9 percent or higher unemployment rate.

These are just a few of the problems that the GAO pointed out in its report. It urged the EPA improve the transparency and clarity of its RIAs and improve its methods of estimating the employment effects of environmental rules.

Source: Zack Colman, "EPA must explain the costs of its rules better, federal watchdog says," Washington Examiner, August 11, 2014; "EPA Should Improve Adherence to Guidance for Selected Elements of Regulatory Impact Analyses," Government Accountability Office, July 2014. 


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