The Government Accountability Office (GAO) has released a report critiquing two EPA cost-benefit analyses on an oil spill prevention regulation. In 2002 and 2006, EPA amended the Spill Prevention, Control and Countermeasure (SPCC) rule which requires oil-storage facilities to prepare plans in the event of an oil leak or spill. Because the amendments to the rule could have a significant impact on the economy, the White House required EPA to prepare cost-benefit analyses of both sets of amendments.

GAO found that EPA's cost-benefit analyses were flawed. The report criticizes EPA for assuming, in the identification of costs, facilities were already in compliance with the original rule. GAO asserts, citing White House guidelines, EPA should not have jumped to this conclusion. By assuming all facilities were in compliance, EPA likely understated the costs of the amendments to the regulation thereby weakening the economic justification for issuing the amendments.

The original SPCC rule was issued in 1973. Facilities had up to 30 years to comply. If facilities weren't in compliance, that hardly seems like a reason for EPA to forego further development. Where's the investigation as to why oil-storage facilities are having trouble complying with this rule? (The requester of this report, Sen. James Inhofe (R-OK), is no friend of the environment, and likely has no interest in examining why oil-storage facilities may be breaking the law, only in attacking EPA.)

Of course, the real issue here is the ridiculousness of cost-benefit analysis in rulemaking. The Bush White House designed its cost-benefit guidelines in order to force agencies to develop estimates that make regulations appear more costly. EPA issued the amendments to the SPCC rule in order to reduce the so-called burden of the regulation. Even so, EPA was forced to prepare a detailed cost-benefit analysis.

The complexity of the current cost-benefit analysis system and the disproportionate focus on quantitative costs rather than qualitative benefits are two primary contributors to the lack of speed and responsiveness in the regulatory process.

The Union of Concerned Scientists (UCS) has the dirt on the efforts of the big three — General Motors, Ford and Chrysler — to mislead the public about the benefits of improved fuel efficiency. The automakers are holding a public rally as part of lobbying efforts to persuade federal legislators to abandon proposed fuel efficiency reform, according to UCS.

The Senate has passed a bill that would strengthen the federal fuel efficiency program, known as CAFE standards. The House chose not to tackle the issue in its own energy legislation. However, Democratic leaders may push to include CAFE reform during conference proceedings before the final bill is sent to the president.

According to UCS, if the new standard was fully implemented, it would, among other things, "cut 206 million metric tons of global warming pollution in 2020 alone—equivalent to taking more than 30 million of today's average cars and trucks off the road."

But full implementation is far from a given. The Senate unwisely included a cost-benefit provision in its version of CAFE reform. Currently, the national minimum rate for fuel efficiency is a static 27.5 miles per gallon and remains as such regardless of monetized costs or benefits. The Senate bill would change that: The legislation would require regulators to prove a new standard's benefits outweigh its costs before regulating.

For more on the problems with the cost-benefit provision and why it may lead to watered-down standards, see the OMB Watch analysis "Cost-Benefit Provision Latches onto Fuel Economy Standard."

Be sure to check out the latest issue of our biweekly newsletter, The Watcher. Regulatory policy articles this time:

Toy Recalls Bring Attention to Commission's Inadequacies

OMB Manipulates Science in Cost-Benefit Analysis for Ozone Rule

Size Matters: Nanotechnologies Present New Challenges

Frank O'Donnell at the Blog for Clean Air has posted on the latest in a series of White House efforts to undermine EPA smog regulations. This time, it's the rule's cost-benefit analysis, wherein the White House Office of Management and Budget tries to underplay the benefits of the rule by attacking the scientific consensus that smog reduction saves lives.

Read the post from the Blog for Clean Air here: White House Tampers with EPA Smog Plan