Apr 13, 2015 - 9:00am

Tell the Truth on Regulations


Advisor and Former Chief Executive Officer, U.S. Chamber of Commerce

Most savvy consumers are wary of being upsold. If salespeople insist that the high-end model is absolutely necessary, they must be ready to prove that the benefits of the product justify the costs and that there is no alternative or better value. Otherwise, buyers will probably say “thanks, but no thanks.”

We should be able to expect the same from the federal government. But when it comes to some of the costliest regulations, the American people are being sold a bill of goods.

The Environmental Protection Agency has touted its massive Mercury and Air Toxics (MATS) rule—which takes effect this week—as an essential tool to reducing mercury. To justify the $10.6 billion the rule will cost our economy, EPA claims that it will produce $60 billion in health benefits. But if you study the fine print, you’ll see that only $4 million to $6 million in estimated benefits come from the reduction of mercury—which, by the way, is the whole point of the regulation. The rest of the purported benefits come from incidental reductions in fine particulate matter or PM2.5, a completely different substance that the rule isn’t designed to control. Sound fishy?

It turns out that PM2.5 is an old trick that EPA uses to justify virtually all of its most costly regulations under the Clean Air Act. Because PM2.5 exists in practically every emissions stream that EPA regulates, the agency can almost always show that a given rule will reduce PM2.5. The quantified health benefits of PM2.5 reductions are usually calculated to be high, and EPA obscures the details when releasing cost-benefit analyses so that the public doesn’t know where the benefits come from—such as in the case of the MATS rule in which mercury accounts for only 0.001% of the claimed health advantages.

Grossly inflating the benefits of a rule to justify sky-high costs is one of the major shortcomings in our regulatory system. It deceives the public, while imposing costly regulations on our economy without delivering the promised results.

To help put a stop to such abuses, the U.S. Chamber is calling for enactment of the Regulatory Accountability Act. The bill would modernize our outdated system, improve the rulemaking process, and hold agencies like EPA accountable. It is a commonsense approach that has bipartisan support and has already passed the House.  

The bottom line is that our regulatory system must be fair, transparent, and cost effective. For rules to pass muster, they must be based on sound science, good data, and demonstrated need. And, at a very minimum, the benefits must outweigh the costs. The American people shouldn’t expect anything less.  

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About the Author

About the Author

Thomas J. Donohue
Advisor and Former Chief Executive Officer, U.S. Chamber of Commerce

Thomas J. Donohue is advisor and former chief executive officer of the U.S. Chamber of Commerce.