We noted earlier this month that a U.S. Small Business Administration official had claimed that the danger of workplace noise was solved just as well with earplugs as it is with reducing the noise at its source -- despite extensive research to the contrary ("Presidential Appointee at SBA Maligns OSHA's Industrial Noise Proposal; Claims Ear Plugs 'Solve' the Problem").
The official, Winslow Sargeant, Chief Counsel for Advocacy at the SBA, has since given a slightly different line. From BNA's Occupational Safety and Health Reporter (4/28):
We strongly support regulations that protect worker safety and health," Sargeant said. "But with regard to the noise rule, we were unable to evaluate whether this proposal was necessary, as a matter of safety, or whether it was economically feasible.
If SBA has indeed not evaluated the safety necessity, it's troubling that Sargeant had previously made such a strident claim about the safety issue being "solved" by earplugs. Sargeant has no obligation to be an expert on the safety benefits of noise controls; he could simply say, as he has, that he is concerned about the costs. Going further and demeaning the safety benefits as nonexistent -- and then later admitting his office was "unable to evaluate" them -- is not helpful.
Full textIt's their favorite figure: $1.75 Trillion. Repeated ad nauseam in congressional hearings by members of congress and expert witnesses alike, it is the supposed annual cost of regulations, this according to a study from last year commissioned by the Small Business Administration's Office of Advocacy. Sponsors of anti-regulatory legislation like the number: Olympia Snowe and Tom Coburn included it in the 'findings' of their bill, while Geoff Davis, chief sponsor of the REINS Act, cites it regularly. It's been used by John Boehner and Eric Cantor, and House committee chairs Fred Upton, Darrell Issa, Lamar Smith, and Sam Graves. Conservative think tanks like the Competitive Enterprise Institute and the Heritage Foundation are fond of it. A few Democrats have gotten in on the act, too: Mark Warner, proponent of his own anti-regulatory plan, has cited it, as has Nydia Velazquez, Ranking Member of the House Small Business Committee.
Is it correct? In February, a CPR white paper found a series of flawed methods in the SBA's study, and showed that most of the SBA's number was derived from a regression analysis that used opinion polling data on perceived regulatory climate.
Now the nonpartisan Congressional Research Service (CRS) has published its own report examining the SBA study. CRS looked at a number of aspects of the SBA-commissioned study, and found an awful lot of questionable assumptions. I encourage you to check it out.
I'm not going to try to summarize the whole CRS report here, but I think this excerpt gets to the heart of some of the problems in the SBA study, which was conducted by economists Nicole Crain and Mark Crain:
More than 70% of the overall estimate ($1.236 trillion) is based on the WGI index of regulatory quality for the United States, with the authors determining the extent to which economic regulations reflected in that index reduces per capita real GDP in the United States. However, one of the authors of the regulatory quality index has said that Crain and Crain misinterpreted the index, and that higher values on the index cannot be interpreted as “less stringent regulations.” Even if it could, he said that the index for the United States should be compared to a country with a preferable index, not to an idealized “best possible” score on the index. Comparing the United States’ regulatory quality index in 2008 to the country with the highest index that year (Ireland) would have reduced Crain and Crain’s estimate of the cost of economic regulations by nearly two-thirds. Other commenters (including one of the peer reviewers of the Crain and Crain study) raised similar concerns about whether the regulatory quality index could be used to measure the cost of economic regulations, and about the regression analysis used to produce the cost estimate.
Folks who have cited the SBA study triumphantly ought to take a step back and really look at the study and CRS's new report. Is the SBA's methodology something they'd want to defend?
Full textRight about this time a year ago, Americans were learning about a massive explosion aboard an oil rig in the middle of the Gulf of Mexico called the Deepwater Horizon that had occurred the day before. Video footage of the flame-engulfed rig began splashing across television screens, and we were told that 11 workers on the rig were “missing.” (In fact, those workers had been killed.)
Also unclear or unrevealed was the extent of the environmental harm that was being done. In the day-after stories, BP and the federal government expressed the view that pollution was not much of a concern. Here’s what the New York Times article said,
Officials said the pollution was considered minimal so far because most of the oil and gas was being burned up in the fire. “But that does have the potential to change,” said David Rainey, the vice president in charge of the Gulf of Mexico exploration for BP, which is leasing the rig.
And change it did. The months-long ooze of crude oil from the well beneath Deepwater Horizon eventually came to be the largest oil spill in U.S. history.
Full textSo far as regulatory safeguards are concerned, we've come a long way in 27 months. The Obama Administration started with federal agencies that had been devastated by eight years of an explicitly anti-regulatory president. Turning that around is not easy, and no President could do it in a day. So, as much as you see a lot of criticism in this space, you also see praise, because we've seen this Administration make important progress. From new rules on lead paint removal to construction crane safety to regulating greenhouse gases, there's a lot to applaud -- changes that will make real differences in people's lives.
But there are also a lot of rulemakings or other initiatives that fall somewhere in the "pending" category. Delay has a real cost in human health and lives. But the problem's not just that. It's that for many of these important safeguards, the administration runs the risk of not completing them at all, or not during this term. The political pressures against some of these health and safety protections in the name of maintaining industry business as usual can be huge.
A new CPR white paper today, Twelve Crucial Health, Safety, and Environmental Regulations: Will the Obama Administration Finish in Time?, identifies key rules that are critical but unfinished, and urges the administration to adopt a sense of urgency. Nine of the twelve regulations in the report are named as being in danger of not being completed during the President's first term.
Full textClaudia Rodgers, Deputy Chief Council for the Office of Advocacy at the U.S. Small Business Administration, testified earlier this month at a hearing conducted by a House Oversight and Government Reform sub-committee. The session ("Assessing The Impact of Greenhouse Gas Regulations on Small Business") was a sparsely attended affair on all sides of the room. But something important happened.
Rep. Jackie Speier asked Rodgers a series of questions (at 1:03:30 in the video) about the Office of Advocacy’s oft-cited report from September, by economists Nicole Crain and Mark Crain, which claims that the cost of regulations in the U.S. in 2008 was $1.75 trillion dollars. Representative Speier cited CPR’s recent report debunking the study. In response, Rodgers mostly gave little new information, telling Speier she'd get back to her. But then there was this:
Rep. Speier:
... Ms. Rodgers, does your office have the data used in the Crain and Crain study, and if so, will you please make that data available to us?
Rodgers:
I will check and see if our office has the data, would make available to you. I do know that it is... I'm told that it is available through Crain and Crain on their website, or through their website, that they have made it available. When we contract out studies, our office is not required to ask of that data and make it publicly available ...
Problem is, if it is somewhere on their website, no one's been able to find it.
Full textThis afternoon at 1:00 p.m., the House Energy and Commerce Committee’s Subcommittee on Energy and Power will check one more box in the House GOP's ongoing effort to demonstrate its appreciation to the corporate interests that helped elect them, by holding a hearing on a proposal disingenuously called the Transparency in Regulatory Analysis of Impacts on the Nation Act of 2011, or as they acronym-ize it, the TRAIN Act.
As the name does not at all suggest, it’s a bill about undercutting environmental regulations that inconvenience the energy industry. The idea is to create a sort of non-environmentally minded Star Chamber to review the full slate of Clean Air Act and coal ash regulations, for the purpose of concluding that they cost too much. That’s not quite how they phrase it, of course, but that is the purpose.
Here’s an excerpt from the committee majority staff’s description of the bill:
In the past two years, the Environmental Protection Agency (EPA) has promulgated numerous final and proposed rules that will require retrofitting of power plants, increased fees for new construction and operation of units from diverse sectors of the economy, potential construction delays, revisions to state plans to implement federal requirements, and the adoption of Best Available Control Technology measures to address greenhouse gas emissions from diverse sources.
EPA’s own analysis indicates that some of these rules will have significant costs; other actions have not yet been analyzed. There has not, however, been an analysis of the cumulative impacts of these regulations on global competitiveness, cumulative change in energy and fuel prices, employment, or reliability of the electricity supply. Nor has there been an analysis of the cumulative impacts on consumers; small businesses; regional economies; state, local and tribal governments; specific labor markets; and agriculture.
Of course, every rule that emerges from EPA undergoes a rigorous cost-benefit analysis, totting up every penny of cost to industry (calculated by industry, for the most part, so you can imagine they don’t under-project), and comparing it with the dollar value of the benefits that would result. For a number of reasons, that process is deeply flawed and slanted against protective regulations. It ignores, for example, the value of benefits that can’t be readily monetized, with the net effect that benefits are commonly understated, while the costs to industry are often exaggerated.
Full textWhen the U.S. Small Business Administration issued a study last September claiming regulations cost the U.S. economy $1.75 Trillion in a single year, the agency trumpeted that the "report was peer reviewed consistent with the Office of Advocacy’s data quality guidelines."
But the peer review file included with the study was embarrassingly meager -- comments from all of two individuals. The authors, economists Nicole Crain and Mark Crain, ignored a fundamental criticism raised by one of the two reviewers that struck at the very heart of their estimates of economic regulatory costs. The second reviewer's complete comment had the sort of casual quality to it that suggested a somewhat less than thorough review. The review, in its entirety: “I looked it over and it's terrific, nothing to add. Congrats[.]"
When CPR Member Scholars issued a report in February critiquing SBA's study, they noted that the peer-review process was unimpressive. CPR co-author Sidney Shapiro sent a letter at the time to Karen Mills, the SBA Administrator, and Dr. Winslow Sargeant, Chief Counsel of the SBA's Office of Advocacy, calling on the SBA to withdraw the study and disavow its findings. The letter noted, among other problems, the inadequate peer review.
Dr. Sargeant responded with a letter in March, standing by the report and waving off the CPR report’s very thorough criticisms, although without responding to the specifics. There was perhaps little of particular surprise, except one bit about the peer review process. Wrote Sargeant:
Full textAdvocacy offered the study for review to a number of individuals with expertise in regulatory cost-benefit analysis, including former heads of Federal regulatory agency economic analysis offices and academics who have published in the field.
Cross-posted from Legal Planet.
EPA has announced that it will delay finalizing its guidance memorandum on Clean Water Act permitting for mountaintop removal mining projects pending review by the White House Office of Management and Budget. The announcement is bad news for Appalachian streams, and worse news for environmental interests hoping the Obama administration won’t completely cave to regulated interests.
The guidance was issued in interim form on April 1 of last year. EPA described the memorandum as clarifying how it would review requests for Clean Water Act permits in support of mountaintop removal mining and its expectations of state permitting agencies and the Corps of Engineers. Despite the date of the guidance, EPA wasn’t fooling. The guidance signaled a new, more aggressive attitude toward EPA’s oversight role, an attitude associated with enhanced review of permit applications and even a rare veto of a permit that had been approved by the Corps.
Not surprisingly, the coal industry is fighting back in all available venues. It’s had some initial success in the courts and is working hard on the Congress, as I hope to explain in another post. This news, though, shows that the White House might turn out to be the easiest of targets.
Full textCPR Member Scholar Robert Glicksman testifies at a hearing this afternoon on "Raising the Agencies' Grades – Protecting the Economy, Assuring Regulatory Quality and Improving Assessments of Regulatory Need." The hearing will be held by the Courts, Commercial and Administrate Law subcommittee of the House Judiciary Committee.
The hearing will feature two witnesses from the Mercatus Center, who will argue that federal agencies produce flawed regulations, and need to engage in more rigorous regulatory analysis to provide better justifications of the need for and content of regulations.
This misses the reality, Glicksman argues in his testimony:
Full textwhile the current regulatory process is indeed flawed, the problems for the most part are not the result of agencies adopting regulations without justification or regulations whose social costs exceed their benefits. Instead, the primary problem is regulatory dysfunction resulting from providing agencies with inadequate resources to fulfill their statutory responsibilities, not giving agencies sufficient tools to address significant health, safety, and environmental risks, and burdening agencies with what are already excessive and unhelpful analytical obligations.
Around 6pm ET last night, after most reporters had wrapped up, EPA issued its long-awaited proposed cooling water rule. Under the Clean Water Act, this rule is supposed to protect the billions of fish and other aquatic organisms that are killed each day when they are squashed against intake screens or sucked up into cooling water systems at existing power plants and other industrial facilities. Unfortunately, the rule seems aimed more at protecting industry profits than fish. And in justifying the rule, EPA has taken a page right out of industry’s playbook, purporting to rely on cost-benefit analysis, even though no one can agree on how to attach a dollar value to a fish or an ecosystem.
Rather than requiring plants to use the sensible closed cycle cooling option, which reduces intake flows (and dead fish) by 95-98% by simply recycling the cooling water, EPA’s new rule would allow existing plants to continue to use the antiquated “once-through” cooling method as long as they attach buckets and other gizmos to their intake screens designed to try to catch fish that bounce off the screens and return them to open water.
As for the organisms that get sucked up through the screens and “entrained” in the cooling water system itself, EPA’s new rule simply punts. Reduction in death by “entrainment” is simply left to a case-by-case permitting process to be administered by the states. This puts an untenable burden on the states, which we've seen clearly lack the resources and expertise to make these determinations.
Particularly troubling is the prominent role that EPA appears to have given to cost-benefit analysis in justifying this toothless rule. You may remember that this rulemaking was in the news two years ago, when EPA’s last effort at drafting a cooling water rule for existing facilities went up to the Supreme Court. This case was closely watched in the environmental community because it presented to the Court the decades-old battle between industry and environmentalists over the use of cost-benefit analysis in environmental rulemaking. (Industry likes cost-benefit analysis and environmentalists hate it because it tends to undercount the benefits of environmental protection, which are hard to put a dollar value on.)
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