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Public Input Sought on EPA Proposal to Improve Cost-Benefit Analysis

In a possible precursor to setting a nationwide policy, the Environmental Protection Agency (EPA) said it wants public input into whether and how it should reconsider the cost-benefit analysis for its regulatory decisions.

Meanwhile, in a related development, an appellate court panel dismissed a lawsuit filed by the American Petroleum Institute (API) and two other industry groups after EPA issued a directive in response to another court ruling that effectively overturned a nationwide policy pursuant to the Clean Air Act (CAA).

On Thursday, EPA issued an advance notice of proposed rulemaking (ANPRM) announcing that it would solicit public input as it seeks to improve its cost-benefit analysis.

"Many have complained that the previous administration inflated the benefits and underestimated the costs of its regulations through questionable cost-benefit analysis," EPA Administrator Scott Pruitt said. "This action is the next step toward providing clarity and real-world accuracy with respect to the impact of the agency's decisions on the economy and the regulated community."

EPA added that implementation of its cost-benefit analysis "has been inconsistent," and that as a result the agency "has created a risk of uncertainty and confusion for states, local communities and industry. EPA is now considering ways to codify common-sense, best practices for cost-benefit analysis in rulemaking."

Public comments received through the ANPRM will go toward helping EPA develop a proposed rule. The agency will take comments on ANPRM for 30 days after its publication in the Federal Register.

The move by EPA satisfies a provision of an executive order (EO) issued by President Trump in March 2017. Among other things, the EO called for federal agencies, including EPA, to review estimates of the "social cost of carbon." Trump, Pruitt, Republican lawmakers and energy industry allies have been critical of the Obama administration's use of the methodology in crafting regulation.

"During the Obama administration, the EPA exaggerated the benefits of Washington regulations and misjudged how costly they are to the economy," said Sen. John Barrasso (R-WY), chairman of the Senate Environment and Public Works Committee. "Now the Trump administration is taking important steps to make sure the agency can no longer abuse the cost-benefit analysis process."

The EPA appeared to back up Barrasso's claim. It said that under the Obama administration, the estimated social cost of carbon was calculated at an average of $36 per ton of carbon dioxide emitted. But under Trump, the agency calculated the cost at an average of $5 per ton.

But environmental groups blasted the move. "This ANPRM is nothing more than another effort by Pruitt to change the EPA from an agency that protects human health into one that bends the law to protect polluters," said Sierra Club spokesman Bill Corcoran. "It's shameful."

Last April, Pruitt proposed a rule designed to change how future environmental regulations are promulgated by restricting the agency to using publicly-available scientific research. One year earlier, in a decision that raised the ire of Congress, Pruitt dismissed several members of the EPA's Board of Scientific Counselors, a key scientific advisory panel.

Lawsuit Dismissed

On Friday, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit rejected a petition filed by three industry groups -- API, the National Environmental Development Association's Clean Air Project (NEDACAP) and Air Permitting Forum -- shortly after EPA issued amendments to the CAA in August 2016.

The amendments were made in response to two court rulings. In August 2012, the Sixth Circuit Court of Appeals in Cincinnati vacated an EPA determination that a natural gas sweetening plant and sour gas production wells in central Michigan owned by Summit Petroleum Corp. constituted a single and major source of pollution under the CAA -- despite the facilities being spread over 43 square miles.

According to court records, EPA "took exception" to the Sixth Circuit's ruling "because it effectively overturned a nationally applicable EPA policy." EPA then issued, in December 2012, a directive to its 10 regional directors stating that the agency would continue "its longstanding practice of considering interrelatedness in EPA permitting actions in other jurisdictions."

One of the three petitioners then filed suit in DC Circuit Court, arguing that EPA had established "inconsistent permit criteria applicable to different parts of the country." The court ruled in 2014 that EPA's post-Summit directive "could not be squared with EPA's regulations."

But the same court on Friday ruled that the amended regulations EPA issued in August 2016 "reflect permissible and sensible solutions to issues emanating from intercircuit conflicts and agency nonacquiescence."

The case is NEDACAP v. EPA, No. 16-1344.

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