Published for The Hill Congress Blog, April 16, 2013

This Thursday, when the Senate holds its hearing on President Obama’s nomination of Gina McCarthy for EPA administrator, attention is likely to be focused on the many costly rules that EPA has issued during the last four years, and the additional ones now planned. During the president’s first term, the administration issued more than 200 economically significant new rules each involving more than $100 million in new annual costs — a record high for any president’s first term — and EPA alone accounted for more than 25 new economically significant final rules, with annual costs in the billions of dollars by EPA’s own estimates.

The administration has argued that these regulatory costs are justified, by asserting high “benefits” that exceed their costs. It is to the president’s credit that he has continued to require cost-benefit analysis of major rules to ensure they do more good than harm, as presidents of both parties have required in the past. But with regard to EPA, what has been less noticed than the high cost of the agency’s rules is that there is considerable reason to be skeptical about how EPA is assessing the benefits that it claims. Though environmental goals often deservedly command wide support, careful analysts have noted that EPA has overstated benefits and included things that ought not count at all. (See Dudley, 47 Business Economics 165, July 2012.) As one example, an ongoing action by EPA illustrates just how far agencies may go to find supposed “benefits” to justify new red tape.

In 2011, EPA proposed a new regulation governing the equipment that power plants and manufacturing facilities use to draw in water to prevent overheating. These water intake systems generally are not harmful to health or water quality, but EPA’s staff expressed concerns primarily about their effect on larvae and forage fish — commonly known as “bait”. To reduce losses of such fish, EPA wants to require installation of advanced screens at 1,200 facilities and dramatically more expensive technologies to be decided later on a site-by-site basis.

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