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June 21, 2018

National Association of Manufacturers & 100+ Groups Push For Updates to Cost/Benefit Analysis

The National Association of Manufacturers (NAM) wrote a letter today expressing support for changes in the way EPA analyzes net costs and benefits when drafting new regulations.  The letter, addressed to Office of Information and Regulatory Affairs Administrator Neomi Rao, was signed by more than 100 trade groups and business organizations.

In the letter, NAM and its partners point to the need for including public input and using the best available science, acknowledging when and where uncertainties persist when crafting prospective regulations.

Earlier this month, EPA issued an Advance Notice of Proposed Rulemaking (ANPRM) to solicit public input into possible changes to the way the Agency weighs costs and benefits when considering the net impacts of proposed regulations.

At the time, the Wall Street Journal pointed out in an Editorial that there has been inconsistency in the way these net impacts are calculated depending on which administration occupies the White House.  The way impacts are analyzed and calculated can ultimately determine whether or not a proposed regulation is implemented.

The letter is available here and in full below:


Dear Administrator Rao,

The public relies on smart regulations to set clear rules that support a clean environment, safe workplaces, and a better quality of life. At the same time, every regulation comes with a price tag, and those costs matter – especially to small businesses and local communities. Cost-benefit analysis, although not perfect, is the best tool agencies have available to them to ensure that regulations promote the public good and do more good than harm.

We believe the time has come for EPA to reexamine its statutory interpretations, and unless prohibited by statute, implement its regulatory statutes through cost-benefit balancing. Agencies must prepare cost-benefit analyses to support their most significant regulations, and to the extent permitted by law, not regulate unless the benefits justify the costs and the selected regulatory option maximizes net benefits to society.

In our view, agencies also should apply the basic tenets of good government process when they create new regulations, or amend or even rescind old ones. First, the regulatory process must be transparent and inclusive of public input. Second, agencies should use the best available science and should clearly identify areas in which meaningful uncertainties remain. Third, agencies should be accountable to Congress and the public for the quality of their rulemaking.

The benefits of regulation are often diffuse to society while the burdens of regulation are concentrated. It is therefore critical that the parties who are impacted by regulations – in particular small and medium-sized businesses – have a seat at the table when agencies write them. It is equally important that agencies develop meaningful cost estimates, based on solid and unbiased scientific information, to help the agency and the public understand the trade-offs being considered and to identify smarter alternatives where available.

Reliance on balanced peer review and scientific advisory panels when evaluating rules helps agencies ensure that outdated, partial, or flawed studies do not influence our public policies. This approach leverages public accountability to prevent backroom negotiations, partisan rulemaking, and overly bureaucratic decisions that may otherwise lead to confusion and distrust of government. Open and honest regulatory processes are easy for public stakeholders to understand and engage with.

We encourage you to implement good government practices that improve the lives of Americans without leaving anyone behind. Demanding transparency, applying the best available science and analysis, and promoting accountability will make our regulatory process fairer while acting as a safeguard against political agendas. Businesses are more likely to hire when they know what to expect, and these basic principles strengthen certainty in the marketplace. These principles also help ensure that an administration of either party does not abuse its authority by issuing poorly-considered rules or gutting necessary protections.

In the days ahead, we look forward to working with you to do the right thing for Americans—and for the future of the most dynamic, innovative economy in the word.