A second criticism is that the agency relies for most of its CAA benefit assessments on the effects of reducing a single category of pollutants, particulate matter (PM). A third issue critics raise is whether the methodology used to place monetary value on the avoidance of premature death—a technique referred to as calculating the "value of a statistical life"—inflates the estimated benefits of regulation. This report examines these issues in the context of Clean Air Act (CAA) regulations. Among the 34 sections are several major regulatory authorities, including the authority to
set emission standards for new stationary sources (power plants, refineries, etc.) These sections of the act direct the EPA Administrator to
consider the "remaining useful life of the existing source" to which an emission standard will apply, under Section 111(d); provide for the use of "generally available control technologies" to control area sources of hazardous air pollutants, under Section 112(d)(5); promulgate "reasonable regulations and appropriate guidance to provide, to the greatest extent practicable, for the prevention and detection of accidental releases" of extremely hazardous substances and take into consideration "the concerns of small business," under Section 112(r)(7); consider "the availability and feasibility of pollution control measures" in classifying nonattainment areas under Section 172; consider "such other factors as he [the Administrator] deems pertinent" and take into consideration "the restraints of an adequate leadtime for design and production" in setting vapor recovery standards for gasoline under Section 202(a)(5) impose emissions standards or emissions control technology requirements that "reflect the best retrofit technology and maintenance practices reasonably achievable" for retrofit of urban buses under Section 219(d); decide whether a requirement is "practicable, taking into account technological achievability, safety, and other relevant factors" in establishing an accelerated schedule for phasing out production and consumption of ozone-depleting substances under Section 606; and consider "the purpose or intended use of the product, the technological availability of substitutes ..., safety, health, and other relevant factors" in regulating nonessential products that release class I ozone depleting substances under Section 610 (except for two specific categories of products that are listed in the statute). These statutory authorities tend to fall into one of four categories: (1) provisions in which Congress itself set the standards; (2) provisions where Congress directed the agency to set health-based standards, without mentioning cost; (3) provisions in which Congress gave the agency broad authority to promulgate regulations to achieve an objective that Congress determined was necessary (generally protecting public health directly or indirectly, or protecting the environment), but the specifics of which Congress could not anticipate; or (4) a provision requiring EPA to promulgate federal requirements in cases where states have failed to develop or implement adequate regulations to meet a federal mandate. EPA's Use of Cost-Benefit Analysis

Although the statute prohibits the consideration of cost in setting some standards, EPA is subject to executive orders that require the estimation of costs and benefits any time an agency develops "economically significant" regulations. Issues Raised by EPA's CAA Cost-Benefit Analyses

A number of issues have been raised regarding EPA's cost-benefit analyses for Clean Air Act rules. Cumulative Impacts of Clean Air Act Regulations

A frequent criticism of EPA's Clean Air Act regulations is that the agency underestimates the cost and other negative impacts of rules by considering them individually, and thus potentially ignoring cumulative impacts. The benefits of those regulations outweighed the costs by more than an order of magnitude, according to the agency. OIRA Reports on the Cost and Benefit of Regulations

The Office of Information and Regulatory Affairs (OIRA) in the President's Office of Management and Budget (OMB) is the office that conducts interagency reviews of proposed and final regulations under E.O. Research has tied PM to tens of thousands of premature deaths, and EPA often finds that reductions in PM emissions justify regulation, even where the target of the regulations is a different pollutant. c. Quantification and Monetization

Most rules also have benefits that cannot be quantified or monetized in light of existing information. Concluding Observations

Although many parts of the Clean Air Act require the EPA Administrator to promulgate regulations without mentioning consideration of cost, EPA is bound by the statute in some cases and by executive orders in the case of each economically significant rule to provide estimates of the costs and benefits during the rulemaking process. The agency has indicated that benefits exceed costs, usually by a wide margin, for the vast majority of its CAA rules: as noted earlier, according to EPA, the estimated cumulative benefits of CAA regulations during the period 1990-2020 will exceed the estimated costs by more than 30 to 1. On January 30, 2017, he signed Executive Order 13771, "Reducing Regulation and Controlling Regulatory Costs." 13783, "Promoting Energy Independence and Economic Growth," signed March 28, 2017, addressed specific Clean Air Act regulations. The second of the two orders, E.O. directs EPA to review these rules "for consistency with the policy set forth in section 1 of this order," and, if appropriate, to "suspend, revise, or rescind" them.
The Clean Air Act (CAA) gives the Environmental Protection Agency (EPA) broad authority to set ambient air quality standards to protect public health and welfare. It authorizes emission standards for both mobile and stationary air pollution sources, including cars, trucks, factories, power plants, fuels, consumer products, and dozens of other source categories. Since 1970, EPA has used this authority to require emission controls for these sources. Emissions of the most widespread ("criteria") pollutants have been reduced by 72% during that period.
As directed by Congress and by executive orders, EPA has estimated the costs and benefits of major CAA (and other) regulations for the last four decades. Its most comprehensive recent studies and studies by the Office of Management and Budget (OMB) have concluded that the benefits of clean air regulations outweigh the costs by substantial margins. EPA's cost-benefit analyses of individual regulations, required by Executive Order 12866, show similar results: a review of the 55 economically significant CAA regulations promulgated from 2001 to 2016 found only two in which estimated costs exceeded benefits.
Nevertheless, many in Congress have expressed concern that Clean Air Act and other environmental regulations harm the nation's economy. One issue raised by critics is whether EPA underestimates the cost and other negative impacts of CAA rules—in part, by considering them individually, and not considering cumulative impacts. Another criticism is that the agency relies for most of its benefit assessments on the effects of reducing a single category of pollutants, particulate matter (PM). Research has tied PM to tens of thousands of premature deaths, and EPA often finds that reductions in PM emissions justify regulation, even where PM reductions are a "co-benefit" of reducing another targeted pollutant. A third issue critics raise is whether the methodology used to place monetary value on the avoidance of premature death—a technique referred to as calculating the "value of a statistical life"—inflates the estimated benefits of regulation.
This report examines these issues in the context of Clean Air Act regulation. It reviews EPA and Office of Management and Budget (OMB) studies of the cost and benefit of CAA regulations, and addresses the issues raised by agency critics. The report finds that
The Clean Air Act authorizes EPA to set standards in multiple sections of the act: about half of the act's major regulatory authorities mention costs or economic considerations explicitly, and several others imply that costs may be considered; but other authorizing sections, including some key sections, make no mention of cost considerations. Where the statutory authorities do not mention cost consideration, they tend to fall into one of four categories: provisions in which Congress itself set the standards; provisions where Congress directed the agency to set health-based standards, without mentioning cost; broad authority to promulgate regulations to achieve an objective that Congress determined was necessary, but the specifics of which it could not anticipate; or authority to promulgate federal requirements in cases where states have failed to develop or implement adequate regulations on their own to meet a federal mandate. In all cases, even where the statute would prohibit consideration of cost in setting standards, EPA is bound by executive orders to provide estimates of costs and benefits if the rule would be economically significant. According to EPA, the estimated benefits of CAA regulation will exceed the estimated costs by more than 30 to 1 in the period 1990-2020. CAA regulations prevent 230,000 premature deaths annually, according to the agency. The estimated benefits of CAA regulations rely heavily on the effects of reducing particulate emissions, and on the value placed on the avoidance of premature death as a result of such controls. Many rules have benefits or costs that cannot be quantified or monetized in light of existing information.
President Trump has issued two executive orders that address the cost of EPA regulations: Executive Order (E.O.) 13771, signed January 30, 2017, and E.O. 13783, signed March 28, 2017. The former directs OMB to set regulatory "budgets" for executive branch departments and agencies and, in general, to rescind two regulations for every new one issued. The latter requires EPA to review—and, if appropriate, suspend, revise, or rescind—several CAA regulations affecting energy production, with an eye to avoiding regulatory burdens. At present, the effect of the two orders on future CAA regulations is unclear. The report discusses some of the possible implications.