The federal government is moving backwards in its regulatory analysis and decision-making.
For decades, policymakers and regulatory experts around the world have lined up behind what has become a mantra of “smart” regulation. Industry representatives and political conservatives have eagerly joined the call. They have long sought to ensure that regulatory decisions would be grounded in sound science and rigorous analysis, rather than irrational fears and political pressures from an ill-informed public.
Having established a process for economic analysis of new federal regulations since the late 1970s, the United States could be considered among the forerunners of the global movement favoring smart regulation—or “smarter” regulation, as it is sometimes called. But today, the U.S. government is moving away from this movement. We are seeing the Trump Administration take steps backward in ensuring that regulatory decisions are well-informed.
The U.S. Environmental Protection Agency (EPA), for example, recently released a document stating that the agency will no longer seek to estimate the value of the health effects of its decisions with respect to two long-regulated air pollutants: ozone and particulate matter.
Both ozone and particulate matter have well-documented adverse health effects. Exposure to particulate matter—or soot—has been linked to significant premature mortality. This is especially the case with very fine soot particles (sometimes referred to as “PM2.5” because they are particulates 2.5 micrometers or less in diameter).
EPA officials in both Democratic and Republican administrations have long placed a monetary value on these health effects, allowing these impacts to be compared with the costs expected to result from new environmental regulations. Monetizing health effects does not mean that the government cares only about money. Nor does it mean that regulatory effects only matter when they can be monetized. Rather, monetizing health effects places the benefits of government regulations on a par with the costs of regulation, enabling smarter comparisons of regulatory impacts to inform, even if not completely determine, regulatory decisions.
The Trump EPA has, however, recently declared that it is “no longer monetizing benefits from PM2.5 and ozone.” The agency claims that in the past it had offered only point estimates—that is, single numbers—for the monetized value of reduced ozone and particulate matter, obscuring uncertainty around the agency’s estimates. Any serious analyst will acknowledge that there is always uncertainty around any estimate of a new regulation’s impacts. The agency correctly observed that point estimates can “lead the public to believe the Agency has a better understanding of the monetized impacts of exposure to PM2.5 and ozone than in reality.”
But astonishingly, the agency has declined to take the sensible step of providing a range of monetary values that would reflect uncertainty—a standard practice in regulatory impact analysis. The agency instead announced that it was abandoning altogether, at least for now, its practice of monetizing the health effects of these pollutants. In the meantime, it was still going forward to make key public health regulatory and deregulatory decisions.
The agency has discarded information useful to decision-makers and the public. It has done so simply by citing the ever-present bugaboo of uncertainty, and without citing any new advance in scientific or economic research that suddenly might make it justifiable to abandon even a reasonable effort to provide a range for its monetized estimates. The agency has just zeroed out the morbidity and mortality effects of ozone and particulate matter pollution in its decision-making.
But zero, alas, is a point estimate, too.
It is hard not to see as self-serving the agency’s decision to remove from its decision calculus all monetary value for major pollutants’ health effects. For an administration bent on deregulation, decisions to rescind or modify existing air pollution rules can now look better than they really are.
Pulling back on providing information is moving in the opposite direction of smart regulation. Unfortunately, the EPA’s recent announcement is of a piece with other actions by the current Administration. It would be easier to take EPA’s expressed concerns about uncertainty in benefit estimation as sincere if the agency were not at the same time significantly scaling back its Office of Research and Development, an office that currently lacks appointed leadership and has suffered significant staffing cuts. Overall, EPA has lost almost a quarter of its Ph.D. scientists in just the last year.
Developments at EPA are part of a troubling pattern of actions in the second Trump Administration that undermine smart regulatory decisions—and that, in particular, devalue information about the existence or extent of regulatory benefits. Within his first two weeks in office, President Donald J. Trump signed Executive Order 14,192 “to significantly reduce the private expenditures required to comply with federal regulations.” This order directed agencies to identify 10 regulations to eliminate for every new regulation they adopted and to make a scrupulous accounting of regulatory costs. But nowhere does the order even acknowledge the other side of the ledger: regulatory benefits.
That same executive order directed the Office of Management and Budget to revoke a 2023 update to Circular A-4, a document that provides agencies with guidance on best practices for conducting regulatory impact analyses. Much had changed in economic and decision sciences in the twenty years since A-4 was first issued, so an update had been long overdue. But the Trump executive order, by fiat, wiped away all the new knowledge contained in the 2023 update. Even if the new Administration had issues with certain aspects of the updated Circular, it was far from consistent with smart regulation simply to revoke the entire update, not to mention “all accompanying appendices, guidelines, and documents.”
When the power to make regulatory and deregulatory decisions is wielded with deliberate indifference to gathering all available facts, a government can no longer be said to be committed to smart regulation. The result is instead arbitrary and capricious regulation. As much as the judiciary has said that agencies cannot fail to consider the costs of regulation, the courts will likely need to push back against how Trump Administration agencies treat benefits, too.
Actions taken by the current EPA and the Trump White House will make regulators less informed. This is especially unfortunate because, with today’s complex problems, this is precisely the time when society needs regulators to be more informed. “Dumb and dumber” might well work as the title of a crude or offensive blockbuster movie. But regulation affects people’s lives and livelihoods. Unlike a comedy on the big screen, regulation is no laughing matter.
This essay is part of a series, titled “Valuing and Devaluing Regulatory Benefits.”
