New Report Finds EPA Economic Analysis of Wetlands Rule Deeply Flawed

'The agency should withdraw its economic analysis and prepare an adequate study of this major change in the implementation of the Clean Water Act'

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A new report released this week is sharply critical of the U.S. Environmental Protection Agency’s (EPA) estimates of probable costs and benefits associated with the proposed rule on “Waters of the United States.” The report finds that EPA has significantly underestimated the economic impacts the rule will have on local communities and businesses.

Dr. David Sunding’s report, Review of 2014 EPA Economic Analysis of Proposed Revised Definition of Waters of the Unites States, examines the economic methodology behind the estimates. EPA has found a way to justify its significant expansion of the term “Waters of the United States” in the rule to include previously unregulated waters located in floodplains and riparian areas, ditches, and “other waters.”

Sunding, an economist on the faculty of the University of California-Berkeley and a principal with The Brattle Group, chronicles how EPA systematically excluded costs, underrepresented jurisdictional areas and used flawed methodologies to arrive at much lower economic impacts. He also examines how the lack of transparency in the report makes it difficult to understand or replicate the calculations, evaluate the underlying assumptions, or understand discrepancies in the results.

“The errors, omissions, and lack of transparency in EPA’s study are so severe as to render it virtually meaningless," Dr. Sunding concludes. "The agency should withdraw the economic analysis and prepare an adequate study of this major change in the implementation of the CWA.”

AGC and its coalition partners in the Waters Advocacy Coalition met with the Office of Information and Regulatory Affairs (OIRA) earlier this year to present a preliminary version of Dr. Sunding’s findings in advance of the rule’s release.