Why No Cost-Benefit Analysis of Greenhouse Gas Regulations?

The House Judiciary Subcommittee on Courts, Commercial and Administrative Law held a hearing Monday that served as a background Executive Branch’s handling of regulations under the Administrative Procedure Act. The hearing was entitled, “The APA at 65 – Is Reform Needed to Create Jobs, Promote Economic Growth and Reduce Costs?

Jeffrey A. Rosen of Kirkland & Ellis LLP was one of the witnesses, and in his prepared testimony he discussed various Administrations’ approaches toward cost-benefit analysis of federal regulations. He made a timely observation:

President Clinton’s Executive Order No. 12866 was retained and has been the policy of the Obama Administration since January 30, 2009. In no uncertain terms, Executive Order No. 12866 requires that federal agencies “shall assess both the costs and the benefits of [an] intended regulation and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” …

[EPA’s] December 2009 Endangerment Rule, which would enable regulation of most sectors of the economy, provided no cost-benefit analysis at all, nor does EPA capture and contain such costs elsewhere. The President’s commitment to Executive Order 12866 failed to prevent EPA from proceeding as it did, and it instead has fallen to the courts to review the concerns about EPA’s arbitrary action on other legal grounds rather than the executive order.

It’s not too late for the Obama Administration to engage in an analysis of the costs, Sen. Sherrod Brown (D-OH) believes. On Monday the Senator asked the White House to use the Administration-wide review of federal regulations to also consider the costs of greenhouse gas limits. In its coverage, “Senator urges White House to assess economic impact of GHG rules,” Platts quotes his letter:

As part of the review process, I urge you to include an assessment of the economic repercussions and potential unintended consequences of the greenhouse gas regulation on manufacturers, farmers, electric power generators, and our nation’s economy as a whole.

Some might argue the Administration has already done the necessary, heavy duty economic analysis, concluding objectively: “It will create jobs!”

Sen. Brown also proposes some sort of “collaborative approaches” — Platts refers to a “settlement” — with energy-intensive industries to arrive at an agreement about emission limits and government investment in industry. He compares the idea to the deal with the auto manufacturers on tailpipe emissions, but here’s the thing: Limits on greenhouse gases will affect every economic activity. A “settlement” would amount to government command and control over the entire economy.

Also, Congress is the policymaking branch of government.

Join the discussion One Comment

  • Frances says:

    Simple answer: it will come out to be strongly negative, as in it cost one h— of a lot more to do then you could possibly derive from any (probably non-existent) benefit. Can you spell SCAM???

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