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S. HRG. 114–183 

OVERSIGHT OF REGULATORY IMPACTS 

ANALYSES FOR U.S. ENVIRONMENTAL 

PROTECTION AGENCY REGULATIONS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON SUPERFUND, WASTE 

MANAGEMENT, AND REGULATORY OVERSIGHT 

OF THE

COMMITTEE ON 

ENVIRONMENT AND PUBLIC WORKS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

OCTOBER 21, 2015 

Printed for the use of the Committee on Environment and Public Works 

( 

Available via the World Wide Web: http://www.gpo.gov/fdsys 

(II) 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

BARBARA BOXER, California, Chairman 

MAX BAUCUS, Montana 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

BERNARD SANDERS, Vermont 

SHELDON WHITEHOUSE, Rhode Island 

TOM UDALL, New Mexico 

JEFF MERKLEY, Oregon 

KIRSTEN GILLIBRAND, New York 

CORY A. BOOKER, New Jersey 

DAVID VITTER, Louisiana 

JAMES M. INHOFE, Oklahoma 

JOHN BARRASSO, Wyoming 

JEFF SESSIONS, Alabama 

MIKE CRAPO, Idaho 

ROGER WICKER, Mississippi 

JOHN BOOZMAN, Arkansas 

DEB FISCHER, Nebraska 

BETTINA POIRIER, Majority Staff Director 

ZAK BAIG, Republican Staff Director 

SUBCOMMITTEE ON SUPERFUND, WASTE MANAGEMENT, 

AND REGULATORY OVERSIGHT

MIKE ROUNDS,South Dakota Chairman 

DAVID VITTER, Louisiana 

MIKE CRAPO, Idaho 

JOHN BOOZMAN, Arkansas 

DAN SULLIVAN, Alaska 

JAMES M. INHOFE, Oklahoma(ex officio) 

EDWARD L. MARKEY, Massachusetts 

THOMAS R. CARPER, Delaware 

JEFF MERKLEY, Oregon 

CORY A. BOOKER, New Jersey 

BARBARA BOXER, California (ex officio) 

(III) 

C O N T E N T S 

Page 

OCTOBER 21, 2015 

OPENING STATEMENTS 

Rounds Hon. Mike, U.S. Senator from the State Of South Dakota .................... 1 

Markey, Hon. Edward J., U.S. Senator from the State of Massachusetts .......... 4 

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma .................... 132 

WITNESSES 

Furchtgott-Roth, Diana, Senior Fellow And Director, Economics21, Manhattan Institute for Policy Research ........................................................................ 6 

Prepared statement .......................................................................................... 8 

Kovacs, William L., Senior Vice President, Environment, Technology & Regulatory Affairs, U.S. Chamber Of Commerce ....................................................... 25 

Prepared statement .......................................................................................... 27 

Batkins, Sam, Director of Regulatory Policy, American Action Forum .............. 54 

Prepared statement .......................................................................................... 56 

Rice, Mary B., M.D., Mph, Instructor In Medicine, Harvard Medical School, 

Physician, Division of Pulmonary, Critical Care & Sleep Medicine, Beth 

Israel Deaconess Medical Center ........................................................................ 68 

Prepared statement .......................................................................................... 70 

Steinzor, Rena, Professor, University of Maryland Carey Law School and 

Member Scholar and Past President, Center for Progressive Reform ............. 92 

Prepared statement .......................................................................................... 94 

(1) 

OVERSIGHT OF REGULATORY IMPACT ANALYSES FOR U.S. ENVIRONMENTAL PROTECTION AGENCY REGULATIONS 

WEDNESDAY, OCTOBER 21, 2015 

U.S. SENATE, 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS, 

SUBCOMMITTEE ON SUPERFUND, WASTE MANAGEMENT, AND

REGULATORY OVERSIGHT

Washington, DC. 

The committee met, pursuant to notice, at 10:02 a.m. in room 

406, Dirksen Senate Office Building, Hon. Mike Rounds (chairman 

of the subcommittee) presiding. 

Present: Senators Rounds, Markey, Vitter, Crapo, Boozman, Sullivan, Inhofe, Carper, Merkley, Booker and Boxer. 

OPENING STATEMENT OF HON. MIKE ROUNDS, 

U.S. SENATOR FROM THE STATE OF SOUTH DAKOTA 

Senator ROUNDS. Good morning, everyone. 

Senator Markey, the ranking member, is on his way. He said it 

was OK with him if we begin early. 

At the same time I think Senator Inhofe will have to leave. As 

Senator Inhofe may indicate we have multiple committees. 

Senator INHOFE. Thank you, Mr. Chairman. We do have a problem, and I am saying this for the benefit of our five witnesses, 

many of whom have come a long ways and gone to a lot of inconvenience. I appreciate their being here. 

In this committee and the Armed Services Committee we have 

an overlap, I think, of eight members, so we finally have an agreement that they are going to have their committee hearings on 

Tuesday and Thursday; we would have ours on Wednesday. However, because of the unique situation of the availability of a witness, we are meeting right now at the same time. So that is the 

reason we don’t have that many. They will be trickling in as they 

participate in the Senate Armed Services Committee. 

Thank you, Mr. Chairman. 

Senator ROUNDS. Thank you, sir. 

In the meantime, we will get started and try to do it on time to 

your benefit as well. We appreciate your being here. 

The Environment and Public Works Subcommittee on Superfund, 

Waste Management and Regulatory Oversight is meeting today to 

conduct a hearing on Oversight of Regulatory Impact Analyses for 

the United States Environmental Protection Agency Regulations. 

2 

Since President Obama took office in January 2009, the EPA has 

issued more than 3,300 new regulations. These regulations impact 

every U.S. citizen and every U.S. industry, from agriculture to domestic manufacturing and energy production, industries that provide jobs for millions of Americans. 

Unfortunately, it is those same Americans who shoulder the burden of these broad, overreaching EPA regulations. According to the 

Office of Management and Budget, over the last 10 years, EPA regulations have imposed an estimated $42 billion in annual costs on 

this Country, costs paid for by American taxpayers and businesses. 

In this Congress, the Environment and Public Works Committee 

has taken a pointed look at the various regulations being promulgated by the EPA, such as WOTUS and the Clean Power Plan. 

Further, this subcommittee has specifically looked at the science 

used by the EPA in their rulemaking process and the impact that 

lawsuits have on the regulatory process. 

Today we will be taking a step back to analyze the EPA’s rulemaking process as a whole. Our witnesses today will testify to the 

systematic issues and concerns they are continually seeing in the 

EPA’s regulatory process. 

The EPA routinely fails to fully monetize the costs versus the 

benefits of their regulations, imposes unfunded mandates onto 

State and local governments, ignores the impacts of regulations on 

small businesses, and over-relies on ancillary benefits to justify 

their regulations. 

EPA is required to conduct Regulatory Impact Analysis, commonly known as RIAs, of their regulations to provide both the public and the agencies with accurate information on the costs and 

benefits of the proposed regulations. However, a July 2014 report 

by the independent Government Accountability Office, the GAO, 

found the EPA failed to conduct a clear, thorough, and accurate 

analysis of the cost and benefits of, or alternatives to, major regulatory actions. Notably, the GAO concluded that ‘‘EPA has not fulfilled its responsibility to provide the public with a clear explanation of the economic information supporting its decisionmaking.’’ 

As a result, EPA regulations that cost the United States economy, small businesses, and American taxpayers billions of dollars 

are being made by Washington bureaucrats who, rather than conducting a thorough, accurate, and public analysis of the impacts 

these regulations will have, are simply rubber-stamping major regulations that drastically reshape segments of the United States 

economy. This impacts American businesses ability to do business 

on a daily basis, to compete globally, and employ Americans in 

steady, well-paying jobs. 

The EPA is also imposing unfunded mandates on States and 

local governments at an increasing rate. Often, these regulations 

are finalized with little input by the affected States and local governments, yet these entities are required to use their limited funds 

and increasingly tight budgets to comply with these new Federal 

regulations. Furthermore, the EPA’s failure to use accurate information to monetize the cost of these regulations provides the States 

with little guidance or ability to estimate the compliance costs of 

regulations. 

3 

In October, in its last decision of the term, the Supreme Court 

ruled in Michigan v. EPA that the United States Environmental 

Protection Agency unreasonably failed to consider costs when deciding to regulate mercury emissions from power plants. Because 

of these exorbitant regulatory costs, the EPA has attempted to justify their air regulations by identifying ancillary benefits, which the 

EPA refers to as ‘‘co-benefits’’ to help outweigh the cost of regulations. These co-benefits allow the Administration to claim a dramatic increase in the net benefits of the EPA regulations, regardless of the cost of the regulation. 

Everybody desires clean air and clean water, but we have to ask 

whether there is a better way to achieve it without imposing burdensome regulations in which the costs outweigh the benefits. Due 

to the EPA’s failure to clearly and accurately quantify the costs 

and benefits of regulations, agencies are unable to make well-informed decisions. Even more troubling, the public, American businesses, and State and local governments are prevented from understanding the real impact of the regulation and meaningfully participate in the rulemaking process. 

I would like to thank our witnesses for being with us today, and 

I look forward to hearing their testimony. 

Now, as I shared earlier, Senator Markey was on his way in. We 

appreciate his being here and I would like to recognize my friend, 

Senator Markey, for a 5-minute opening statement, if you are 

ready to go, Senator. 

Senator MARKEY. I am ready to go. Thank you. 

Senator ROUNDS. Very good. 

[The prepared statement of Senator Rounds follows:] 

STATEMENT OF HON. MIKE ROUNDS, U.S. SENATOR

FROM THE STATE OF SOUTH DAKOTA

The Environment and Public Works Subcommittee on Superfund, Waste Management, and Regulatory Oversight is meeting today to conduct a hearing on ‘‘Oversight of Regulatory Impact Analyses for U.S. Environmental Protection Agency Regulations.’’ 

Since President Obama took office in January 2009, the EPA has issued more 

than 3,300 new final regulations. These regulations impact every U.S. citizen and 

every U.S. industry—from agriculture to domestic manufacturing and energy production—industries that provide jobs for millions of Americans. 

Unfortunately, it is those same Americans who shoulder the burden of these 

broad, overreaching EPA regulations. According to the Office of Management and 

Budget, over the last 10 years, EPA regulations have imposed an estimated $42 billion in annual costs on this country—costs paid for by American taxpayers and businesses. 

In this Congress, the Environment and Public Works Committee has taken a 

pointed look at the various regulations being promulgated by the EPA, such as 

WOTUS and the Clean Power Plan. Further, this subcommittee has specifically 

looked at the science used by the EPA in their rulemaking process and the impact 

that lawsuits have on the regulatory process. 

Today we are taking a step back to analyze the EPA’s rulemaking process as a 

whole. Our witnesses today will testify to the systematic issues and concerns they 

are continually seeing in EPA’s regulatory process. 

The EPA routinely fails to fully monetize the costs versus the benefits of their regulations, imposes unfunded mandates onto State and local governments, ignores the 

impacts of regulations on small businesses and over-relies on ancillary benefits to 

justify their regulations. 

The EPA is required to conduct Regulatory Impact Analyses, commonly known as 

RIAs, of their regulations to provide both the public and the agencies with accurate 

information on the costs and benefits of proposed regulations. However, a July 2014 

report by the independent Government Accountability Office (GAO) found the EPA 

4 

failed to conduct a clear, thorough and accurate analysis of the cost and benefits 

of, or alternatives to, major regulatory actions. Notably, the GAO concluded that 

‘‘EPA has not fulfilled its responsibility to provide the public with a clear explanation of the economic information supporting its decisionmaking’ 

As a result, EPA regulations that cost the U.S. economy, small businesses and 

American taxpayers billions of dollars are being made by Washington bureaucrats 

who, rather than conducting a thorough, accurate and public analysis of the impacts 

these regulations will have, are simply rubber-stamping major regulations that 

drastically reshape segments of the U.S. economy. This impacts American businesses ability to do business on a daily basis, to compete globally, and employ Americans in steady, well-paying jobs. 

The EPA is also imposing unfunded mandates on states and local governments 

at an increasing rate. Often, these regulations are finalized with little input by the 

affected states and local governments, yet these entities are required to use their 

limited funds and increasingly tight budgets to comply with these new Federal regulations. Furthermore, the EPA’s failure to use accurate information to monetize the 

cost of these regulations provides the states with little guidance or ability to estimate the compliance costs of regulations. 

In October, in its last decision of the term, the Supreme Court ruled in Michigan 

v. EPA, that the U.S. Environmental Protection Agency unreasonably failed to consider costs when deciding to regulate mercury emissions from power plants. 

Because of these exorbitant regulatory costs, the EPA has attempted to justify 

their air regulations by identifying ancillary benefits, which the EPA refers to as 

‘‘co-benefits’’ to help outweigh the cost of the regulations. These co-benefits allow the 

administration to claim a dramatic increase in the net benefits of EPA regulations, 

regardless of the cost of the regulation. 

Everybody desires clean air and clean water, but we have to ask whether there 

is a better way to achieve it without imposing burdensome regulations in which the 

costs outweigh the benefits. 

Due to the EPA’s failure to clearly and accurately quantify the costs and benefits 

of regulations, agencies are unable to make well-informed decisions. Even more 

troubling, the public, American businesses and State and local governments are prevented from understanding the real impact of the regulation and meaningfully participating in the rulemaking process. I’d like to thank our witnesses for being with 

us here today and I look forward to hearing your testimony. 

OPENING STATEMENT OF HON. EDWARD J. MARKEY, 

U.S. SENATOR FROM THE STATE OF MASSACHUSETTS 

Senator MARKEY. Thank you, Mr. Chairman, very much. Thank 

you for having this very important hearing. 

The Clean Air Act is one of the most effective public health laws 

in American history. It has cut air pollution from power plants, 

from factories, and from vehicles. As of 2010, these regulations 

saved more than 164,000 adult lives and prevented tens of millions 

of lost work days due to fewer pollution related illnesses like asthma. And the United States gross domestic product rose 234 percent 

since President Nixon signed the 1970 Clean Air Act. 

The same is true of the 1972 Clean Water Act. It has stopped 

millions of tons of toxic pollution from degrading our waters and 

has increased the number of waterways that are safe for fishing, 

safe for swimming. 

We are here today discussing how the EPA develops Regulatory 

Impact Analysis, a tool used to estimate the costs and the benefits 

of regulation. This is an inherently challenging task because in 

many cases putting a dollar value on the benefits and costs of pollution is not straightforward. 

For example, scientists figured out that a majority of kids in the 

1970’s had an unsafe level of lead in their blood, and that this was 

largely caused by the use of leaded gasoline in cars. But how do 

you put a price on the cognitive impairment caused by elevated 

blood lead levels in a 5-year old? Or how about the price of lost 

5 

schools days due to illnesses like asthma that are aggravated by 

ground level ozone? 

The diminished productivity caused by these childhood exposures 

may be subtle and span their entire lives. But that doesn’t mean 

that complex and hard-to-quantify environmental and health impacts are not both real and important at the same time. 

History has shown that the benefits of environmental regulations 

are enormous compared to economic costs. Yet, whenever the EPA 

proposes a new regulation, the impacted industries always, always 

cry foul. 

In 1974, a Ford executive argued that if automobile fuel economy 

standards became law, the Ford product line could consist of all 

sub-Pinto sized cars. In 2001, GM’s chief spokesman predicted that 

if the standard for trucks went up three miles per gallon, three 

miles per gallon, to 23.7 miles per gallon, they might have to stop 

making SUVs, four-wheel drive pickups, full-sized vans, and some 

two-wheel drive pickups. That is the top people at General Motors. 

From what I saw on my commute to work this morning, this just 

hasn’t happened. There are SUVs still on the street, even though 

the goal is 54.5 miles per gallon by the year 2025. In fact, the projected fuel economy standard of light trucks itself in 2016 is 28.9 

and 38.2 for automobiles. That is for 2016. We are well on our way 

to meeting the highest goals ever, 54.5 miles per gallon. 

Industry also said the sky was falling when the EPA established 

the acid rain program. To respond to the harm sulfur dioxide was 

causing to public health and the environment, Congress amended 

the Clean Air Act in 1990. In response, the EPA issued a rule on 

sulfur dioxide and nitrogen oxide emissions from fossil fuel burning 

power plants and other sources. The Edison Electric Institute and 

Peabody Coal Company estimated that complying with the acid 

rain program would cause $4 billion to $5 billion per year. 

By 2002, the acid rain concentrations in the Midwest were down 

by over 50 percent. Most Americans saw their electricity bills decrease. And in the end the Energy Information Administration 

found that the actual industry compliance costs were only about 

$836 million, one-fifth of the industry predictions. 

The health benefits of EPA regulations are clear and they are 

big. If the EPA hadn’t taken action to protect the air and the 

water, our cities would still be thick with smog like China’s are 

now. Our rivers would still be at risk for catching on fire. No critique of the EPA’s Regulatory Impact Analysis can undermine the 

four decades of environmental regulatory successes. The fact of the 

matter is that the EPA is doing its job protecting us from harmful 

toxins and pollution, and the value of a healthy, thriving society at 

the same time is priceless. 

Thank you, Mr. Chairman. 

Senator ROUNDS. Thank you, Senator Markey. 

Our witnesses joining us for today’s hearing are Diana 

Furchtgott-Roth, Senior Fellow and Director of Economics21 at the 

Manhattan Institute for Policy Research, welcome. William Kovacs, 

Senior Vice President in Environment, Technology & Regulatory 

Affairs at the United States Chamber of Commerce, welcome. Sam 

Batkins, Director of the Regulatory Policy at the American Action 

Forum, we welcome you today. Mary B. Rice, M.D., MPH, InstrucVerDate Aug 31 2005 10:28 Feb 25, 2016 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 S:\_EPW\DOCS\98668.TXT VERN
6 

tor at Harvard Medical School, welcome. And Rena Steinzor, Professor at the University of Maryland Carey Law School, welcome 

today. 

Now we will turn to our first witness, Dr. Diana Furchtgott-Roth, 

for 5 minutes. 

Dr. Furchtgott-Roth, you may begin. 

STATEMENT OF DIANA FURCHTGOTT-ROTH, SENIOR FELLOW 

AND DIRECTOR, ECONOMICS21, MANHATTAN INSTITUTE 

FOR POLICY RESEARCH 

Ms. FURCHTGOTT-ROTH. Thank you very much, Mr. Chairman, 

but you flatter me, I am not a doctor. So I should just say that 

right for the record. 

Senator ROUNDS. Thank you. I will correct the record. 

Ms. FURCHTGOTT-ROTH. I am the author of five books, but I am 

not a doctor, at least not yet. 

Well, as you said before, everyone wants cleaner air, and the 

question is what is the balance. Under current Federal regulations, 

the air is getting cleaner every year, as old equipment is replaced 

by new. Greenhouse gas emissions from power plants declined by 

15 percent from 2005 to 2013. The carbon intensity of the economy 

has fallen by 23 percent since 2005, continuing a long decline since 

the end of the World War II. 

Absent heavy regulatory intervention, the United States is already making great strides toward a cleaner economy. Sales of 

pickup trucks and SUVs, by the way, have soared precisely because 

they have a different miles per gallon fuel standard than do smaller cars, which is why Senator Markey saw so many of them on his 

way to work this morning. 

Over the past 2 years, EPA has issued proposed or final regulations on emissions of mercury, ozone, and carbon. I would like to 

discuss the problems with the cost-benefit analysis used for these 

regulations. I will first discuss the problems with the calculations 

of the benefits, then the calculations of the costs, and then with the 

discount rate. 

The main problem with the calculations of the benefits are that 

the co-benefits of other substances are included. The carbon rule’s 

putative benefits exceed its claimed costs not from reductions in 

carbon dioxide, say from the carbon rule, but from reductions in 

other substances, such as particulate matter, sulfur oxides, and nitrogen oxides. Without these alleged health benefits of these other 

substances, the rule would fail EPA’s cost-benefit tests. 

As can be seen by the table I provided in the testimony, the benefits listed for the Clean Power Plan in EPA’s Regulatory Impact 

Analysis, which I have right here, by the way, all 500 pages of it, 

are about $15 billion in 2025. But these benefits shrink to $3.6 billion if the health benefits of other substances are removed. In the 

mercury rule, benefits shrink from about $61 billion to less than 

$100 million when the co-benefits of other substances are removed. 

For the ozone rule, benefits shrink from about $29 billion to $8.7 

billion when benefits of other particulates are emitted. 

These benefits, the net benefits, in other words, are accounting 

for the costs, are actually negative for mercury and ozone, and 

barely positive for carbon. 

7 

While many States and localities are already in compliance with 

established national ambient air quality standards for NOx, SOx, 

and particulate matter, by claiming benefits from further reducing 

below the established safe level, EPA is in effect lowering the established standard without going through the legal requirements of 

a rulemaking focused on the relevant standard. 

EPA is adopting a regulation for carbon, mercury, and ozone that 

does not yield enough benefits to justify the cost. Instead, the agency is using supposed other benefits. And as we all know, particulate matter, SOx and NOx, are already regulated under other rules. 

Other problems are a double counting of health benefits from 

particulates. It is not clear that EPA is accurately accounting for 

all of its claims of particulate matter reduction benefits across 

many rulemakings. If, for example, there are health benefits, such 

as reductions in asthma, from one rule, one cannot count those 

benefits as reductions from a second rule because they will have already taken place. And it is not clear that double counting is not 

taking place. 

Third, there is the assumption that benefits that all particulates 

are equally harmful and some particulates might be more harmful 

than others. 

Fourth, there is the assumption that reductions in particulates 

have equal value independent of their base level, basically saying 

that reductions in particulates in New York City are equally valuable from reductions in particulates up in New York State, which 

has less levels of emission. 

It is very important that there is reliance on benefits from reductions in asthma, because over the past 25 years, as the air has got 

cleaner, incidents of asthma has arisen. Asthma is associated with 

obesity and lack of exercise, and if these trends are not reversed, 

then it is not clear that there will be any further reductions in 

asthma from particulate matter. 

There are also problems with the costs, major ones being that future increases in electricity prices are not accounted for. The EPA 

analysis specifically says there will be no effects on small business. 

They do not account effects of increases in electricity prices in 

small business. 

They omit the cost of energy-intensive industries going offshore. 

In other words, if we regulate them here, the EPA assumes that 

the emissions are going to disappear. But if they go to China or 

they go to Mexico, the emissions are going to stay the same and 

we are not going to have climate benefits. In fact, they might be 

even worse because China and Mexico have lower clean air regulations than we do. 

There are also problems with the discount rates that EPA uses, 

which are below the standard business rates. Business rates are 

often in the range of 10 percent. EPA uses discount rates that are 

3 percent and 7 percent, and the benefits are discounted at a lower 

rate from the costs, which wouldn’t be allowed in most analyses. 

Thank you very much for giving me the opportunity to testify 

today. 

[The prepared statement of Ms. Furchtgott-Roth follows:] 

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Senator ROUNDS. Thank you, Ms. Furchtgott-Roth. Thank you. 

Now we will hear from Mr. William Kovacs. 

Mr. Kovacs, you may begin. 

STATEMENT OF WILLIAM L. KOVACS, SENIOR VICE PRESIDENT, ENVIRONMENT, TECHNOLOGY & REGULATORY AFFAIRS, U.S. CHAMBER OF COMMERCE 

Mr. KOVACS. Thank you, Mr. Chairman, Ranking Member Markey, and members of the committee for inviting me to testify today 

on the oversight of Regulatory Impact Analysis for EPA Regulations. 

Regulations are needed for an orderly society to protect health 

and the environment. But we must keep in mind that agencies are 

not an independent branch of government; they are not a fourth 

branch. Rather, they were created by Congress to implement congressional policy. 

In 1946, Congress enacted the Administrative Procedure Act, 

which is the bible of the administrative State, which delegates legislative and judicial powers to agencies. Over time, Congress 

passed numerous ambitious and broad bills that required agencies 

to fill in more and more of the details. Also over the same period 

of time, courts granted more and more deference to agency action. 

The result of this expanded gap-filling authority and greater judicial deference created a shield around agency action. In short, 

while the Constitution made your job in the Congress to legislate 

very difficult, as we now know, Congress and the courts made legislating by agencies very, very easy. 

For several decades, Congress has tried to reign in this growing 

power of agency through the passage of numerous, but toothless, 

statutory requirements like the Unfunded Mandates Act Reform, 

Information Quality, Regulatory Flexibility. Presidents from Jimmy 

Carter forward have issued executive orders to rein agencies in and 

instruct them how to do their job, all to no avail. 

The requirement for the Regulatory Impact Analysis comes from 

this effort. If used correctly, these tools assist regulators to understand the need for regulation, available regulatory alternatives, the 

costs and benefits of the regulation, the best available facts and 

how to get them, the impact of the regulation on jobs, and whether 

a regulation imposes unfunded mandates on State and local governments. 

Considering that the Administrative Procedure Act has not been 

amended since 1946, and the agencies have published over 200,000 

regulations, I must State that the APA, for routine regulations, 

generally works well. However, in the last few decades regulations 

have been issued that are extremely complex, costing billions of 

dollars annually, and impacting large segments of the economy. 

When agencies aggressively legislate, that is, when the agencies 

expand a few words or a few hundred words in a State into thousands of pages of regulatory mandates, the agency is legislating. It 

is that simple. And when legislating, the agency should be required 

to use all the tools provided by Congress and executive orders if it 

is to be given any court deference. 

Citizens should also be able to hold agencies in check and challenge the agency for failing to use these RIA type tools. 

26 

And since today’s focus is on EPA, it must be stated that EPA issues more rules costing over $1 billion a year than all other agencies combined. Between 2000 and 2014, all executive branch agencies issued 31 rules costing over $1 billion a year, and EPA issued 

18 of those. 

In the last 5 months, EPA has issued three more mega-rules: 

Waters of the United States, Clean Power, and Ozone, without the 

use of many of the RIA tools. Had EPA undertaken a cumulative 

impact analysis of the three rules, examined the unfunded mandates it was imposing on State and local governments, hosted a 

small business review panel, evaluated the impacts on employment, the agency would have had a much deeper appreciation of 

the massive requirements it was imposing on State and local governments and the private sector. 

For example, States implement approximately 96 percent of all 

EPA’s delegated programs, and the Federal Government pays 25 

percent of that cost. Therefore, the States find themselves literally 

commandeered by EPA to simultaneously implement WOTUS, 

CPP, and ozone. And when you try to implement three major acts, 

one covering the air, one covering the water, you have a lot of moving parts, and where you might be regulating waters you are finding out you have to put a new gas line and you may need a dredge 

and fill permit. So it is not as simple as that. 

So to address this issue there are several things. I think the Senate should pass the Regulatory Accountability Act or some equivalent that codifies the RIA requirements into environmental law. 

Thank you very much. I would be glad to answer any questions. 

[The prepared statement of Mr. Kovacs follows:] 

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Senator ROUNDS. Thank you for your testimony, Mr. Kovacs. 

Our next witness is Mr. Sam Batkins. 

Mr. Batkins, you may begin. 

STATEMENT OF SAM BATKINS, DIRECTOR OF REGULATORY 

POLICY, AMERICAN ACTION FORUM 

Mr. BATKINS. Chairman Rounds, Ranking Member Markey, and 

members of the committee, thank you for the opportunity to appear 

today. In this testimony I wish to highlight the following points: 

First, by virtually any metric, regulatory activity has increased 

at EPA. This is due to a variety of factors, but recently the Agency 

has finalized five regulations that impose more costs than benefits. 

Second, the Nation appears to be experiencing declining returns 

in air quality investments. Despite $12 billion in investments from 

the Obama administration, air quality gains have not been as pronounced as in the past. 

And, third, the rise of particulate matter and the social cost of 

carbon has made it easier for EPA to justify regulation. For example, in 2010, PM2.5 generated 100 percent of the benefits from four 

air quality regulations. 

The Office of Information and Regulatory Affairs, OIRA, recognizes EPA as the No. 1 regulator in the Federal Government. From 

2003 to 2013, the Agency has issued 34 major rules, or 21 percent 

more than the next closest agency. As measured by rules that attribute the Unfunded Mandates Reform Act, EPA has increased 

from the pace of 1.75 annually to 3.1. 

The amount of paperwork EPA imposes has also increased, from 

142 million hours in Fiscal Year 2004 to more than 163 million 

hours today, a 15 percent increase. These burdens have benefits to 

the American people, but, in a recent trend, the Agency has finalized five rules where costs exceed the benefits. 

The Supreme Court recently reaffirmed the general principle 

that regulatory benefits should justify the costs. Every executive 

order since the Carter administration has affirmed this goal, and 

as Justice Scalia wrote in Michigan v. EPA early this year, no regulation is appropriate if it does significantly more harm than good. 

Yet, five recent EPA measures could impose $1.3 billion in annual 

costs, compared to just $700 million in benefits. 

On the declining returns on air quality investments, despite at 

least $12 billion in clean air rules since 2009, the rate of improvement has slowed in recent years. EPA describes very unhealthy 

days as health warnings of emergency conditions. For this category, 

the national air quality has not improved. In 2005, there were 46 

very unhealthy days; in 2014, there were also 46 very unhealthy 

days. 

Now, there are likely a variety of factors behind this figure, but 

these extreme days recent regulation has not alleviated the problem. Air quality gains have also slowed somewhat recently. For example, from 2005 to 2009, the rate of unhealthy days per jurisdiction declined by 20 percent. Compare this for the recent decline 

during the Obama administration of 9 percent. The slowing improvement in air quality under the Obama administration is in 

concert, of course, with a more, not less, active EPA. 

55 

On the rise of PM2.5 and the social cost of carbon, the Agency, 

and the Federal Government as a whole, is increasingly reliant on 

particulate matter co-benefits to justify regulation in other areas, 

as has been mentioned. For example, the 2008 NAAQS for ozone 

derived 70 percent of its benefits from reductions in particulate 

matter. Notably, in 2010, PM2.5 generated 100 percent of the benefits from four air quality regulations. 

Perhaps most famously, the Agency’s Mercury Air Toxic Standard, or MATS rule, derived more than 99 percent of its benefits 

from the reduction of particulate matter. Even though the goal of 

the regulation was the control of mercury, toxic gases, and other 

heavy metals, mercury contributed just 0.007 percent of the rule’s 

benefits. 

On the social cost of carbon, the Administration has generally ignored longstanding guidance and excluded a 7 percent discount 

rate from its analysis. As Circular A–4 states, ‘‘As a default position, a real discount rate of 7 percent should be used as a base-case 

for regulatory analysis.’’ Using lower discount rates on the social 

cost of carbon allows EPA to more easily justify a variety of regulatory action. For comparison, the United Kingdom uses a central 

case discount rate of 6 percent and a higher rate of 10 percent for 

sensitivity purposes. 

I would also like to point out that we are getting a sort of steady 

stream of retrospective studies that have called into question some 

of EPA’s regulatory assumptions, including a recent one on greenhouse gas regulations for heavy duty trucks. A Resources for the 

Future study concluded that EPA underestimated the rebound effect of increased truck efficiency. This higher rebound effect, in the 

words of the study, lowers projected long-run fuel savings and 

greenhouse gas emission reductions. In the end, the actual rebound 

effect was four to six times larger than what EPA had assumed. 

Thankfully, this research might inform EPA’s final rule for the 

second round of heavy-duty truck regulation, which has a projected 

total cost of more than $31 billion. But how many other regulations 

have regulators and scholars missed over the years, and what is 

the ultimate impact of those regulatory errors? How do we learn 

from these past mistakes and false assumptions to shape the future 

of regulatory policy? 

Thank you for your time, and I look forward to answering your 

questions. 

[The prepared statement of Mr. Batkins follows:] 

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Senator ROUNDS. Thank you, Mr. Batkins. 

We will now hear from our next witness, Dr. Mary Rice. 

Dr. Rice, you may begin. 

STATEMENT OF MARY B. RICE, M.D., MPH, INSTRUCTOR IN 

MEDICINE, HARVARD MEDICAL SCHOOL, PHYSICIAN, DIVISION OF PULMONARY, CRITICAL CARE & SLEEP MEDICINE, 

BETH ISRAEL DEACONESS MEDICAL CENTER 

Dr. RICE. Chairman Rounds, Ranking Member Markey, and 

members of the subcommittee, thank you for the opportunity to testify today. My name is Dr. Mary Rice, and I am a pulmonary and 

critical care physician at Beth Israel Deaconess Medical Center at 

Harvard Medical School, and I care for adults with lung disease, 

most of whom have severe asthma or emphysema. I also care for 

critically ill adults in the intensive care unit. 

You have my written testimony before you and there are a few 

points that I would like to emphasize today. 

First, it is now well established that exposure to outdoor air pollution, including ozone, particulate matter, mercury, and other air 

pollutants regulated by the EPA, is bad for human health. This has 

been known for decades. I will focus just on two of these pollutants, 

ozone and particulate matter, because their health effects are so 

extremely well described through hundreds and hundreds of research studies. 

Ozone is a respiratory irritant that is particularly harmful for 

people with lung disease, including people with asthma and emphysema; and ozone also harms the lungs of babies and young children, and even healthy adults. Research, including my own work 

with colleagues at Harvard, has shown that normal adults, when 

exposed to ozone at levels above 60 parts per billion have lung 

function that is not as good as when the ozone levels are lower. 

And for the elderly and those with heart and lung disease, ozone 

increases the risk of death. 

Particulate matter pollution has been recognized as a cause of 

premature death since the early 1950’s, and today it is clear that 

particulate matter also aggravates respiratory disease, including 

asthma and emphysema, and is a major trigger for devastating cardiovascular events such as heart attack, stroke, and heart failure. 

Second, the research evidence that has accumulated over the 

past three decades for these health effects of air pollution is comprehensive and consistent. Studies have used multiple scientific 

methods, including animal toxicology, human exposure, observational epidemiology, and natural experiments; and together these 

studies clearly show that exposure to ozone and particulate matters, at many cases at levels permissible by the EPA, is bad for 

children and adults. 

Third, our experience here in the United States has confirmed 

that when air pollution levels go down, health improves. A steel 

mill closed for a few months in Utah Valley, and the number of 

bronchitis and asthma emissions for preschool-aged children in 

that Valley fell by 50 percent. Traffic and ozone levels declined 

sharply during the 1996 Atlanta Olympics and fewer kids had asthma attacks in the city of Atlanta. 

69 

Particulate matter levels declined dramatically in Southern California, and children with and without asthma experienced greater 

growth in lung function. And, nationwide, particulate matter levels 

declined in the 1990’s and 2000’s, and this added months to U.S. 

life expectancy. When air pollution goes down, health improves and 

people live longer. 

Fourth of all, these are real people I am talking about. I focus 

a lot on asthma because I am a lung doctor and because it is abundantly clear that air pollution makes asthma worse. One of my patients, for example, is a 24-year-old African-American man who 

came to the city of Boston from the rural Midwest where he was 

a star athlete in college and he landed himself a brilliant job in finance in the city. And ever since coming to Boston, this young man 

has been struggling with asthma attacks every few weeks. 

Boston is a city that is generally compliant with EPA clean air 

standards, and he had to quit exercise for a month during peak 

ozone levels this summer due to labored breathing. He had severe 

coughing fits at work that forced him to walk out of meetings, and 

just keeping up with all the nebulizer treatments, doctor visits, and 

x-rays have caused him to miss a lot of work since starting his new 

job. He also feels exhausted and short of breath and miserable during these asthma attacks. This young man has an incredibly bright 

future ahead of him, and asthma attacks are getting in the way of 

that future. 

My older patients with severe asthma or emphysema can’t continue to work when their disease gets worse. They go to the emergency room and are often hospitalized. Air pollution increases the 

risk of hospitalization for my patients and for people across the 

United States with lung disease. When air pollution goes down, 

their risk of getting sick goes down too. 

Last, is it any surprise that the benefits of EPA regulation to reduce air pollution are so great that they exceed costs? We breathe 

the outdoor air. Therefore, the health benefits of cleaner air are enjoyed by millions. 

While economists may debate the dollar value of avoided asthma 

medications, emergency room visits, hospital stays, or even the 

value of additional months of life that are brought by cleaner air, 

these health benefits are real, they are measurable, and they are 

clearly supported by the science. 

Thank you. I would be very happy to answer questions. 

[The prepared statement of Dr. Rice follows:] 

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Senator ROUNDS. Thank you, Dr. Rice. 

Our next witness is Ms. Rena Steinzor. 

Ms. Steinzor, you may begin. 

STATEMENT OF RENA STEINZOR, PROFESSOR, UNIVERSITY OF 

MARYLAND CAREY LAW SCHOOL AND MEMBER SCHOLAR 

AND PAST PRESIDENT, CENTER FOR PROGRESSIVE REFORM 

Ms. STEINZOR. Thank you, Mr. Chairman, Ranking Member Markey, and members of the subcommittee. I appreciate the opportunity to testify today. 

EPA’s work on cost-benefit analysis is the gold standard for all 

other government agencies. Its elaborate and meticulous studies 

conclude that benefits exceed costs. In fact, in the case of the Clean 

Air Act rules that Dr. Rice was just talking about, which are reserved for especially irrational condemnation by regulated industries, benefits exceed costs by a margin of 30 to 1. Rather than 

focus on the few marginal improvements that the GAO has recommended and that EPA is already addressing, I urge the subcommittee to applaud the Agency’s diligent, thorough, and creative 

efforts to carry out one of the most difficult elements of its mission 

to preserve environmental quality. 

Few agencies have a more important role in improving public 

health than EPA. Just ask anyone whose children escaped brain 

damage because the agency took the lead out of gas, who turns on 

the faucet knowing the water will be safe, or who is unfortunate 

enough to live in an area afflicted by smog and is counting on EPA 

to lower the emissions that aggravate the asthma that afflicts so 

many Americans. 

As for the charge that an EPA-induced regulatory tsunami will 

cause irrevocable damage to the economy, the truth is that these 

rules and the civil servants who write them do not sweep industries’ hard-earned money into a pile and set it on fire for no good 

reason. The regulations impose costs, and it is certainly appropriate to consider estimates of these financial burdens when deciding whether to promulgate a rule. 

Yet, as illustrated by Clean Air Act protections, EPA rules also 

deliver tremendous benefits. Ignoring these benefits has become 

standard practice in every one of the multiple fora organized by 

regulated industries to demonstrate EPA’s perfidy. 

This approach is both biased and unsupportable from any objective perspective. The rules are required by statute. The appropriate 

remedy is to amend the law if you disagree with the statute, not 

cripple the Agency by stealth through budget cuts and excessive 

and redundant analytical requirements. 

Because of the business community’s perception that EPA’s popular mandate to clean up pollution would produce expensive rules, 

the Agency has experienced intensive scrutiny from its inception 

and was a pioneer in developing cost-benefit analysis. It performs 

such analyses today with sophistication, doing its best to produce 

reliable numbers from a methodology that is anything but precise. 

In fact, the most significant flaws inherent in cost-benefit analysis as it is practiced today are the pronounced understatement of 

benefits and significant overstatement of costs. Costs are inflated 

because EPA analysts have little choice but to rely upon companies 

93 

they propose to regulate for the empirical data that underlies cost 

estimates, and such parties have ample incentives to inflate those 

numbers, as Senator Markey explained so eloquently at the beginning of the hearing. 

As for the propensity of cost-benefit analyses to underState benefits, the problem arises because EPA often confronts benefits that 

are difficult to monetize or turn into dollar amounts. What is the 

value of avoiding a severe asthma attack that does not require hospitalization, for example? The person experiencing such an attack 

is miserable for a time and may suffer some increment of long-term 

adverse effects on her health, but she does ultimately recover from 

the attack. EPA has great difficult when it attempts to monetize 

this suffering. 

EPA and other agencies have encouraged by OIRA to describe 

such implications without crunching numbers, but the reality is 

that any value not translated into a number most often gets lost 

in the shuffle. The Agency staff can write eloquently about brain 

damage suffered by infants, the likelihood that key elements of an 

aquatic system too small to be cooked for dinner will disappear as 

a result of water pollution, or the effects of sea level rise on iconic 

American cities. None of this narrative has anything close to the 

impact of a number crunched in a comparable fog of uncertainty. 

Thank you. 

[The prepared statement of Ms. Steinzor follows:] 

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Senator ROUNDS. Thank you for your testimony, Ms. Steinzor. 

Senators will now each have 5 minutes for questions, and I will 

begin. 

For Mr. Kovacs, in the Chevron deference by the courts, it has 

allowed the agencies to promulgate increasingly broad and wideranging regulations so long as they are not arbitrary and capricious. What, if any, impact do you believe King v. Burwell could 

have on the amount of deference the courts show agencies in the 

future when their regulations are challenged? 

Mr. KOVACS. Well, the King v. Burwell was really the first time 

in decades that the court has set a different type of standard other 

than deference for agency review, and it took the position that on 

those broad-ranging cases where there is deep political and social 

change, that the court was actually going to almost do a de novo 

review; and that is really welcomed because for the last 30 or 40 

years the difficulty has been that when Congress delegates authority to the agencies to fill in the gaps and then the agencies fill in 

more and more gaps, and then the courts, through deference, give 

away their power to interpret laws, you end up in a position where 

the agencies really are not accountable. 

So the Burwell case, for the first time, brings the court back in 

and says at least for those mega type regulations we are going to 

take a much more detailed view and we are not going to grant the 

deference. So we welcome that. 

Senator ROUNDS. What, if any, impact will the recent ruling in 

Michigan v. EPA have in the way that the EPA goes about conducting economic analysis for future regulations? 

Mr. KOVACS. I think the Michigan case, for the first time, gets 

rid of the assumption that no matter what happens, no matter 

what EPA does, it doesn’t have to look at costs. And for certain 

types of regulations, and granted, these are the toxics, it indicated 

that appropriate and necessary had to include under any reasonable set of circumstances costs. It really goes to what we would call 

truth in regulating. 

What we are hoping that the agencies will do is just be honest. 

And the reason why we need that is because if they are overregulating in one area, it means they are not spending money in another area that might need it. And if you have truth in regulating, 

the agency, for the first time, would have said in the Michigan case 

4 percent, 5 percent of all the benefits went to mercury and the 

other 96 percent initially went to SO2 and then the converted that 

to PM2.5. And what we are saying is go back to really the Clinton 

administration, where they said we are looking at this particular 

particulate and it costs this much per ton to take it out of society, 

so that you have some idea of what it is that we are getting for 

the money we are spending. 

Senator ROUNDS. Thank you. 

Ms. Furchtgott-Roth, in your testimony you say that in the Clean 

Power Plan specifically EPA is understating the costs of the regulation to the U.S. economy. Can you elaborate on what the costs the 

EPA is underestimating and explain how you believe the regulation 

would be different if the EPA had accurately stated all aspects of 

the costs of the regulation to the economy? 

118 

Ms. FURCHTGOTT-ROTH. The major cost that is omitted is the cost 

to small businesses and businesses from the increased cost of electricity, the rise in the cost of the electricity. So here is this Regulatory Impact Analysis and on page 7–7 it says the EPA certifies 

that this action will not have a significant economic impact on a 

substantial number of small entities. And this action does not contain an unfunded mandate of $100 million or more. 

Well, here is a situation where States or groups of States, depending if they use rate-based or mass-based, are going to have to 

cut back on their emissions-producing industries, power plants, energy-intensive factories. This is definitely going to have an economic effect, not just because these entities cut back their activities, but also because there are other firms, such as restaurants, 

dry cleaners, you can imagine, movie theaters, that depend on the 

activities of these large entities that are going to be cut back. 

In my testimony I show a chart based on EPA data that shows 

how much emissions are going to have to be cut back in different 

States. And, in fact, Mr. Chairman, your State actually is a winner. 

Your State is actually going to be able to increase its amount of 

carbon, but it is one of the few States that vote Republican that 

does. Most of the cutbacks are in Republican States, and most of 

the States where increases are allowed are Democratic States. 

Senator ROUNDS. Yes. And the unfortunate part for my consumers living in South Dakota is that they purchase their power 

from the States around them, which are going to have to have increases in costs passed on to them. 

Ms. FURCHTGOTT-ROTH. Right. Exactly. 

Senator ROUNDS. Thank you for your testimony. 

My time has expired. Senator Markey. 

Senator MARKEY. Thank you, Mr. Chairman, very much. 

Professor Steinzor, it is my understanding that the Office of 

Management and Budget guidance for Regulatory Impact Analysis 

directs, directs Federal agencies to count the additional co-benefits 

of regulations and accounting co-benefits has been the longstanding 

practice of Republican and Democratic administrations alike. Is 

that true? 

Ms. STEINZOR. Yes. 

Senator MARKEY. So in order for the EPA to do their Regulatory 

Impact Analysis correctly, they need to count the additional co-benefits of the Clean Power Plan, the mercury rule, the ozone rule, is 

that correct? 

Ms. STEINZOR. Yes. 

Senator MARKEY. OK. So that means that if reducing ozone and 

particulate matter have real benefits to public health, even if those 

reductions come from regulations targeting other pollutants like 

mercury. 

Ms. STEINZOR. Yes. And it is also worth noting that they also 

subtract costs that are imposed by other rules. They don’t do it in 

a one-sided way. 

Senator MARKEY. So, in other words, if there is a rule that says 

that a company has to reduce the amount of mercury it is sending 

up into the atmosphere, and simultaneously that rule also has the 

simultaneous benefit of reducing the amount of smog that is going 

up into the air or soot that is going up into the air that could wind 

119 

up in the lungs of children and cause harm, the EPA could count 

that, and both Democrat and Republican administrations have 

counted that as a co-benefit. Even though you are trying to reduce 

the mercury, you are reducing this material that can go into the 

lungs of children, attach themselves to the lungs of children. We 

call it soot, we call it smog, or you can call it sulfur dioxide. You 

can get technical, but what ordinary people call it, it is a benefit, 

right? 

Ms. STEINZOR. Yes. 

Senator MARKEY. And there isn’t really a debate at any OMB 

that it should be counted, is that correct? 

Ms. STEINZOR. No. 

Senator MARKEY. Oh. Well, that is important for us to know, because there are a lot of people who don’t want to count those cobenefits, but that is really not the practice. And it is obvious why 

it is not the practice, because the benefits are so obvious if children 

are protected from these harms. If asthmas aren’t as frequent from 

these harms, you have to add that up because that is going to be 

factored into how much it cost that company to keep the mercury 

from going into the sky. And if you add up the total benefit in that 

area, it is obviously going to be quite significant. 

So let’s just talk to you, Dr. Rice. How does increased exposure 

to ozone impact the health of children and other vulnerable populations? 

Dr. RICE. Thank you, Senator Markey. That is an issue of great 

concern to me and other doctors in the field of respiratory medicine 

because the evidence, as I mentioned, is very clear that exposure 

to particles and to ozone increases the risk of a number of bad respiratory health effects in children and also in adults. 

Just to give you a few examples, it is now clear that exposure 

to ozone increases the risk of respiratory emissions for very small 

babies in the first month of life. 

Senator MARKEY. And, again, ozone is? 

Dr. RICE. Smog. 

Senator MARKEY. Smog. Right. Go ahead. Keep going. 

Dr. RICE. At levels that we experience today. 

Senator MARKEY. So if we put babies into smog, it is going to 

cause real problems. Is that what you are saying? 

Dr. RICE. That is what the evidence shows and that is what our 

experience has demonstrated when we look at the data of the exposure to ozone and the rates of hospital emissions in children. 

It also affects young kids, not just babies, but school-aged children. It increases the risk of having an asthma attack, landing in 

the emergency room for asthma attacks. There is evidence that 

children born to African-American mothers are at even higher risk 

of having an asthma attack when ozone levels go up. 

Senator MARKEY. Thank you. 

Professor Steinzor, EPA ranked fifth out of the 22 U.S. regulatory agencies in report card comparison on cost-benefit analysis 

performed by the conservative Mercatus Center at George Mason 

University. Professor Steinzor, do you agree that the EPA produces 

some of the most sophisticated cost-benefit analysis in the entire 

Government? 

120 

Ms. STEINZOR. Yes, I do, and I think the reason for that is that 

because the agency has been subject of special focus at the White 

House since President Nixon was elected, it has endured trial by 

fire and it has been perfected, it has been rigorously criticized and 

has responded, and does an excellent job. 

Senator MARKEY. God bless Richard Nixon and the fantastic job 

he did on these environmental issues. 

Ms. STEINZOR. Well, he created EPA. 

Senator MARKEY. God bless him. And we thank God he did that. 

So I just want to get that out on the record as well. 

[Laughter.] 

Senator MARKEY. And I want to thank all of the witnesses for 

being here. I would also note that since 1990 Massachusetts has reduced its greenhouse gases by 40 percent and increased its GDP 

by 70 percent, just so that you can see the huge disconnect between 

the reduction in the harmful stuff and the increase in the beneficial 

job creation simultaneously. 

Thank you, Mr. Chairman. 

Senator ROUNDS. Senator Inhofe. 

Senator INHOFE. Thank you, Mr. Chairman. 

Senator Markey and I were both in the House at the time of the 

Clean Air Act amendments in 1990. You could use the same analogy here to say that if we are doing such a good job, why do we 

have to go into such a huge cost for the American people to come 

up with more regulations. 

I had requested, when I had to go down to Armed Services and 

come back up here, this document. It is from the EPA and this 

kind of fortifies what you are saying. It says that between 1980 

and 2014, gross domestic product increased 147 percent, vehicle 

miles traveled increased 97 percent, energy consumption increased 

26 percent, and U.S. population grew by 41 percent. During the 

same period, total emissions of the six principal air pollutants 

dropped 63 percent. That is there. And I think we have been doing 

a very good job. I was a cosponsor, as I suggest you were too, at 

that time. 

So some good things are happening and it seems like the people 

on the left will always talk about how dirty everything is and really don’t talk about the successes that we have had, and I appreciate Senator Markey talking about those successes. 

Mr. Kovacs, in the last subcommittee hearing Senator Rounds 

held, we received testimony on the EPA’s rampant use of sue and 

settle tactics to achieve its aggressive regulatory agenda. That is 

the subject of this hearing today. Even GAO confirmed sue and settle agreements can lead to gaps in EPA’s cost-benefit calculations. 

So I would ask you to make a comment on what impact the sue 

and settle deadlines have on the EPA’s cost-benefit calculations. 

Mr. KOVACS. Well, one of the difficulties with sue and settle is 

that if EPA is putting out 400 rules in the course of a year and 

they are sued on, let’s say, 15 of those and they enter into a sue 

and settle agreement. What happens once the court enters the consent decree is EPA is really under a court order to push those 15 

regulations to the front of the line. Many times when they are put 

in the front of the line they are on extremely tight deadlines, Boiler 

MACT, for example, even Utility MACT. What happens is they are 

121 

taking a very complex issue and jamming it into a short period of 

time. 

What usually happens is they avoid forming the small business 

advisory panels; they avoid doing an analysis of what it is going 

to do to the States and unfunded mandates; they avoid doing Information Quality Act. What they do is they push it out and then the 

litigation continues. I think that is one of the reasons why there 

is so much litigation with EPA, is because they are constantly 

jammed and constantly missing deadlines. 

Senator INHOFE. OK, I appreciate that. I have two other questions. I am going to try to get them out kind of quickly. The next 

one is for you. Today’s hearing is important to understanding how 

EPA decides the who and the what, the where, the when, the why 

prior to issuing a regulation, because once it is final it may be too 

late. The best example of that is this summer the EPA Administrator McCarthy shrugged off concerns over a court potentially 

vacating the mercury rule because ‘‘the investments have been 

made.’’ Another way of saying that is the damage has already been 

done. So in the case of the mercury rule we know what has happened with that. 

I would ask you, how robust was the RIA in making the case for 

the final regulation, which we now know has been overturned by 

the Supreme Court? 

Mr. KOVACS. Well, I think just look at the testimony, really, or 

the letter from small business council of advocacy. They made it 

very clear that EPA did not really talk to small business; they did 

not really try to understand what the impact was going to be on 

States. What happens when you have a regulation, a regulation, in 

my mind, is harder to get rid of than a law, because you can sue 

under it even if you change it. 

What happens is once the process goes into effect, it is there 

until it is overturned. They have tried, on Utility MACT, for example, several times to get a stay of it and they could not get a stay. 

So what happens is the regulation is in effect, the industry and the 

regulator community is going to be implementing that. 

Senator INHOFE. And in the case of Utility MACT the damage 

was done. 

Mr. KOVACS. It was done. And when the Supreme Court decided 

to send it back, at that point in time there was nothing that could 

be done, the damage was done. And I just put in a push for the 

Coats bill, which says that on those few large mega regulations, 

those over $1 billion that have national impact, and there are only 

a few a year, that there should be some mechanism to allow the 

regulated community to get a stay. 

Senator INHOFE. Well, and I know a lot of the people who were 

already hurt not just because it had gone into effect, but because 

they were anticipating it was going to be going into effect, so they 

had done their fuel switching and everything else, anticipating 

that. 

The other thing I wanted to bring up, and you can just answer 

it real quickly, this is for Mr. Batkins. I was the bad guy, as Senator Markey knows, back in 2002, and 2003, and 2004, and 2005 

when they first started coming to the world coming to an end, global warming and all that. I actually, at that time, was the majority 

122 

and chair of the subcommittee that Senator Rounds chairs now, 

and at that time I thought that was probably true until I found out 

the cost of this thing. 

At that time it was from Senator Markey’s own MIT came out with the cost. The cost range at that time was between $300 billion 

and $400 billion, and that was for the legislation that had been introduced. At that time it was introduced by McCain and 

Lieberman, I guess it was. And then Charles Rivers came along, 

they came along with the same approximate cost. 

So we know it is a very costly thing. So I think it was necessary 

for those on the other side to come up with something to offset that 

argument, so they came up with the social cost of carbon. 

Now, I would like to ask you, Mr. Batkins, the figure to claim 

alleged benefits of its climate regulations, what are some of the 

shortcomings with the current SCC figure? 

Mr. BATKINS. Well, there is a lot of tension between the social 

cost of carbon on Circular A–4 and the Clean Air Act. What you 

will see broadly is, again, climate change, global climate change, so 

these are going to be generally global benefits accruing. So we have 

a majority of the benefits going overseas. For example, the Clean 

Power Plan, according to EPA’s estimate, had $8.4 billion in costs. 

These costs are borne domestically, but a majority of the benefits 

are borne internationally. Again, it is a difficult task when we talk 

about projecting costs and benefits out to 2100 or 2300. We are 

talking about generations. 

There is also the issue of the discount rate. I mentioned Circular 

A–4 generally prefers a discount rate of 3 and 7 percent; other nations have slightly higher. And for this discount rate, just to give 

you an example of the range that we can have in social cost of carbon, depending on the discount rate, this year the social cost of carbon could be $12 per ton or $120 per ton. So there is generally a 

lot of tension between the social costs of carbon and what you will 

see with Circular A–4 and the Clean Air Act. 

Senator INHOFE. Good answer. Thank you. 

Senator ROUNDS. Senator Vitter. 

Senator VITTER. Thank you, Mr. Chairman. 

And thanks to all of you for your testimony. 

Ms. Furchtgott-Roth, thank you for your testimony. Back in 

2013, when I was ranking member of the committee, I procured a 

commitment for EPA’s Science Advisory Board to pull together a 

group of economists to review how the Agency does economic modeling and a cost for cost and benefits, and it has taken them forever 

to get organized, but they finally are convening their first panel of 

experts this week. There are at least a few on the panel, I am 

happy to say, who seem truly independent. 

What would be the top three or four things you would suggest 

those experts focus on in terms of how EPA currently quantifies 

costs and benefits? 

Ms. FURCHTGOTT-ROTH. With regard to the co-benefit issue, if 

ozone and mercury have harmful effects, as other witnesses were 

saying, we should be able to see that in the cost-benefit analysis 

without the co-benefits. If EPA thinks that we have levels of particulates that are too high, then it should be able to issue a separate 

rule and look at those separately, because right now, according to 

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EPA, the level of particulates, that standard is fine. Many places 

all over the Country are in attainment. So by saying that we are 

getting benefits from different levels of particulates, EPA is implicitly saying that its standard is not correct. So that is one particular 

error. 

I think also the costs of increased electricity prices have not been 

factored in. The costs on small businesses have been minimized. 

NERA, an economic consulting firm, says that the costs of electricity would rise by 17 percent, causing about $473 billion of damages. 

Most important, the climate benefits, we will not see these climate benefits if firms just relocate, because the same emissions 

will go out in the air and we won’t have any reduced effect on global warming. We might have a greater effect, in fact, because other 

countries don’t have as strict standards as we do, and those, right 

now, are not counted in the analysis. It is just assumed that emissions, if we regulate them, are going to go away. Same with the 

health benefits. We know that dirty air also travels. 

Senator VITTER. OK, thank you very much. 

Dr. Rice, thank you for being here as well. I have a pretty simple 

question that I think you can speak to as a doctor. It is my understanding that there is ample evidence and research that shows that 

there are real human health impacts from unemployment increases, areas with high unemployment. Some of those impacts include increased rates of alcoholism, child neglect and abuse, impacts on mental health. 

So my question is simply this: Do you believe it is accurate that 

there can be human health impacts from increases in unemployment, someone losing their job, potentially not being able to care 

adequately for their family? 

Dr. RICE. Thank you for that question, Senator Vitter. As I also 

mentioned in my testimony, when people don’t have their health, 

that impairs their ability to work and to perform well and to get 

sleep and to keep their job because of doctor appointments that 

they might have. So you are absolutely right, there is a complicated 

intersection between health and employment. And I hope I have 

answered your question. 

Senator VITTER. I don’t think you really have. So do you think 

there is a clear relationship between higher unemployment and 

negative health impacts on the population? 

Dr. RICE. I am a pulmonary doctor and I am not an expert on 

employment specifically as an exposure. But I agree generally that 

the better people are doing in all kinds of ways, and there are all 

kinds of exposures that affect health, and when people don’t have 

their health they also can’t work as well. So it is a complicated 

issue. 

Senator VITTER. OK. I would point to, in particular, there are 

lots of studies, but one is an American Academy of Pediatrics study 

that was presented at an exhibition in San Francisco that goes directly to this. In fact, one of the top predictors of health is income, 

employment, economic status. 

Could I have a little bit more time, Mr. Chairman? 

Senator ROUNDS. Certainly. 

Senator VITTER. Thank you. 

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Just one other question for Mr. Kovacs. Another agreement I procured from EPA back in 2013 as ranking member was that they 

would finally provide the scientific data underlying the key studies 

that go to some of their past regulatory actions and would de-identify personal information so that data would be available and could 

be independently reviewed. Now, they have done a little bit of that 

and they have stonewalled on a lot of that, saying that they somehow can’t de-identify data, can’t take personal information out. 

Do you believe it is credible in 2015, with current technologies, 

that it is not possible to de-identify datasets, particularly datasets 

developed in the 1980’s, to protect truly confidential patient information, but make these de-identified datasets available for independent analysis so we can judge and folks independently can 

judge if they really justify what EPA has pushed forward in terms 

of regulation? 

Mr. KOVACS. Well, it is certainly my understanding that even 

HHS de-identifies data and shares it with researchers. That I am 

fairly confident of and that happens every day. What you are referring to is the Pope and Dockery study. The reason this entire issue 

has become so contentious is because the Pope and Dockery studies 

in the late 1990’s became the basis for literally all the studies that 

are going on today. And when Congress passed the Information 

Quality Act, it required that the data be peer-reviewed and that it 

be reproducible. 

And the difficulty that we are facing as we talk about all these 

outcomes, and why I have tried to get the regulations right as opposed to worrying about the outcome, is that no one can really determine whether or not, if this data is not correct, without getting 

the information to the public for checking on reproducibility, we are 

all sort of stuck and we are arguing about something we may not 

know the answer to, but it is easy to find. 

Now, EPA has been asked for the data and they said they don’t 

own it, they say Harvard owns it, and we have been fighting over 

this for, I don’t know, 20 years and this is the difficulty. And if 

there is anything that I can communicate in terms of my testimony, it is the regulatory process works for Congress and citizens, 

not for agencies, and we need to be able to have a process where 

we are open and transparent, and the data can be put on the table 

and we can actually deal with what is right, what is wrong. 

If we are going to regulate PM2.5, we have a statute where we 

can regulate it. If we are going to regulate SO2, we have a statute 

under NAAQS. And if you are going to regulate mercury, you have 

two, you have 111 and 112. But let’s do it right and let’s do it honest and let’s do it transparently. 

Senator VITTER. Thank you very much. 

Dr. RICE. Senator Vitter, may I comment on that issue of the air 

pollution studies in Pope and Dockery? Would that be all right? 

Senator ROUNDS. Quickly. 

Dr. RICE. There have been hundreds and hundreds of studies on 

the issue of air pollution and mortality. Pope and Dockery was one 

of them. That was one of the earliest ones. I am not quite sure 

what Witness Kovacs means by the basis for all the other air pollution studies. There have been studies using all sorts of methodologies, and not all of them have taken place in the United States; 

125 

some excellent studies in Europe and Asia as well. And this evidence overwhelmingly supports that there is an association between particulate matter exposure and death. 

Senator VITTER. Well, just to clarify, I think the point was correct that study in particular is a huge basis for both major EPA 

action and other related studies, and we have never gotten the 

data sets de-identified so that can be independently reviewed. I 

think that is the major point. 

Senator ROUNDS. Thank you, Senator Vitter. 

The purpose for this oversight hearing in the first place is to look 

at the analysis which is done by an agency within the Federal Government, the EPA. Whether you believe in the processes, as Senator Markey shared, whether you look at the impacts and the costs 

to the actual economy, as Senator Inhofe has shared, there is a 

common theme here that I think we would all agree on. That is, 

to be able to point at a process which provides confidence to the 

American public, one that you look at and you review and you find 

out what is working correctly and what may not be working correctly. That is when you begin to put together the confidence necessary for laws to be implemented and accepted. 

So today’s hearing is as much about looking at the processes and 

finding ways to make them even better in the future than what 

they are today. When there are shortcomings identified, then we 

should work for both points of view to make it better than what 

it was in the past. I think that works to the benefit of both sides, 

when you can look at it and identify what is fact and what is a supposition or a proposition. 

So from my perspective today you have been very helpful, and I 

want to thank all of the members of the witnesses here, all of the 

witnesses that have come in today and helped us in our process as 

well. 

And I want to thank Senator Markey for his participation. It 

would be great to see some more members here as well. I understand that there are other conflicts as well. 

Senator Markey, do you have any closing thoughts? 

Senator MARKEY. Thank you, Mr. Chairman, very much. I ask 

unanimous consent to include in the record this explanation of the 

social cost of carbon from the New York University School of Law, 

which shows that the social cost of carbon uses a 3 percent discount rate, which Mr. Batkins said was the preferred rate of OMB. 

Senator ROUNDS. Without objection. 

Senator MARKEY. Thank you. 

[The referenced information follows:] 

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Senator MARKEY. I would also like to say that historically this 

area doesn’t really factor in the weight of innovation in the technology sector. The industry itself tends to be very, very pessimistic 

about what they can do; that is, the existing generation of executives just doesn’t think they can do it. So that is what they testify 

to. 

For example, back in 2001, 2003, 2005 I kept making the same 

amendment on the floor of the House of Representatives, saying 

that the auto industry should average 35 miles per gallon by the 

year 2020 with their vehicles. The industry said we can’t do that, 

you will bankrupt us; we can’t do that, the technology just isn’t 

there. So finally, in 2007, my law passed over in the House of Representatives that said 35 miles per gallon by the year 2020. 

Then the industry basically suffered a tremendous collapse in 

2008 and 2009. They dropped all the way down to just 9 million 

vehicles which they sold in the United States. Nine million is a 

very low number. And President Obama then promulgated the 

rules, saying they had to meet this much higher standard. 

Well, this is unbelievable. They are not going to have 35 miles 

per gallon by the year 2020; they are going to have pretty close to 

35 miles per gallon by 2016. So the industry dramatically underestimated how quickly they could move. They said they couldn’t 

even meet that deadline of 2018, 2019, 2020. They are meeting it 

in 2016. 

Moreover, here is the big news: they are selling 16 million vehicles this year, these newer, more efficient vehicles out there that 

the public loves because they are saving money on gasoline and, by 

the way, sending up less pollution into the air; less carbon dioxide, 

less soot, less smog. It is just a completely win-win-win-win situation. But it does reflect how conservative these companies are. 

The utilities are the same way. The chairman of the full committee made reference to the 1990 Clean Air Act and how much 

more quickly the technology moved and how much greater the benefits were. 

So a lot of this kind of reflects, to a certain extent, the conservative view, which is understandable, of CEOs of companies in 

terms of what can happen after they are the CEOs of the company. 

That is just the way it is. But the truth is another generation taking another view of the same issues, bringing in perhaps younger 

technologists, younger scientists who have a more innovative spirit 

invariably, invariably results in dramatically faster implementation 

of new technologies and dramatically higher benefits that flow from 

the reduction in pollution that goes up into the atmosphere. 

So that has been my observation over my career, while also stipulating that I understand that motivation of the existing group of 

CEOs, but they are almost always wrong about the future, as right 

as they might be about the present. But the future has always 

been, from my perspective, a very elusive thing for the existing 

CEOs to grasp, especially if they have been on the same job for a 

prolonged period of time. They almost have a stake in the status 

quo and their vision being validated, because they don’t have to 

worry about the future. 

So I thank you, Mr. Chairman, and I yield back the balance. 

Senator ROUNDS. Thank you. 

132 

Senator INHOFE. The balance of what? 

[Laughter.] 

Senator ROUNDS. The chair is going to take prerogative on this 

and allow the chairman of the full committee to make a comment 

before we close. 

Senator INHOFE. Well, no, I learned a long time ago, and this 

surprises a lot of people. I used to say it and it really surprised 

them, that Barbara Boxer and I are good friends. This guy and I 

are good friends, and we have the kind of relationship that is a 

very honest relationship. He has every right to be wrong. 

And I really believe that when you look at the overregulation, 

the direct relationship between overregulation and jobs that are 

lost and the cost of the economy, we have all those figures, we have 

used them. You mentioned Utility MACT. Look at the number of 

people who have lost their jobs in anticipation of what would happen. 

So, anyway, we have a nice relationship and we will continue 

this, and that is one of the most significant things about this committee, I think. Anyhow, I will yield back. 

Senator ROUNDS. Thank you. 

Once again, I would just like to take this opportunity to thank 

our witnesses for the time to be with us today. I would also like 

to thank my colleagues who attended this hearing for their 

thoughts and their questions. 

The record for this meeting will be open for 2 weeks, which 

brings us to Wednesday, November 4th. With that, this hearing is 

adjourned. Thank you. 

[Whereupon, at 11:18 a.m. the committee was adjourned.] 

[Additional material submitted for the record follows.] 

STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR

FROM THE STATE OF OKLAHOMA

Thank you Subcommittee Chairman Rounds for convening today’s oversight hearing, and thank you to our witnesses for being here to testify. At a time when the 

U.S. Environmental Protection Agency (EPA) is advancing an unprecedented regulatory agenda on top of mounting court challenges, today’s hearing on regulatory impact analyses (RIAs) is absolutely critical to assessing the integrity of EPA’s tools 

for developing regulatory actions. 

RIAs were designed to provide Federal agencies a framework for weighing the 

costs and benefits of a particular regulatory action and alternatives—prior to 

issuing a rule. In theory, robust RIAs should improve an agency’s decisionmaking 

process and result in efficient actions. However, as witnesses today will testify, the 

deep flaws in recent EPA RIAs call into question many of EPA’s recent rules. Specifically, testimony today will highlight several deficiencies across EPA RIAs that 

warrant congressional oversight, including: an over reliance on alleged benefits that 

are unrelated to the subject of the rule, such as benefits from reductions in fine particulate matter (PM2.5 ) in rules addressing other pollutants. Additional flaws include the use of a global estimate of the social cost of carbon to manufacture alleged 

climate benefits here in the United States and the recurring failure to conduct robust economic analyses of regulatory impacts in accordance with regulatory guidance, executive orders, and statutes designed to protect small businesses as well as 

state, local, and tribal governments. 

These shortcomings reveal a troubling pattern under the Obama EPA—where its 

tools for developing RIAs are highly speculative and deviate from the long-standing 

established regulatory process—in an effort to seemingly mold the RIA to fit a predetermined regulatory outcome. 

I co-sponsored the Clean Air Act Amendments of 1990 and the Clear Skies Act 

of 2003, where Congress gave EPA certain authorities to issue regulations. However, 

the Obama EPA has stepped outside of its legal boundaries and—as demonstrated 

in today’s hearing—EPA has stepped outside the regulatory process by issuing RIAs 

133 

with significant gaps. Quite simply, EPA has gone too far, issuing legally vulnerable 

rules under short time frames based on unsubstantiated science and incomplete economic analyses. 

Indeed, defective RIAs are likely to result in inefficient and overly burdensome 

regulations, many of which are challenged in the courts. But, by the time these challenges are resolved, often against EPA; regulated entities have already incurred the 

costs of compliance with an illegal regulation. If EPA Administrator Gina 

McCarthy’s unconcern for the Supreme Court’s determination that the mercury rule 

was invalid because ‘‘investment had been made’’ is any indication, testimony today 

will suggest the Agency is similarly disinterested in completing open and robust 

RIAs to inform regulatory action because by the time challenges surface, EPA will 

have issued the regulatory action it so desired and forced compliance. 

Accordingly, Congress must continue to conduct oversight of EPA RIAs and hold 

the Agency accountable in order to curb regulatory uncertainty over the true impact 

of rules and restore integrity to the regulatory process and subsequent actions coming from the EPA. I ask that my full statement be entered into the record. Thank 

you. 

Æ