Let’s say I planned to buy a new sofa with a price tag of $800, but I changed by mind. I guess I could say “I saved $800.”

My neighbor disagrees and insists I saved a lot more than that. He says the sofa was worth double that amount. Did I save myself $800? Or did I save $1,600 because my neighbor said that’s what he thinks the sofa was worth?

That’s the same kind of nonsense I see with Scott Pruitt’s cost-savings claims for revoking improvements for chemical plant safety.  Amendments to EPA’s Risk Management Plan (RMP) regulations were published at the very end of the Obama administration. Nearly immediately, the Trump administration put them on hold and they’ve never taken effect.  Last week, EPA’s Pruitt announced plans to rescind essentially all of the 2017 amendments.  (I wrote last week about it.) Surrounded by chemical industry reps, Pruitt said rescinding the improvements would save businesses “$88 million in regulatory costs.”  

I was curious to see how Pruitt’s EPA came up with their $88 million figure. Is their estimate akin to the $800 sofa I decided not to purchase? Or is it more like my neighbor’s make believe price tag of $1,600?

I examined the regulatory impact analysis for the 2017 rule that never took affect (here) and compared it to the analysis for Pruitt’s newly announced rescission. Both analyses indicate that about 14,000 facilities are subject to EPA’s RMP requirements. You’ll see below that Pruitt’s claims of cost savings are at least double to that estimated for the rule’s costs. Here are some examples from specific provisions of the rule:

Requirement: Hiring a third-party auditor.

Type of plant: One with simple chemical processes, such as waste water treatment, and 1-19 employees. 

• Staff time for the contracting process
  • Estimate in 2017 rule: 36 hours
  • Estimate in rescission rule: 72 hours
• Auditor’s Fee
  • Estimate in 2017 rule: $15,000
  • Estimate in rescission rule: $30,000

Type of plant: One with a complex chemical process and 100 or more employees. 

• Staff time for the contracting process
  • Estimate in 2017 rule: 90 hours
  • Estimate in rescission rule: 180 hours
• Auditor’s Fee
  • Estimate in 2017 rule: $40,000
  • Estimate in rescission rule: $80,000

In total for the third-party audit requirements, the 2017 rule projected an annualized cost to business of $5 million. Pruitt says revoking the requirement will actually save businesses $9.8 million annually.

Requirement: Determining the feasibility of using safer technologies

Type of plant: About 1,500 facilities with a high frequency of accidental chemical releases

• Estimated cost in 2017 rule: $34.8 million annually
• Estimated savings (by rescission)  for not having to do it: $70 million annually

Requirement: Becoming familiar with the RMP amendments

• Estimated in 2017 rule: $2.4 million annually
• Estimated savings (by rescission) for not having to do it: $34.7 million annually.

Do Pruitt’s cost-saving claims seem to you like my fictional neighbor’s sofa nonsense?

I couldn’t find anything in EPA’s new regulatory impact analysis to explain why their savings estimates differ so wildly from what was projected in 2017 for the rule’s costs. I’m hoping that someone reading this post can explain it to me.