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84130 / Vol. 85, No. 247 / Wednesday, 23, 2020 / Rules and

ENVIRONMENTAL PROTECTION SUPPLEMENTARY INFORMATION: Preamble VII. Statutory and Order Reviews AGENCY acronyms and abbreviations. The EPA A. 12866: Regulatory uses multiple acronyms and terms in Planning and Review and Executive 40 CFR Part 83 this preamble. While this list not be Order 13563: Improving and exhaustive, to ease the reading of this Regulatory Review [EPA–HQ–OAR–2020–0044; FRL 10018–56– B. Executive Order 13771: Reducing OAR] preamble and for reference purposes, Regulations and Controlling Regulatory the EPA defines the following terms and RIN 2060–AU51 Costs acronyms: C. Paperwork Reduction Act Increasing Consistency and ANPRM Advanced of Proposed D. Regulatory Flexibility Act Transparency in Considering Benefits E. Unfunded Mandates Reform Act BCA Benefit-cost analysis F. Executive Order 13132: Federalism and Costs in the Clean Air Act G. Executive Order 13175: Consultation Rulemaking Process BenMAP Benefits Mapping and Analysis Program (BenMAP) and Coordination With Indian Tribal AGENCY: Environmental Protection CAA Clean Air Act Agency (EPA). CBI Confidential business information H. Executive Order 13045: Protection of CFR Code of Federal Regulation Children From Environmental Health ACTION: Final rule. CRA Risks and Safety Risks I. Executive Order 13211: Actions SUMMARY: EPA Environmental Protection Agency This rule establishes Concerning Regulations That processes that the Environmental IOM Institute of Medicine NAAQS National Ambient Air Quality Significantly Affect Energy Supply, Protection Agency (EPA) will be Standards Distribution or Use required to undertake in promulgating NHTSA National Highway Traffic Safety J. National Technology Transfer and regulations under the Clean Air Act Administration Advancement Act (CAA) to ensure that information NPRM Notice of Proposed Rulemaking K. Executive Order 12898: Federal Actions regarding the benefits and costs of IRIS Integrated Risk Information System To Address Environmental in regulatory decisions is provided and ISA Integrated Assessments Minority Populations and Low-Income considered in a consistent and PII Personally identifiable information Populations L. Congressional Review Act transparent manner. The EPA is SAB Science Advisory Board WTA Willingness-to-accept establishing procedural requirements WTP Willingness to pay I. Executive Summary governing the preparation, A. Purpose of the Regulatory Action development, presentation, and Organization of this document. The consideration of benefit-cost analyses following outline is provided to aid in locating information in this preamble. Thorough and careful economic (BCA), including risk assessments used analysis is informative for developing in the BCA, for significant I. Executive Summary sound environmental policies. High conducted under the CAA. Together, A. Purpose of the Regulatory Action quality economic analyses enhance the B. Summary of the Major Provisions of the these requirements will help ensure that effectiveness of environmental policy the EPA implements its statutory Regulatory Action II. General Information decisions by providing policy makers obligations under the CAA, and A. Does this action apply to me? and the public with information needed describes its work in implementing B. What is the Agency’s authority for to assess the likely consequences of those obligations, in a way that is taking this action? various actions or options. consistent and transparent. III. Background Transparency about how these DATES: This final rule is effective A. Summary of Executive Orders, economic analyses are developed and December 23, 2020, but does not apply Guidances, and Rulings Related to how they are used in decision-making is to final rules for which a proposal was Regulatory BCA B. Summary of Proposed Rule essential to allowing interested parties published prior to the effective date. IV. Description of the Final Rule to hold decision makers accountable for ADDRESSES: The EPA has established a V. Responses to Significant Comments their decisions. BCA, a type of economic docket for this action under Docket ID A. Purpose of the Action analysis, can serve an integral No. EPA–HQ–OAR–2020–0044. All B. Authority To Promulgate a Procedural informative role in the regulatory documents in the docket are listed on Rule development process. It provides the http://www.regulations.gov website. C. Definitions detailed information about the value of Although listed in the index, some D. Preparation and Consideration of BCA benefits and costs of a policy to affected in Rulemaking information is not publicly available, E. Best Practices for the Development of parties and whether a policy change has e.g., CBI or other information whose BCA the potential to improve the aggregate disclosure is restricted by . 1. Key Elements of a BCA well-being of society. Certain other material, such as 2. Statement of Need The purpose of this action is to codify copyrighted material, is not placed on 3. Regulatory Options procedural best practices for the the internet and will be publicly 4. Baseline 5. Measuring Benefits and Costs preparation, development, presentation, available only in hard copy form. and consideration of BCA in regulatory Publicly available docket materials are 6. Methods for Estimating Benefits and Costs decision-making under the CAA. This available electronically through http:// 7. Selecting and Quantifying Health will help ensure that the www.regulations.gov. Endpoints in a BCA EPA implements its statutory FOR FURTHER INFORMATION CONTACT: Leif 8. Uncertainty Analysis obligations under the CAA, and Hockstad, Office of Air Policy and 9. Principle of Transparency describes its work in implementing Program Support, Office of Air and F. Requirements for the Presentation of those obligations, in a way that is Radiation, Environmental Protection BCA Results consistent and transparent. This G. Additional Comment Responses Agency, Mail Code 6103A,1200 1. Planning for Retrospective Analysis transparency is important to allow Pennsylvania Avenue NW, Washington, 2. Comments Pertaining to Executive Order interested parties to understand and DC 20460; (202) 343–9432; email 12898 evaluate the adequacy and accuracy of address: [email protected]. VI. References the BCA and the role the analysis

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played in significant regulatory relate to total costs, to the extent forth in the Administrative Procedure decision-making. possible; and Act. See 5 U.S.C. 553(a)(2),(b)(A),(d). The Agency is taking this action d. When the CAA statutory provision Nonetheless, the Agency voluntarily pursuant to CAA section 301(a). 42 or provisions under which the rule is sought public comment on the proposed U.S.C. 7601(a)(1). Section 301(a)(1) promulgated permit consideration of the rule because it believed that the provides authority to the Administrator BCA, a description of how the Agency information and opinions supplied by ‘‘to prescribe such regulations as are considered the BCA. the public would inform the Agency’s necessary to carry out his functions’’ Together, these requirements will views. Vt. Yankee Nuclear Power Corp. under the CAA. Such authority extends help ensure that the EPA implements its v. Nat. Res. Def. Council, Inc., 435 U.S. to internal agency procedures that statutory obligations under the CAA in 519, 524 (1978) (‘‘Agencies are free to increase the Agency’s ability to provide a way that is consistent and transparent. grant additional procedural rights in the consistency and transparency to the The provisions of the final rule codify exercise of their discretion.’’) In public in regard to the rulemaking best practices for the preparation, addition, even assuming arguendo that process under the CAA. See NRDC v. development, presentation, and the notice-and-comment requirements EPA, 22 F.3d 1125, 1148 (D.C. Cir. 1994) consideration of BCA as articulated in of the Act applied to this action, EPA (‘‘[Section 301] is sufficiently broad to the principles and requirements of has determined that there would be allow the of rules that are Executive Order 12866. This final rule good cause, consistent with 5 U.S.C. necessary and reasonable to effect the does not change any other requirements 553(d)(3), for making this final rule purposes of the Act.’’). pertaining to CAA rules specified in effective immediately because the goals B. Summary of the Major Provisions of executive orders and existing guidance of the rule, ensuring transparency and the Regulatory Action documents. For example, this final rule consistency in BCAs for significant CAA does not change the requirements for rulemakings, are crucial for ensuring This final rule consists of three what types of analysis should be confidence in EPA decision-making. elements. First, it requires the EPA to included in regulatory impact analyses Because this is a procedural rule that prepare a BCA for all future significant prepared under E.O. 12866. only applies internally to ensure that proposed and final regulations under EPA follows existing best practices with II. General Information the CAA. The rule also requires that the respect to BCA and to ensure that EPA Agency consider the BCA in A. Does this action apply to me? explains how EPA considered the promulgating the regulation except This rule does not regulate the results, the rationale for delayed where the statutory provision or effectiveness to allow time to adjust to provisions under which a significant conduct or determine the rights of any entity or individual outside the Agency, the new requirements does not apply. regulation is promulgated prohibit it. In addition, the EPA received Second, the rule requires EPA to as this action pertains only to internal comments and recommendations on the develop the BCA using the best EPA practices. However, the Agency proposed rule from the EPA Science available scientific information and in recognizes that any entity or individual Advisory Board (SAB), pursuant to its accordance with best practices from the interested in EPA’s regulations may be statutory duties to offer advice and economic, engineering, physical, and interested in this rule. For example, this comments on the scientific and biological . The final rule rule may be of particular interest to technical basis of certain planned EPA codifies best practices consistent with entities and individuals concerned with actions pursuant to the Environmental the EPA’s Guidelines for Preparing how the EPA conducts BCA. Research, Development, and Economic Analyses (hereafter B. What is the Agency’s authority for Demonstration Authorization Act of ‘‘Guidelines’’) and the Office of taking this action? 1978 (ERDDAA).1 Finally, the EPA also Management and Budget’s (OMB) reviewed comments received from the Circular A–4, and also requires that risk The Agency is taking this action SAB during the course of its review of assessments used to support BCAs pursuant to CAA section 301(a). 42 the forthcoming update of the EPA’s should follow best methodological U.S.C. 7601(a)(1). Section 301(a)(1) Guidelines.2 practices for risk characterization and provides authority to the Administrator risk assessment. ‘‘to prescribe such regulations as are III. Background Third, the rule imposes additional necessary to carry out his functions’’ procedural requirements to increase under the CAA. Such authority extends A. Summary of Executive Orders, transparency in the presentation and to internal agency procedures that Guidances, and Court Rulings Related consideration of the BCA results. increase the Agency’s ability to provide to Regulatory BCA Specifically, the rule provides that the consistency and transparency to the As the EPA works to advance its preambles of significant proposed and public in regard to the rulemaking mission of protecting public health and final CAA regulations must include a process under the CAA. See NRDC v. section that contains: EPA, 22 F.3d 1125, 1148 (D.C. Cir. 1994) 1 The ERDDAA requires the EPA to make a. A summary presentation of the (‘‘[Section 301] is sufficiently broad to available to the SAB proposed criteria documents, allow the promulgation of rules that are standards, limitations, or regulations, together with overall BCA results for the rule, relevant scientific and technical information on including total costs, benefits, and net necessary and reasonable to effect the which the proposed action is based. On the basis benefits; purposes of the Act.’’). of this information, the SAB may provide advice b. An additional reporting of the This is a rulemaking of agency and comments. The SAB final report on the public health and welfare benefits that organization, procedure, or practice. proposed rule is available at: https:// yosemite.epa.gov/sab/sabproduct.nsf/0/ pertain to the specific objective(s) of the This procedural rule would not regulate 82e89c7a596e9efa852585a50064d32e! CAA provision(s) under which the rule any person or entity outside the EPA OpenDocument&TableRow=2.3#2. is promulgated; and would not affect the rights or 2 Information about the SAB review of the c. A transparent presentation of how obligations of outside parties. As a rule forthcoming update of the EPA’s Guidelines is available at: https://yosemite.epa.gov/sab/ specific costs contemplated in the CAA of Agency procedure, this rule is exempt sabproduct.nsf//LookupWebProjects provision(s) under which the rule is from the notice-and-comment and CurrentBOARD/30D5E59E8DC91C22852584 promulgated (to the extent specified), delayed effective-date requirements set 03006EEE00?OpenDocument.

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the environment, it seeks to ensure that The usefulness of BCA in informing an annual effect on the economy of $100 its analyses of regulatory decisions the development of environmental million or more; or (b) a major increase provided to the public continue to be regulations has been recognized both in costs or prices for individual rooted in sound, transparent, and within and outside for industries, levels of government or consistent approaches to evaluating decades. As discussed below, geographic regions.’’ 6 Regulatory benefits and costs. Presidential Executive Orders and analyses under E.O. 12044 were The Supreme Court noted in Michigan have been in place for decades required to contain ‘‘a succinct v. EPA that ‘‘[c]onsideration of cost formally requiring the preparation of statement of the problem; a description reflects the understanding that BCA in the development of major of the major alternative ways of dealing reasonable regulation ordinarily Federal regulations, and the have with the problem that were considered requires paying attention to the examined the use of BCA in several by the agency; an analysis of the advantages and the disadvantages of regulatory contexts. In addition, the economic consequences of each of these agency decisions.’’ Michigan v. EPA, usefulness of formal BCA in informing alternatives and a detailed explanation 135 U.S. 2699, 2707 (2015). Many regulatory policy debates on protecting of the reasons for choosing one environmental statutes, including the and improving public health, safety, and alternative over the others.’’ CAA, contemplate the consideration of the natural environment has been In 1981, President Reagan issued E.O. costs as part of regulatory decision- emphasized in the academic literature. 12291, Federal Regulation, which making in many instances. Several of For example, as explained in seminal imposed the first requirements for these statutes, including the CAA, work by prominent economists Arrow et conducting formal benefit-cost analysis contain provisions that explicitly al. (1996a, 1996b), BCA ‘‘can provide an in the development of new major require some form of cost consideration exceptionally useful framework for Federal regulations. Among its when establishing a standard. consistently organizing disparate provisions, E.O. 12291 explicitly Additionally, several other statutory information, and in this way, it can required that: ‘‘(a) Administrative provisions use terminology that in greatly improve the process and, hence, decisions shall be based on adequate context implicitly direct or allow the the outcome of policy analysis. If information concerning the need for and EPA to consider costs, alone or in properly done, BCA can be of great help consequences of proposed government conjunction with benefits and other to agencies participating in the action; (b) Regulatory action shall not be factors. For example, section development of environmental undertaken unless the potential benefits 112(n)(1)(A) of the CAA directs the regulations . . .’’ (1996b). Arrow et al. to society for the regulation outweigh the potential costs to society; (c) Administrator to ‘‘regulate electric recommend that ‘‘Benefit-cost analysis Regulatory objectives shall be chosen to utility steam generating units under should be required for all major maximize the net benefits to society; (d) [section 112], if the Administrator finds regulatory decisions,’’ and that ‘‘the Among alternative approaches to any such regulation is appropriate and precise definition of ‘major’ requires given regulatory objective, the necessary.’’ ‘‘Read naturally in the .’’ alternative involving the least net cost to present context, the phrase ‘appropriate Benefit-cost analyses have been an society shall be chosen; and (e) and necessary’ requires at least some integral part of executive branch Agencies shall set regulatory priorities attention to cost.’’ Michigan, 135 S. Ct. rulemaking for decades. Presidents with the aim of maximizing the at 2707 (2015). Therefore, in light of the since the 1970s have issued executive orders requiring agencies to conduct aggregate net benefits to society, taking varying statutory provisions in the CAA into account the condition of the that apply to or otherwise address cost analysis of the economic consequences of regulations as part of the rulemaking particular industries affected by consideration, the Agency is finalizing regulations, the condition of the procedural requirements to provide development process. President Ford’s 1974 Executive Order (E.O.) 11821 national economy, and other regulatory analysis to the public that will present 7 required government agencies to actions contemplated for the future.’’ all of the benefits and costs in a Under E.O. 12291, major regulations consistent manner for all significant prepare inflation impact statements before issuing major regulations.3 These included ‘‘any regulation that is likely CAA rulemakings. to result in: (1) An annual effect on the Thorough and careful economic inflation impact statements essentially turned into benefit-cost analyses based economy of $100 million or more; (2) A analysis is informative for developing major increase in costs or prices for sound environmental policies. High on the understanding that a regulation would not be truly inflationary unless consumers, individual industries, quality economic analyses enhance the Federal, State, or local government effectiveness of environmental policy its costs to society exceeded the benefits 4 agencies, or geographic regions; or (3) decisions by providing policy makers it produced, and the E.O. was renamed as Economic Impact Statements with Significant adverse effects on and the public with information needed competition, employment, investment, E.O. 11949 in 1976.5 President Carter’s to systematically assess the likely productivity, innovation, or on the 1978 E.O. 12044, Improving consequences of various actions or ability of -based Government Regulations, included options. BCA, a type of economic enterprises to compete with foreign- formal requirements for conducting analysis, can serve an integral based enterprises in domestic or export regulatory analysis at a minimum ‘‘for informative role in the regulatory markets.’’ development process. In general terms, all regulations which will result in (a) In 1993, E.O. 12291 was revoked and a BCA is an evaluation of both the replaced by President Clinton’s E.O. 3 Executive Order 11821—Inflation Impact benefits and costs to society as a result Statements, Federal Register, VOL. 39, NO. 231— 12866, Regulatory Planning and Review, of a policy and the difference between Friday, 29, 1974 (pages 41501–41502) . which is still in effect today. E.O. 12866 the two (i.e., the calculation of net 4 https://obamawhitehouse.archives.gov/omb/ benefits (benefits minus costs)). It inforeg_chap1#tnfrp. 6 Executive Order 12044—Improving Government provides information about whether a 5 Executive Order 11949—Economic Impact Regulations, Federal Register, VOL 43, NO. 58— policy change has the potential to Statements, Federal Register, VOL. 42, NO. 3— Friday, 24, 1978 (Pages 12659–12670). Wednesday, 5, 1977 (page 1017). https:// 7 Executive Order 12291—Federal Regulation, improve the aggregate well-being of www.govinfo.gov/content/pkg/FR-1977-01-05/pdf/ Federal Register, Vol 46— 19, 1981 (Page society. FR-1977-01-05.pdf. 13193).

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requires that for all significant More recent Executive Orders also Guidelines) 15 complements Circular A– regulatory actions pursuant to Section reaffirm the requirements and principles 4 by providing the Agency with more 3(f), an agency provide ‘‘an assessment in E.O. 12866. E.O. 13563, issued in detailed peer-reviewed guidance on of the potential costs and benefits of the 2011 and still in effect today, reaffirms how to conduct BCA and other types of regulatory action, including an the requirements and other principles economic analyses for both explanation of the manner in which the and definitions in E.O. 12866 and environmental regulatory actions and regulatory action is consistent with a embraces benefit-cost analysis: ‘‘In non-regulatory management strategies, statutory mandate . . .’’ For regulatory applying these principles, each agency with the intent of improving compliance actions meeting criteria listed under is directed to use the best available with E.O. 12866 and other executive Section 3(f)(1)—that is, any regulatory techniques to quantify anticipated orders and statutory requirements (e.g., action that is ‘‘likely to result in a rule present and future benefits and costs as Small Business Regulatory Enforcement that may . . . have an annual effect on accurately as possible.’’ 9 More recently, Fairness Act of 1996 provisions). The the economy of $100 million or more or E.O. 13777, issued in 2017, directs Guidelines are updated periodically— adversely affect in a material way the agencies to identify regulations that building on work issued in 1983 (then economy, a sector of the economy, ‘‘impose costs that exceed benefits.’’ 10 titled Guidelines for Performing productivity, competition, jobs, the E.O. 13783, also issued in 2017, Regulatory Impact Analysis), 2000, and environment, public health or safety, or similarly reaffirms the importance of most recently in 2010—to account for State, local, or tribal governments or benefit-cost analysis: ‘‘In order to ensure growth and development of economic communities’’—E.O. 12866 further sound regulatory decision-making, it is tools and practices. The Guidelines requires that this assessment include a essential that agencies use estimates of establish a scientific framework for quantification of benefits and costs to costs and benefits in their regulatory analyzing the benefits, costs, and other the extent feasible. In addition, E.O. analyses that are based on the best economic impacts of regulations and 12866 states that, to the extent available science and economics.’’ 11 policies, including assessing the permitted by , agencies ‘‘should The Office of Management and distribution of costs and benefits among assess both the costs and the benefits of Budget’s (OMB’s) Circular A–4 (OMB various segments of the population. In the intended regulation and, recognizing 2003), which remains in effect today, addition to presenting the well- that some costs and benefits are difficult provides guidance to Federal agencies established scientific foundations for to quantify, propose or adopt a on the development of regulatory economic analysis, the Guidelines incorporate recent advances in regulation only upon a reasoned analysis as required under E.O. 12866 theoretical and applied work in the field determination that the benefits of the and a variety of related authorities.12 In of environmental economics. Updates of intended regulation justify its costs’’; developing Circular A–4, OMB first the Guidelines are led by the EPA’s ‘‘in choosing among alternative developed a draft that was subject to National Center for Environmental regulatory approaches . . . should public comment, interagency review, Economics in consultation with select those approaches that maximize and external peer review. As economists from across the Agency and net benefits (including potential summarized in E.O. 13783, ‘‘. . . OMB OMB. All chapters undergo an external economic, environmental, public health Circular A–4 . . . was issued after peer peer review, either through EPA’s and safety, and other advantages; review and public comment and has Science Advisory Board or through distributive impacts; and ), unless been widely accepted for more than a independent reviews by external a statute requires another regulatory decade as embodying the best practices 16 for conducting regulatory cost-benefit experts, prior to be being finalized. approach’’; and that ‘‘[e]ach agency Given the history described above analysis.’’ 13 The document encourages shall base its decisions on the best pertaining to the use of BCA by transparency in practices, including the reasonably obtainable scientific, executive agencies, and given that expression of costs and benefits in technical, economic, and other several statutes, including the CAA, monetary units that allow for the information concerning the need for, include provisions that require some evaluation of ‘‘incremental benefits and and consequences of, the intended form of cost consideration, the federal costs of successively more stringent regulation.’’ courts have also developed significant regulatory alternatives’’ such that an In 1995, the Unfunded Mandates regarding regulatory cost agency can ‘‘identify the alternative that Reform Act of 1995 (UMRA) included consideration and the usefulness of maximizes net benefits.’’ 14 analytical requirements for all BCA. This case law addresses when, regulatory actions that include federal EPA’s Guidelines for Preparing and if, such use is required or mandates ‘‘that may result in the Economic Analyses (hereafter, the permissible and how it may be expenditure by State, local, and tribal employed in reasoned decision-making. governments, in the aggregate, or by the because the $100 million threshold is not adjusted for inflation under E.O. 12866. 15 https://www.epa.gov/environmental- private sector, of $100 million or more 9 https://obamawhitehouse.archives.gov/the- economics/guidelines-preparing-economic- (adjusted annually for inflation) in any press-office/2011/01/18/executive-order-13563- analyses. one year.’’ An action contains a federal improving-regulation-and-regulatory-review. 16 The EPA is in the process of a periodic update 10 Enforcing the Regulatory Reform Agenda (82 mandate if it imposes an enforceable of the Guidelines. The EPA anticipates that among FR 12285, , 2017). duty on state, local or tribal the changes within this update, the current Section 11 governments, or the private sector. The https://www.govinfo.gov/content/pkg/FR-2017- 9.2.3.3, ‘‘Impacts on employment’’, will be replaced 03-31/pdf/2017-06576.pdf. with a discussion based on more recent literature analytical requirements under UMRA 12 https://obamawhitehouse.archives.gov/omb/ and feedback from the Economy Wide Modeling _ _ are similar to the analytical circulars a004 a-4/. Circular A–4 refines and Science Advisory Board Panel. For more details requirements under E.O. 12866, and replaces OMB’s ‘‘best practices’’ document of 1996, regarding Chapter 9, see: https://www.epa.gov/sites/ thus the same analysis may permit which was issued as a guidance in 2000 and production/files/2017-09/documents/ee-0568- reaffirmed in 2001. All these versions of the 1996 09.pdf. For more details regarding the update of the compliance with both analytical document were superseded by Circular A–4. 8 Guidelines in general, see: https://yosemite.epa.gov/ requirements. 13 https://www.govinfo.gov/content/pkg/FR-2017- sab/sabproduct.nsf// 03-31/pdf/2017-06576.pdf. LookupWebProjectsCurrentBOARD/ 8 While the analytical requirements are the same, 14 https://obamawhitehouse.archives.gov/omb/ 30D5E59E8DC91C2285258403006EEE00 the dollar thresholds do not exactly coincide circulars_a004_a-4/. ?OpenDocument.

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As a general matter, while certain U.S. at 471, quoted in Entergy Corp., 556 consideration is either required or statutory provisions may prohibit U.S. at 223. The Entergy Corp. Court permitted by the CAA, the courts have reliance on BCA or other methods of further elaborated that ‘‘[t]he relevant not mandated a specific approach for cost consideration in decision-making,17 ’statutory context’ [in American cost consideration but have granted the such provisions do not preclude the Trucking] included other provisions in Agency broad discretion in determining Agency from providing additional the [CAA] that expressly authorized its methodology. See Michigan, 135 S. information regarding the impacts of a consideration of costs, whereas § 109 Ct. at 2711 (‘‘We need not and do not proposed or final rule to the public. For did not.’’ 556 U.S. at 233. The Court hold that the law unambiguously example, while the CAA prohibits the concluded, not that American Trucking required the Agency, when making this EPA from considering cost when stands for the proposition that statutory preliminary estimate, to conduct a establishing or revising requisite silence always unambiguously bars cost formal cost-benefit analysis in which National Ambient Air Quality Standards consideration, but, rather that American each advantage and disadvantage is (NAAQS) for criteria pollutants,18 the Trucking ‘‘stands for the rather assigned a monetary value. It will be up EPA nonetheless provides Regulatory unremarkable proposition that to the Agency to decide (as always, Impact Analyses (RIAs) 19 to the public sometimes statutory silence, when within the limits of reasonable for these rulemakings.20 viewed in context, is best interpreted as interpretation) how to account for The Supreme Court has held that limiting agency discretion.’’ 556 U.S. at cost.’’); see also Sierra Club v. Costle, agencies may conduct and consider a 223. The Court further noted that in 657 F.2d 298, 345 (D.C. Cir. 1981) BCA even when a statute does not American Textile, the Court had relied, (‘‘[S]ection 111(a) explicitly instructs explicitly require one. In Entergy Corp. in part, on the absence of mention of the EPA to balance multiple concerns v. Riverkeeper, Inc., 556 U.S. 208, 222– BCA in the statute to hold that the when promulgating a NSPS.’’); id. at 321 224 (2009), the Supreme Court clarified agency was not required to conduct a (‘‘The text gives the EPA broad that neither American Textile Mfrs. Inst. BCA when setting certain health and discretion to weigh different factors in V. Donovan, 452 U.S. 490 (1981) safety standards. 556 U.S. at 223. setting the standard.’’); Lignite Energy (American Textile Mfrs.) nor Whitman ‘‘[U]nder Chevron, that an agency is not Council v. EPA, 198 F.3d 930, 933 (D.C. v. Am. Trucking Ass’ns, 531 U.S. 457 required to [engage in cost-benefit Cir. 1999) (‘‘Because section 111 [of the (2001) (American Trucking), stands for analysis] does not mean that an agency CAA] does not set forth the weight that the broad proposition that statutory is not permitted to do so.’’ Id. Thus, the [should be] assigned to each of these silence in regard to a potential factor Supreme Court has confirmed that a factors, we have granted the agency a always implies prohibition of statute need not have explicitly required great degree of discretion in balancing consideration of that factor. Therefore, that the agency conduct a BCA in its them’’); Husqvarna AB v. EPA, 254 F.3d the Supreme Court concluded that the decision-making process for the agency 195, 200 (D.C. Cir. 2001) (‘‘Section 213 EPA was permitted to use BCA in to do so. [of the CAA] . . . simply directs the EPA to consider cost. . . . Because determining the content of regulations The Supreme Court additionally section 213 does not mandate a specific promulgated under acknowledged in Entergy Corp. that method of cost analysis, we find section 1326(b). The Court reasoned ‘‘whether it is ‘reasonable’ to bear a ‘‘that [CWA] § 1326(b)’s silence is meant reasonable the EPA’s choice to consider particular cost may well depend on the costs on the per ton of emissions to convey nothing more than a refusal resulting benefits.’’ 556 U.S. at 225–226. to tie the agency’s hands as to whether removed basis.’’). This concept was further elaborated Additionally, courts have noted the cost-benefit analysis should be used, upon by the Court in Michigan v. EPA, usefulness of BCA and have utilized the and if so to what degree.’’ Id. at 222; see which held, in the context of the term information provided therein to inform also id. at 212, 219–20, 226. ‘‘appropriate and necessary’’ contained their analysis when reviewing agency The Supreme Court noted that its in Section 112(n)(1)(A) of the CAA, that regulations. Several of these cases decisions in American Trucking and the term required consideration of cost. utilize information from agency-created American Textile Mfrs. ‘‘do not 135 S. Ct. 2699, 2706 (2015). In doing BCAs and/or RIAs as that an undermine this conclusion.’’ 556 U.S. at so, the Supreme Court stated that ‘‘[o]ne agency ignored alternatives or acted in 223. The Court highlighted that in would not say that it is even rational, an arbitrary and capricious manner American Trucking, it had held that the never mind ‘appropriate,’ to impose when taking action. text of section 109 of the Clean Air Act, billions of dollars in economic costs in For example, in Advocates for ‘‘interpreted in its statutory and return for a few dollars in health or Highway and Auto Safety v. FMCSA, historical context . . . unambiguously environmental benefits’’, concluding 429 F.3d. 1136 (D.C. Cir. 2005), the D.C. bars cost considerations’’ when air that ‘‘[n]o regulation is ‘appropriate’ if it Circuit relied in part on a BCA in quality standards are set pursuant to does significantly more harm than invalidating, as arbitrary and capricious, that provision. American Trucking, 531 good.’’ Id. at 2707. The D.C. Circuit a final rule promulgated by Federal recently echoed this concept in Mingo Motor Carrier Safety Administration 17 See, e.g., Whitman v. Am. Trucking Ass’ns, 531 Logan Coal Co. v. EPA. While the D.C. U.S. 457 (2001) (holding that Section 109(b) of the (FMCSA) intended to ensure that CAA unambiguously barred cost considerations Circuit panel ultimately concluded that drivers of commercial motor vehicles when setting the National Ambient Air Quality the cost issue had been forfeited by received adequate training. In its Standards. petitioners, in response to then analysis, the D.C. Circuit highlighted an 18 Id. Kavanaugh’s dissent which argued that incongruity between methods of 19 A regulatory impact analysis, or ‘‘regulatory cost consideration should be required, training shown to be effective and the analysis’’ for brevity, as prepared under E.O. 12866, consists of a benefit-cost analysis and any related the panel stated, ‘‘[i]ndeed, we do not final rule, noting that ‘‘[f]rom a purely cost-effectiveness analyses and assessments of quibble with his general premise—and economic perspective, the agency’s economic and distributional impacts (OMB 2003). that of the many legal luminaries he disregard of the Adequacy Report 20 See, e.g., U.S. EPA, Regulatory Impact Analysis cites—that an agency should generally [containing a BCA] is baffling in light of of the Proposed Revisions to the National Ambient Air Quality Standards for Ground-Level Ozone weigh the costs of its action against its the evidence in the record.’’ Id. at 1146. (2014), https://www3.epa.gov/ttn/ecas/regdata/ benefits.’’ 829 F.3d 710, 723 (D.C. Cir. The D.C. Circuit pointed to a training RIAs/20141125ria.pdf. 2016). In general, when cost regimen that ‘‘according to the agency’s

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own calculations, [would] produce 13777 noted above, the EPA opened a under the CAA, and proposed benefits far in excess of costs.’’ Id. public docket 21 in 2017 to solicit additional procedural requirements to Noting the agency’s findings that ‘‘the feedback and identify regulations that increase transparency in the program’s estimated 10–year cost of ‘‘impose costs that exceed benefits.’’ presentation of the benefits and costs between $4.19 billion to $4.51 billion Among the public comments received, a resulting from significant CAA would yield a benefit ranging from $5.4 large cross-section of industry regulations. Together, these billion to $15.27 billion, depending on stakeholders stated that the agency requirements were proposed to ensure a analytic assumptions,’’ the court either underestimated costs, consistent approach to the EPA’s BCAs concluded that the BCA for the rule overestimated benefits, or evaluated under the CAA and to provide ‘‘lends no support to FMCSA’s position. benefits and costs inconsistently in its transparency by requiring the provision In the final rule, FMCSA says rulemakings. Per E.O. 13777 and based of relevant information in all significant practically nothing about the projected on these public comments, the EPA rulemakings. In the proposed rule, the benefits.’’ Id. decided to take further action to EPA also solicited comment on how the In Public Citizen, Inc. v. Mineta, 340 evaluate opportunities for reform. Agency should take into consideration F.3d 39 (2nd Cir. 2003), the Second In 2018, the EPA issued an the results of a BCA in future Circuit determined that a National Advance Notice of Proposed rulemakings under specific provisions Highway Traffic Safety Administration Rulemaking (ANPRM), ‘‘Increasing of the CAA, among other topics. (NHTSA) rule regarding tire pressure Consistency and Transparency in Discussion of topics where the EPA monitoring system (TPMS) requirements Considering Costs and Benefits in the solicited comment, and comments and was arbitrary and capricious, as the Rulemaking Process’’ (83 FR 27524, responses where EPA has made NHTSA BCA showed that alternatives , 2018), to solicit public input on modifications in the final rule, is would be safer and more cost-effective. potential approaches for increasing included in Section V of this preamble. The court stated that it may ‘‘be difficult consistency and transparency in how Responses to the rest of the comments to weigh economic costs against safety the EPA considers benefits and costs in are provided in the Response to benefits. But the difficulty of the task the rulemaking process. Informed by the Comments Document. does not relieve the agency of its public comments received on that IV. Description of the Final Rule obligation to perform it under [certain ANPRM, on , 2019, the vehicle safety ] and State Farm.’’ Id. Administrator issued a memorandum 22 This final rule consists of three at 58 (citing Motor Vehicles Mfrs. Ass’n to EPA’s Assistant Administrators elements. In the first element, it requires v. State Farm Mut. Auto. Ins. Co., 463 announcing the intention to propose the EPA to prepare a BCA for all future U.S. 29 (1983)). The Second Circuit statute-specific rules that outline how significant proposed and final observed that NHTSA ‘‘instead, presents consistency and transparency concepts regulations promulgated under the CAA us with a rulemaking record that does will be implemented in future and to consider the BCA in the decision- not explain why the costs saved were rulemakings. The memorandum making process when permitted for worth the benefits sacrificed.’’ Id. The outlined the following principles for consideration under the specific court noted that the BCA ‘‘discloses that developing these regulatory proposals, provision of the CAA under which the the added cost for a system that worked consistent with applicable laws and future regulation is promulgated. The all of the time, rather than half of the regulations: Ensuring that the Agency EPA believes that in keeping with time, was less than $10 per car, and that balances benefits and costs in regulatory OMB’s Circular A–4 and Executive the adoption of the four-tire, 25 percent decision-making; increasing consistency Order 12866 that the requirement to standard alone was the most cost in the interpretation of statutory prepare a BCA would create consistency effective means of preventing crashes terminology; providing transparency in with well-understood and established caused by significantly under-inflated the weight assigned to various factors in processes and determinations for what tires.’’ Id. regulatory decisions; and promoting constitutes a ‘‘significant’’ rulemaking. Finally, in NRDC v. EPA, 824 F.2d adherence to best practices in Therefore, in this final rule, a significant regulation will include any proposed or 1258 (1st Cir. 1987), the First Circuit conducting the technical analysis used final regulation that is determined to be vacated, in part, and remanded rules for to inform decisions. long-term disposal of high-level In June 2020, the EPA issued a Notice a ‘‘significant regulatory action’’ radioactive waste under Nuclear Waste of Proposed Rulemaking (NPRM), pursuant to Section 3(f) E.O. 12866 or is Policy Act of 1982 based in part on the ‘‘Increasing Consistency and otherwise designated as significant by Agency’s selection of a 1,000-year Transparency in Considering Costs and the Administrator. Consideration of the design criterion rather than a longer- Benefits in the Rulemaking Process’’ (85 results of BCA in regulatory decision- term one. The court determined that it FR 35612, , 2020). The proposed making is also consistent with the requirements of E.O. 12866. If the was unreasonable agency action to not rule was the first statute-specific provision or provisions under which the adopt cheap methods of increasing rulemaking in this effort. The EPA rule is promulgated prohibit the protections. In doing so, the court proposed to codify the procedural consideration of the BCA, the final rule observed that ‘‘[l]ikewise, EPA’s Final requirements governing the requires the Agency to identify the [RIA] of 40 CFR part 191 demonstrates development of BCA, including risk specific provision that bars such that more rigorous site selection could assessments used as inputs to the BCA, consideration. produce sites with such impermeable for significant rulemakings conducted geologic media that compliance with the The second element of the final rule requires EPA to develop the BCA using individual protections for a much longer 21 See EPA, Evaluation of Existing Regulations (82 duration would not even require the FR 17793). All public comments are accessible the best available scientific information extra cost of ‘very good’ engineered online in our docket on the Regulations.gov website and in accordance with best practices canisters.’’ Id. at 1289. identified by Docket ID No. EPA–HQ–OA–2017– from the economic, engineering, 0190. physical, and biological sciences. The B. Summary of the Proposed Rule 22 Available at: https://www.epa.gov/ environmental-economics/administrator-wheeler- final rule codifies general best practices With the history discussed above in memorandum-increasing-consistency-and- consistent with the existing guidances mind as a backdrop and following E.O. transparency. that EPA relies upon to develop high

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quality regulations (e.g., EPA’s higher quality data, models, and/or provide an additional reporting of the Guidelines for Preparing Economic analyses that have been peer reviewed. public health and welfare benefits that Analyses (hereafter ‘‘Guidelines’’) and The models used to quantify the pertain to the specific objective(s) of the the Office of Management and Budget’s concentration-response relationships CAA provision(s) under which the rule (OMB) Circular A–4), and also requires should take into account the breadth is promulgated and a transparent that risk assessments used to support and quality of the available evidence presentation of how specific costs BCAs should follow best regarding the nature and magnitude of contemplated in the CAA provision(s) methodological practices for risk the risk to the populations affected by under which the rule is promulgated (to characterization/assessment. The final the regulation. The presentation of the extent specified), relate to total rule does not replace any detailed results should characterize the costs, to the extent possible. Finally, guidance for Agency analysis, including sensitivity of the choice of the when the CAA statutory provision or Executive Orders (e.g., E.O. 12866), concentration-response function on the provisions under which the rule is OMB Circulars (e.g., Circular A–4), and magnitude and the uncertainty promulgated permit consideration of the EPA documents (e.g., Guidelines for associated with estimated benefits. BCA, this section of the preamble Preparing Economic Analyses). The BCA must include an should contain a description of how the The specific best practices that are identification of uncertainties Agency considered the BCA. required in this final rule are as follows. underlying the estimation of both Together, these requirements will The BCA must include a statement of benefits and costs and, to the extent help ensure that the EPA implements its need, an examination of regulatory feasible and appropriate, quantitatively statutory obligations under the CAA options which would contribute to the analyze those that are most influential; with high quality regulations in a way stated objectives of the CAA, and to the and must present benefits and cost that is consistent and transparent and extent feasible, an assessment of all estimates in ways that convey their that these procedures are made benefits and costs of these regulatory uncertainty, including acknowledging enforceable upon the Agency. The options relative to the baseline scenario. unquantified benefits and costs, where provisions of the final rule codify into The baseline used in the BCA must appropriate. The BCA must include a regulation best practices for the appropriately consider relevant factors reasoned explanation for the scope and preparation, development, presentation, and rely on transparent and reasonable specific quantitative or qualitative and consideration of BCA as articulated assumptions. In preparing the BCA, the methods chosen to analyze in the principles and requirements of Agency must rely on the use of a uncertainties. Executive Order 12866. framework for estimating costs and The final rule also requires that the V. Responses to Significant Comments benefits that is appropriate for the overall results of the BCA (benefits, characteristics of the regulation being costs, and net benefits of each regulatory The EPA had a 45-day public evaluated and must provide an option evaluated in the BCA) be comment period on the proposed rule, explanation for the approach adopted. presented and described in a manner and also hosted a virtual public hearing In estimating costs and benefits, the designed to be objective, on 1, 2020, which included 50 Agency must consider how costs and comprehensive, reproducible to the speakers registered to provide benefits may be affected by consumer extent reasonably possible, and easily testimony. In total, the EPA received and producer behavior both in the understood by the public. To the extent 24,740 public comments, including baseline and in the policy scenarios. permitted by law, the Agency must several mass mail campaigns and 513 The BCA must include, to the extent ensure that all information (including unique comment letters (including supported by scientific literature as well data and models) used in the transcripts from the virtual public as practicable in a given rulemaking: A development of the BCA is publicly hearing). Of these, a total of 143 letters quantification of all benefits; a available. If data and models are provided detailed, substantive monetization of benefits that follows proprietary, the Agency must make comments. Commenters included well-defined economic principles using available, to the extent practicable, the environmental and health advocacy well-established economic methods, underlying inputs and assumptions organizations, industry trade groups, appropriate data and/or studies; and a used, equations, and methodologies academics, and State, Local, and Tribal qualitative characterization of benefits used by EPA. The BCA shall provide a governments. reasoned explanation for any departures that cannot be quantified or monetized. A. Purpose of the Action Regarding the process of selecting from best practices in the BCA, health benefit endpoints for including a discussion of the likely Commenters supporting the EPA’s quantification, the final rule requires effect of the departures on the results of proposed rulemaking argued that the that this process will be based upon the BCA. proposed requirements, if finalized, scientific evidence that indicates there The third element of the final rule would provide more clarity and is a clear causal or likely causal imposes additional procedural transparency, make common sense, relationship between pollutant exposure requirements to increase transparency enhance public accountability and and effect, and that sufficient data and in the presentation and consideration of understanding of the scientific inputs understanding allows the agency to the BCA results. Specifically, the rule that drive the EPA’s decisions, improve reasonably model the anticipated requires the preamble of significant the integrity of the rulemaking process, change in that effect in response to proposed and final CAA regulations to and lead to better . changes in environmental quality or include a section that contains a Commenters also stated that exposures expected as a result of the summary presentation of the overall codification of best practices for regulation under analysis. The BCA results for the rule, including total conducting and presenting BCA would evaluation of the scientific evidence benefits, costs, and net benefits. Within standardize procedures and would necessary to select and quantify health this summary presentation, if any achieve consistency over time and benefit endpoints should follow the benefits and costs accrue to non-U.S. provide for better transparency. Some systematic review process, must populations they must be reported commenters further argued the rule emphasize transparency and separately to the extent possible. This would deliver continued environmental replicability, and give more weight to section of the preamble should also improvement as well as a more

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predictable and achievable set of few commenters objected to the OMB Circulars (e.g., Circular A–4), and outcomes for the regulated community. proposal’s approach, as they believed EPA documents (e.g., EPA’s Guidelines). In addition, a commenter stated that that a regulation establishes rigid B. Authority To Promulgate a EPA’s proposed rule, if finalized, would practices that then make it difficult for Procedural Rule supersede, rather than duplicate, the EPA to readily adopt future existing non-justiciable, non-statutory improvements to best practices. On this The EPA received comments on its sources of guidance for Agency analysis, issue, a few commenters further legal authority to promulgate the including EOs (e.g., E.O. 12866), OMB suggested that because analytical proposed rule. We respond to some of Circulars (e.g., Circular A–4), and EPA requirements evolve, the EPA should the major comments below and to the documents (e.g., EPA’s Guidelines). create a requirement to periodically rest in Chapter 4 of the Response to Comments Document. In particular, the Commenters opposed to the proposed update the best practices through a EPA received comments that Section rule argued that the EPA does not public notice and comment rulemaking 301(a)(1) of the CAA both does and does explain how any of the Agency’s process. not provide adequate authority to previous BCAs have fallen short of any The EPA disagrees with commenters promulgate the proposed rule. applicable legal requirements or failed that this rule is unnecessary. The EPA Commenters asserted that Section to deliver on their purported policy continues to believe that codifying best 301(a)(1) explicitly authorizes the EPA benefits. Commenters stated that EPA practices into regulation provides Administrator ‘‘to prescribe such has also not specifically detailed how additional certainty and increases the regulations as are necessary to carry out the Agency’s use of its own economic consistency and transparency of its his functions’’ under the statute, noting guidance (e.g., EPA’s Guidelines) and analysis of the benefits and costs of the D.C. Circuit holding that Section OMB’s Circular A–4 guidance has significant regulations under the CAA. 301(a)(1) ‘‘is sufficiently broad to allow resulted in inadequate, inconsistent, or The requirements promulgated in this the promulgation of rules that are nontransparent practices or has action address the comments, by many, necessary and reasonable to effect the compromised the Agency’s abilities and that the Agency has not consistently purposes of the Act.’’ NRDC v. EPA, 22 disagreed with the need for a estimated, presented, and considered F.3d 1125, 1148 (D.C. Cir. 1994). rulemaking. These commenters said that benefits and costs in line with best Commenters further noted how the EPA’s proposal does not make the practices and principles set forth in consistency and transparency advance case that such shortcomings are so longstanding executive orders governing the goals of the CAA. Other commenters widespread among the EPA’s existing regulatory analysis. Some commenters argued that Section 301(a)(1) was not an BCA practices that the proposal was asserted that these inconsistencies were adequate authority as the rule was not necessary. These commenters further not identified by EPA and were not so necessary, noting that Section 301(a)(1) stated the EPA does not identify any widespread among the EPA’s existing does not provide the Administrator deficiencies in existing laws, orders, BCA practices that the proposal was ‘‘carte blanche authority to promulgate and guidelines, and, therefore, did not necessary. However, EPA has not had any rules, on any matters relating to the fully demonstrate how the proposed procedural enforceable regulations in Clean Air Act, in any manner that the changes will address the alleged place to ensure consistency in its past Administrator wishes,’’’ and only problem. Some commenters further BCA practices. To the extent that permits ‘‘the promulgation of rules that stated that the EPA’s proposed rule commenters assert that EPA’s past are necessary and reasonable to effect creates an excessively burdensome set practice has been consistent and the purposes of the Act.’’ Id. of procedures for completing a BCA that transparent, it is not due to an The EPA agrees with the commenters would be difficult for the agency to enforceable standardized approach that stating that Section 301(a)(1) of the CAA satisfy and would be prohibitively would ensure such a result. Other provides adequate authority for this costly to complete. One commenter commenters have noted the contrary final rulemaking. The EPA has stated that increasing transparency and belief, that EPA’s practices in regard to determined that the authority in Section consistency in the analysis upon which BCA have indeed been inconsistent and 301(a)(1) extends to internal agency regulatory decisions are based should have lacked transparency. Without procedures that increase the Agency’s not come at the cost of undermining the enforceable procedural regulations for ability to provide consistency and flexibility and accuracy needed for BCA, future regulations may be transparency to the public in regard to regulatory decision-making on the wide promulgated without consideration of, the rulemaking process under the CAA. variety of air pollutants and sources and public accountability concerning, In NRDC, the court stated that regulated under the CAA. The their costs and benefits. Thus, the EPA ‘‘[a]lthough section 301 does not commenter added that many of the has determined that the Final Rule is provide the Administrator ‘carte consistency and transparency goals in necessary to ensure that BCA practices blanche authority to promulgate any the proposal are already being met are implemented in a consistent fashion rules, on any matter relating to the through existing EPA practices, prospectively. The requirements Clean Air Act, in any manner that the particularly requirements in E.O. 12866, provide a practical framework to ensure Administrator wishes,’ Spencer County, and contended that setting a that the BCA of significant CAA 600 F.2d at 873, it is sufficiently broad prescriptive process for conducting regulations follow best practices and to allow the promulgation of rules that BCAs will lead to inflexibility that complement more detailed existing are necessary and reasonable to effect could prove detrimental to public health guidances the EPA relies upon (e.g., the purposes of the Act.’’ Id. Further and the environment. One commenter OMB’s Circular A–4 and EPA’s finding that ‘‘[w]here, as here, Congress argued that, given the clear credibility Guidelines) to develop quality has erected no clear impediment to the and reliability of the peer-reviewed and regulations consistent with the CAA, issuance of binding rules, section 301 longstanding methodologies for and that these procedures are made takes the agency as far as the second developing BCAs (as acknowledged by enforceable upon the Agency. The final step of Chevron. Once there, the EPA the EPA itself throughout the proposal), rule does not replace detailed guidance provided a reasoned explanation for it was arbitrary and capricious for the for Agency analysis, including resorting to rulemaking.’’ Id. Likewise, EPA to constrain its methodologies. A Executive Orders (e.g., E.O. 12866), the Agency is not aware of any clear

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impediment to this rulemaking and this § 8165 (1st ed. Oct. addition, the Supreme Court explained preamble provides a reasoned 2020 Update) (‘‘One of the most firmly in Chrysler Corp. v. Brown, that rules of explanation of the purpose and need for established principles in administrative internal agency management are this rulemaking. law is that an agency must obey its own considered procedural rules as opposed The Agency believes that the rules.’’). See also, e.g., United States v. to substantive rules under the APA. 441 information provided as a result of the Nixon, 418 U.S. 683, 696 (1974) (‘‘So U.S. 281, 301–02 (1979). As the procedural requirements of this rule long as this regulation remains in force Supreme Court explained in Chrysler will increase transparency and the Executive Branch is bound by it, and Corp., ‘‘the central distinction among consistency across CAA rulemakings; indeed the United States as sovereign agency regulations found in the APA is provide the public with additional composed of the three branches is that between ‘substantive rules’ on the information in the CAA rulemaking bound to respect and to enforce it.’’); one hand and ‘interpretive rules, general process; and provide the Agency with Vitarelli v. Seaton, 359 U.S. 535, 540 statements of policy, or rules of agency supplemental information for use by the (1959); United States ex rel. Accardi v. organization, procedure, or practice on Agency when it is appropriate to be Shaughnessy, 347 U.S. 260, 266–67 the other.’ ’’ 441 U.S. at 301. The considered. These outcomes will better (1954). Indeed, many courts have Supreme Court further clarified that allow the Agency to fulfill the purpose enforced non-legislative procedural unlike procedural rules, substantive described in Section 101(b)(1) of the rules against the agency. See, e.g., rules have legal force and effect on CAA ‘‘to protect and enhance the Morton v. Ruiz, 415 U.S. 199, 235 (1974) individual rights and obligations, and quality of the Nation’s air resources so (enforcing an agency manual even noted that whether a rule affects as to promote the public health and though the manual was not a individual rights and obligations is an welfare and the productive capacity of ‘‘legislative rule’’ but ‘‘solely an ‘‘important touchstone’’ for its population’’. Further, Section 101(c) internal-operations brochure intended distinguishing substantive rules from of the CAA states that ‘‘a primary goal to cover policies that do not relate to the other types of rules. Chrysler Corp., 441 of [the Act] is to encourage or otherwise public,’’ because ‘‘[b]efore the BIA may U.S. 281 at 302. promote reasonable Federal, State, and extinguish the entitlement of these Because this rule covers requirements local governmental actions, consistent otherwise eligible beneficiaries, it must that apply to the agency’s rulemaking with the provisions of [the] Act, for comply, at a minimum, with its own procedure and does not impose any pollution prevention.’’ As noted above, internal procedures.’’); NRDC v. Perry, obligations or grant any rights to third the Supreme Court has stated that 940 F.3d 1072, 1077 (9th Cir. 2019). parties, it is procedural. ‘‘reasonable regulation ordinarily Thus, the Agency believes that this In this Final Rule, the EPA does not requires paying attention to the Final Rule is binding upon the Agency interpret or apply other provisions of the CAA. Subsequent substantive CAA advantages and the disadvantages of for significant CAA regulations, and that rulemakings applying this rule will be agency decisions.’’ Michigan v. EPA, EPA’s compliance with these procedural subject to judicial review. By contrast, 135 U.S. 2699, 2707 (2015). The requirements is subject to judicial in this action, the EPA finalizes a rule information provided as a result of the review in challenges to such governing internal agency procedures. procedural requirements of this rule rulemakings. will be in addition to the information This rule does not require any outside provided by other methodologies and Finally, the EPA received comments entity to take any action. Further, this analyses as directed by specific CAA that the proposed rule was a procedural rule would not regulate the conduct or statutes and regulations. Such an rule and comments, to the contrary, that determine the rights of any entity approach is consistent with reasonable the proposed rule was non-procedural outside the federal government in the rulemaking standards. because it altered the rights and manner described above. Several The EPA also received public interests of parties beyond EPA. The comments noted that the rule would comments asking for clarification as to EPA disagrees with commenters potentially create an enforcement whether the procedures in this final rule asserting that the proposed rule was mechanism were the Agency to fail to are enforceable against the Agency. The non-procedural because it altered the follow its own internal procedures. The EPA received comments arguing that the rights and interests of parties beyond Agency, as discussed above, believes procedures in this final rule are EPA. The D.C. Circuit has explained that this Final Rule is binding upon the enforceable against the agency and that ‘‘the critical feature of a rule that Agency for significant CAA regulations, comments that such procedures would satisfies the so-called procedural and EPA’s compliance with these not be and asking for clarification. The exception [to the APA’s notice and procedural requirements is subject to EPA agrees with commenters asserting comment requirements] is that it covers judicial review in challenges to such that the procedures in this final rule are agency actions that do not themselves rulemakings. However, this does not enforceable against the Agency. alter the rights or interests of parties, render a rule non-procedural. As Generally, a court reviews an agency’s although it may alter the manner in discussed above, courts have generally compliance with its regulations, even which the parties present themselves or enforced non-legislative procedural where the regulatory requirements go their viewpoints to the agency.’’ James rules against agencies. Commenters beyond what is required by statute. See, A. Hurson Assocs. v. Glickman, 229 assert that such enforcement in turn e.g., Service v. Dulles, 354 U.S. 363, 388 F.3d 277, 280 (D.C. Cir. 2000); National renders the rule non-procedural. If (1957) (‘‘While . . . the Secretary was Mining Association v. McCarthy, 758 enforcement of a procedural rule not obligated to impose upon himself F.3d 243 (D.C. Cir. 2014) (holding that rendered the rule substantive, there these more rigorous substantive and EPA’s interagency plan for enhanced could be no history of enforcement of procedural standards, neither was he consultation and coordination is a procedural rules; all such rules would prohibited from doing so, as we have procedural rule because it does not alter simply be substantive. Clearly this already held, and having done so he the rights or interests of parties); cannot be the standard. The rule itself could not, so long as the Regulations Batterton v. Marshall, 648 F.2d 708 must alter the rights and interests of remained unchanged, proceed without (D.C. Cir. 1980) (‘‘The critical question parties beyond EPA, rather than simply regard to them.’’). See generally Wright is whether the agency action jeopardizes be binding upon the Agency, and this & Miller, 32 FED. PRAC. & PROC. the rights and interests of parties.’’). In final rule does not regulate any party

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outside of the EPA, but, rather, Specifically, the SAB recommended through planning, design, installation exclusively governs the EPA’s internal revising the definition to clearly state and operation of pollution abatement procedure. that BCA provides decision makers with equipment. a clear indication of the most efficient Data. The EPA received limited C. Definitions alternative, that is, the alternative that specific suggestions in the public Several commenters and the SAB generates the largest net benefits comments on the definition of data. provided specific recommendations for (benefits minus costs) to society Some commenters expressed concern changes to some of the definitions in the (ignoring distributional effects) (OMB, that this language could be interpreted proposed rule. Examples of terms that 2003). The SAB also recommended that to exclude anonymized medical data commenters or the SAB provided the definition should indicate that costs from the definition of ‘‘data’’ and specific definitions for include, but are should be opportunity costs and therefore preclude use of studies relying not limited to, ‘‘Benefit-cost analysis benefits represent the willingness-to-pay on such medical data in the EPA’s (BCA)’’, ‘‘Opportunity cost,’’ ‘‘Social for a policy outcome valued by United BCAs. The EPA notes that the proposed benefits,’’ ‘‘Compliance cost,’’ States individuals. definition for ‘‘data’’ is consistent with ‘‘Regulatory Options’’, and ‘‘Significant’’ The EPA agrees with the SAB and the EPA’s ‘‘Strengthening Transparency regulation. These commenters provided public comments that it would be in Pivotal Science Underlying Final references for their suggested helpful to provide a more Significant Regulatory Actions and definitions, which included guidance comprehensive definition of BCA, Influential Scientific Information’’ published by OMB, the EPA’s drawing language more explicitly from rulemaking.23 Therefore, the EPA is Guidelines, and published economic OMB’s Circular A–4 and avoiding finalizing this definition as proposed to journal articles, and they recommended undefined phrases such as ‘‘favorable maintain consistency with related EPA that the EPA finalize the rule with these effects’’. Thus, in this final rule the actions. definitions. Discussed below are the definition of BCA is revised to eliminate Expected value. The EPA did not definitions that we are revising or the phrase ‘‘favorable effects.’’ The receive specific suggestions in the finalizing as proposed based on the definition is also expanded to clarify public comments on the definition of comments received. Complete responses that the social benefits of a policy are expected value. However, based on to other specific suggestions for measured by society’s willingness-to- feedback from the EPA SAB on the EPA additional terms to be defined are pay for the policy outcome, and the Guidelines update, the EPA has decided provided in Chapter 10 of the Response social costs are measured by the to expand the definition for clarity. The to Comments document, and in some of opportunity costs of adopting the revision does not change the substantive the remaining sections in this preamble policy. Finally, the definition explains meaning of the term. In the final rule, where relevant. that where all benefits and costs can be the definition of expected value is as Baseline. The EPA did not receive quantified and expressed in monetary follows: ‘‘Expected value means the specific suggestions in the public units, BCA provides decision makers probabilistically weighted outcome that comments on the definition of baseline. with a clear indication of the most defines a statistical mean and a measure However, based on feedback from the economically efficient alternative, that of the central tendency of a set of data. EPA SAB on the EPA Guidelines is, the alternative that generates the For a variable with a discrete number of update, the EPA has decided to adopt a largest net benefits to society (ignoring outcomes, the expected value is minor revision to the definition to distributional effects). calculated by multiplying each of the clarify that it provides the The EPA does not agree with the possible outcomes by the likelihood that counterfactual situation against which a SAB’s recommendation to add ‘‘valued each outcome will occur and then policy should be assessed. The revision by United States individuals’’ because summing all of those values.’’ does not change the substantive limiting the geographic scope of a BCA Model. The EPA did not receive meaning of the term. In the final rule, does not belong in a general definition specific suggestions in the public the definition of baseline is as follows: of BCA. OMB Circular A–4 allows comments on the definition of model. ‘‘Baseline means the best assessment of impacts accruing to non-U.S. Therefore, the EPA is finalizing the the way the world would evolve absent populations to be estimated and definition as proposed. the regulation. It is the primary point of reported separately: ‘‘Where you choose Opportunity cost. One commenter comparison for assessing the effects of to evaluate a regulation that is likely to recommended that the EPA expand the the regulatory options under have effects beyond the borders of the definition of opportunity cost to explain consideration.’’ United States, these effects should be how other concepts like willingness to Benefit-cost analysis (BCA). Some reported separately’’ (OMB 2003). The pay capture the notion of opportunity commenters recommended that EPA EPA is including in this final rule a cost. Further discussion of opportunity provide a more detailed definition of presentational requirement consistent cost and how to measure it is provided benefit-cost analysis. For example, one with this guidance. See Section V.F of in section V.E.5 of this Preamble. The commenter claimed that as written, this Preamble. EPA disagrees that an expanded ‘‘benefit-cost analysis’’ lacks clarity, Compliance cost. One commenter definition of this term is needed in the because a key term ‘‘favorable effects of stated that the definition provided in regulatory text. Therefore, the EPA is a policy action’’ is undefined. The the proposed rule fails to include all finalizing this definition as proposed. commenter further argued that necessary costs of compliance, because Publicly available. The EPA did not evaluation of a benefits-cost analysis is costs of professional service and receive specific suggestions in the incomplete without concise, clear interrelated effects appear to be public comments on the definition of directive to the EPA on what favorable excluded. While the EPA believes that publicly available. Therefore, the EPA is effects may balance opportunity costs. the definition provided in the proposed finalizing this definition as proposed. In their review of the proposed rule, rule was broad enough to cover all Regulatory options. One commenter the SAB recommended that the private costs associated with criticized the proposed definition of definition for BCA be revised to more compliance, the final rule revises the closely align with the definition definition to explain that this could 23 https://www.epa.gov/osa/strengthening- provided in OMB’s Circular A–4. include, for instance, costs incurred transparency-regulatory-science.

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‘‘regulatory options’’ for bracketing the executive orders can be changed or projected to have less than a $100 selected proposed or final option with withdrawn in the future. million annual effect on the economy one more stringent alternative and one Some commenters advocated using could disproportionately affect a single less stringent alternative. In the the definition of ‘‘significant’’ from the industry, population subgroup, or commenter’s view, this bracketing Congressional Review Act (CRA). The geographic area. Such rules, or ones that results in biasing the EPA in favor of commenters argued that adopting a are notably novel or significant for other ultimately choosing central options definition from U.S. law is preferable to policy reasons, will benefit from rather than a more environmentally one from an executive order. rigorous analysis to inform the public protective one that is more consistent Furthermore, the commenters also and decision makers about the with statutory guidance or argued that the CRA is not limited to a magnitude and disposition of both their requirements. In their review of the narrow economic impact analysis that benefits and costs on affected entities. proposed rule, the SAB recommended ignores the indirect impacts of a Social benefits, or benefits. One that the definitions for regulatory regulation on the broader economy. The commenter argued that the definition of options be revised to make clearer that commenters further stated that the ‘‘social benefit or benefits’’ is overly for BCA, as opposed to cost- EPA’s economic impact statements for broad and vague. Another effectiveness analysis, the regulatory any significant proposal should be recommended an expanded definition options should only help to solve a consistent with the CRA and give that included discussion of how to problem, not accomplish a goal or approximate quantitative estimates of measure benefits. Another said the objective. For example, a less stringent the potential economic impacts, the EPA’s definition is arbitrary and option might accomplish less, but at expected timing of these impacts, and capricious and potentially unlawful lower cost. the sectors of the economy that will because the proposed definition of The EPA disagrees with the comment experience the impact. ‘‘social costs’’ included the ‘‘sum’’ of all that analyzing one more stringent and Several commenters objected to giving costs, but the proposed definition of one less stringent alternative than the the Administrator the discretion to social benefits, did not. The commenter selected option biases the Agency’s decide what constitutes a significant contended that this apparent direction decision. The analysis of these regulation, because with no specific to include all costs but not necessarily alternative options provides the public decision criteria specified in the rule, all benefits would be inconsistent with and decision makers information about the decisions would be arbitrary and the general principles of BCA and the consequences of options that are contrary to the stated goals of the BCA would bias any such analyses. The EPA more or less stringent than the selected rule for consistency and transparency. did not intend to create a disparity option. The EPA agrees with the SAB’s And some commenters expressed between the calculations of costs and comment and is adopting the SAB opposition to expanding rules requiring benefits, so the Agency is adjusting the definition of social benefits to be recommended revisions to the a BCA because it would deplete the consistent with the phrasing of the definition to improve clarity. EPA’s analytic, financial, and expertise definition of social costs to avoid any Specifically, the EPA is revising parts of resources without providing any benefit confusion. In this final rule, social the definition of regulatory options to to public health or the environment. benefits, or benefits, means ‘‘the sum of clarify that the options should only help As discussed in more detail below, all positive changes in societal well- to solve a problem, not accomplish a after reviewing the comments on being experienced as a result of the goal or objective. For example, the applicability, in this final rule, EPA regulation or policy action.’’ Additional definition describes a more stringent maintains the same definition of discussion of how benefits can be option as one that ‘‘contributes to’’ the significant regulation as in the proposal measured is provided in section V.E.5 of stated objectives of the Clean Art Act and concludes it represents an appropriate scope for the rule. this Preamble. and achieves additional benefits (and Social costs, or costs. One commenter presumably costs more) beyond those Specifically, EPA requires that all future significant proposed and final recommended an expanded definition realized by the proposed or finalized of social cost to elaborate on how costs option. regulations promulgated under the CAA be accompanied by a BCA using the are measured. In this final rule, the EPA Sensitivity Analysis. The EPA did not is adding a second sentence to the receive specific suggestions in the definition that a significant regulation is a proposed or final regulation that is definition of social costs to further public comments on the definition of clarify what is included in opportunity sensitivity analysis. Therefore, the EPA determined to be a ‘‘significant regulatory action’’ pursuant to E.O. costs. Additional discussion of how is finalizing this definition as proposed. these costs can be measured is provided 12866 Section 3(f) 24 or is otherwise Significant regulation. Several in section V.E.5 of this Preamble. commenters were broadly supportive of designated as significant by the the proposed definition of ‘‘significant Administrator. Regulations meeting D. Preparation and Consideration of regulation’’. Additionally, several either of these factors are generally BCA in Rulemaking commenters supported the concept that those that the EPA anticipates would In the proposed rule, the EPA the definition of a ‘‘significant have the largest annual impact on the proposed to require that all future regulation’’ should include ‘‘those that economy (i.e., greater than $100 million) significant proposed and final would disproportionately affect an or are important to analyze for other regulations promulgated under the CAA industry, group or area’’ or ‘‘those that policy reasons. For example, a rule be accompanied by a BCA. Commenters are novel or relevant for other policy supportive of the proposal were 24 Separate from and independent of the reasons,’’ with one commenter arguing requirements in this rulemaking, E.O. 12866 generally supportive of conducting BCA that such inclusion is important to establishes broadly applicable conditions for for all significant regulatory actions, avoid adverse impacts on small regulatory analysis. More specifically, section 6 of though some commenters argued for a businesses. One commenter stated that E.O. 12866 establishes the analytic requirements for less expansive approach and others those actions OIRA determines to be a ‘‘significant the E.O. 12866 language should be regulatory action’’ and ‘‘significant regulatory argued for broader application than the inserted into the BCA rather than actions within the scope of section 3(f)(1).’’ Sec. proposal. For example, as discussed referencing E.O. 12866, because 6(a)(3)(B)–(C). above, some commenters argued that the

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EPA should use the definition of proposal highlighted the historical use provide the Agency with information, significant from the CRA. Other of BCA by courts to inform their view and the Agency will be required to commenters recommended expanding of the appropriateness of agency actions consider such information and respond the scope, for example, to (1) apply not and that ‘‘[c]onsideration of cost reflects to comment as is dictated by the process only to BCA, but also to any related risk the understanding that reasonable governing the future CAA rulemaking. assessment to estimate both baseline regulation ordinarily requires paying To provide the public with as much risk and the risk-reduction benefits attention to the advantages and the information and transparency as estimated in the BCA, and (2) clarify disadvantages of agency decisions.’’ possible, the EPA is finalizing a that its information quality standards Michigan v. EPA, 135 U.S. 2699, 2707 requirement to identify when the CAA apply to BCA, risk assessments, and (2015), see 85 FR 35615–617. provision or provisions under which the related risk analyses (e.g., IRIS Based on the comments received, future rule is promulgated permit assessments). Commenters opposed to executive orders, and judicial decisions, consideration of the BCA, and if so, the the proposal found the scope too the EPA has determined that, when Agency is required to provide a expansive and questioned the resource permitted for consideration under the description in the preamble of how the burden of the requirements. specific provision of the CAA under Agency considered the results of the After considering these comments, the which a future regulation is BCA. If the provision or provisions EPA is finalizing the requirement that promulgated, the Agency should under which the rule is promulgated all future significant proposed and final consider in the decision-making process prohibit the consideration of the BCA, regulations promulgated under the CAA the BCA developed pursuant to this the final rule requires the Agency to be accompanied by a BCA. The EPA Final Rule, which would be part of the identify the specific provision that bars believes that in keeping with OMB’s record of such a future rulemaking. See such consideration. Circular A–4 and Executive Order 12866 42 U.S.C. 7607(d)(9); 5 U.S.C. 706(2); that this requirement would create E. Best Practices for the Development of see also Motor Vehicles Mfrs. Ass’n v. consistency with well-understood and BCA State Farm Mut. Auto. Ins. Co., 463 U.S. established processes and The EPA received a wide range of 29, 43 (1983) (‘‘Normally, an agency rule determinations for what constitutes a comments on the proposed would be arbitrary and capricious if the ‘‘significant’’ rulemaking. Therefore, in requirements to codify best practices for agency has relied on factors which this final rule, a significant regulation the development of the BCA into a Congress has not intended it to will include any proposed or final procedural regulation. In its review of regulation that is determined to be a consider, entirely failed to consider an the proposed rule, the SAB sought to ‘‘significant regulatory action’’ pursuant important aspect of the problem, offered limit its review to requirements in the to Section 3(f) E.O. 12866 or is an explanation for its decision that runs proposed rule that would not be otherwise designated as significant by counter to the evidence before the addressed by the SAB’s review of the the Administrator. agency, or is so implausible that it could forthcoming update to the EPA’s At proposal, in addition to proposing not be ascribed to a difference in view Guidelines. Therefore, the SAB did not the preparation of a BCA for all or the product of agency expertise.’’). advise on the details of each BCA best significant regulation, the EPA also The benefits and costs of a potential practice that the EPA proposed to solicited comment on how or whether regulation, when permitted to be codify. However, the SAB did the results of the BCA should inform considered under the specific provision emphasize that the EPA should consider significant CAA regulatory decisions. of the CAA under which a future carefully which aspects of BCA should The EPA requested comment on how regulation is promulgated, are of clear be included in the final rule versus the Agency ‘‘could take into importance to decision-making and can which aspects should be addressed in consideration the results of a BCA in provide justification for whether and guidance, given the case-by-case nature future rulemakings under specific how the Agency decides to regulate. of BCA. The EPA appreciates all the provisions of the CAA.’’ 85 FR 35624. Consideration of the results of BCA in comments received and agrees with the The EPA received numerous comments regulatory decision-making is also SAB that it is important to think including recommendations that the consistent with the requirements of E.O. carefully about which best practices Agency formulate a mandatory test that 12866. However, the EPA declines to should be made enforceable and which the benefits justify the costs of future formulate a specific test or mandate of best practices (or details thereof) should significant rulemakings subject to this how to consider the BCA or what weight be addressed in guidance. The best final rule, recommendations that the it should be given in such a future practices codified in this final rule Agency not address how BCAs would be rulemaking. The precise details of what include the high-level best practices in taken into consideration in future rules, test would be appropriate could differ conducting regulatory BCA. The EPA’s and recommendations that no final rule from one CAA provision to another, and Guidelines will continue to provide be promulgated. Several commenters the EPA has not proposed or requested detailed guidance on how to implement noted the importance of BCA and how comment on how such tests would be these best practices. The EPA does not it can inform decision makers. formulated under those specific expect the forthcoming update of the Commenters emphasized that provisions. Some commenters also EPA’s Guidelines to include any consideration of benefits and costs is expressed concern that the rule as changes to these high-level elements. part of long held requirements imposed proposed would limit or prohibit the We respond to some of the major by executive order. As one commenter Agency from considering other metrics comments in the discussions in the summarized, ‘‘the clear direction of or analyses, either generated by the subsections below and to the rest in every president over the last four Agency or submitted by commenters Chapter 7 of the Response to Comments decades [is] that, to the extent permitted into the record of a future rulemaking Document. by law, executive agencies ‘shall . . . proceeding. There is nothing in this After reviewing the comments, the propose or adopt a regulation only upon final rule that would create such an EPA has included in this final rule the a reasoned determination that the outcome, as consideration of one metric requirements outlined in the following benefits of the intended regulation does not consideration of another; subsections, which are the high-level justify its costs.’ ’’ In addition, the commenters will retain the ability to best practices outlined in existing peer-

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reviewed OMB and EPA guidance information,29 the EPA is also finalizing requiring a statement of need in the documents developed in response to the requirement that the EPA follow BCA stating that the requirement is longstanding presidential orders certain best practices regarding the consistent with agency guidance discussed above, OMB’s Circular A–4 incorporation of information as an input detailed in OMB’s Circular A–4 and (2003) and its associated guidance to BCA for significant CAA regulations. Executive Order 12866. These (2010, 2011a, 2011b),25 EPA’s In particular, risk assessments often commenters argued that a concise and Guidelines (2010). These guidance provide key inputs to the development coherent statement of need helps to set documents are grounded in the of the EPA’s health benefit estimates in the foundation for developing the economics literature pertaining to the a BCA, and several commenters subsequent analysis of benefits and conduct of BCA. Benefit-cost analysis as recommended that additional costs, particularly as it relates to a discipline is a branch of applied consistency and transparency be assessing environmental or public microeconomic welfare economics and applied in the assessment of risks health improvements targeted by the is summarized in numerous textbooks leading to the estimation of benefits. relevant statutory provision from which such as Boardman et al. (2018), Farrow Through this rulemaking, the EPA the rule derives its authority. (2018), Brent (2006), Mishan and Quah requires a consistent and transparent Some commenters opposed the EPA (2007), and Hanley and Spash (1996).26 use of risk assessments in BCA of CAA requiring a statement of need in the This discipline is applied routinely to regulations. These requirements include BCA. These commenters argued a environmental economics issues and the elements that are responsive to statement of need would be in conflict theory of BCA and its application can be recommendations from the National with many, if not most, of the EPA’s found in standard environmental Academies of Science, Engineering and rulemaking responsibilities under the economic textbooks such as Phaneuf Medicine (hereafter, ‘‘National CAA. Commenters further asserted that and Requate (2016) and Perman et al. Academies’’) and the EPA’s SAB to a citation to the provision of the CAA (2012).27 Specific lists of best practices improve the utility of risk assessment that requires the rulemaking should be and guidance for practitioners can also for use in BCAs for CAA regulations, as sufficient for any statement of need. be found in articles by Robinson and well as recommendations offered by the Furthermore, one commenter also Hammit (2016), Sunstein (2014), Farrow SAB in their review of the proposed argued that the EPA cannot apply the (2013), Farrow and Viscusi (2011), rule. As an example, the National ‘‘statement of need’’ requirement to Krutilla (2005), and notably in an article Academies has previously provided rulemakings subject to CAA section on the principles and standards by advice to the Agency regarding best 307(d) requirements, because CAA Nobel laureate Kenneth Arrow and a practices for selecting concentration- section 307(d)(2) already includes a number of prominent economists response parameters, when it is requirement that the notice of rulemaking shall be accompanied by ‘‘a (Arrow et al., 1996).28 appropriate to pool (or, combine) risk estimates and how to characterize statement of its basis and purpose.’’ Since best practices for the conduct of uncertainty in those estimates. This rule None of the comments received have BCA inherently require that the inputs is also consistent with the 2007 OMB led the EPA to materially change its to the analysis reflect the best available and Office of Science and Technology views from the proposal regarding the Policy’s Updated Principles for Risk requirement for a statement of need. The 25 Office of Management and Budget, U.S., 2003. Analysis,30 which also builds off the EPA disagrees with the comment that a Circular A-4: Regulatory Analysis. Office of National Academies and SAB statement of need would conflict with Management and Budget, U.S., 2010. Agency the EPA’s rulemaking responsibilities Checklist: Regulatory Impact Analysis. Office of recommendations as well as the EPA’s Management and Budget, U.S., 2011a. Circular A– Risk Characterization Handbook.31 under the CAA. There is nothing in this 4, ‘‘Regulatory Analysis’’ Frequently Asked 1. Key elements of a BCA. The EPA final rule that would create such an Questions (FAQs). Office of Management and did not receive comments on the outcome, since an articulation of the Budget, U.S., 2011b. Circular A–4, ‘‘Regulatory statement of need does not bar the Impact Analysis: A Primer’’. proposed requirement that a BCA 26 Farrow, S. ed., 2018. Teaching Benefit-Cost should include three key elements. The Agency from complying with any Analysis: Tools of the Trade. Edward Elgar specific comments received on each requirements of the CAA, including Publishing. Brent, R.J. ed., 2004. Applied Cost- element are provided in the those of CAA section 307(d)(2). The Benefit Analysis. Edward Elgar Publishing. Mishan, corresponding subsections below. EPA is codifying into regulation a E.J. and Quah, E., 2007. Cost-benefit analysis. procedure that is already prescribed as Routledge. Hanley, N. and Spash, C., 1996. Cost Therefore, EPA is finalizing the key benefit analysis and the environment. elements of a BCA as proposed. The key a best practice in OMB’s Circular A–4 27 Phaneuf, D.J. and Requate, T., 2016. A course elements of a rigorous regulatory BCA (OMB, 1993) and EPA’s Guidelines in environmental economics: Theory, policy, and include: (1) A statement of need; (2) an (EPA, 2010), which are the existing peer practice. Cambridge University Press. Perman, R., examination of regulatory options; and reviewed guidance documents Ma, Y., McGilvray, J. and Common, M., 2003. Natural resource and environmental economics. (3) to the extent feasible, an assessment implementing E.O. 12866. Therefore, Pearson Education. Krutilla, K., 2005. Using the of all benefits and costs of these the EPA is finalizing the requirement Kaldor-Hicks tableau format for cost-benefit regulatory options relative to the that each regulatory BCA should analysis and policy evaluation. Journal of Policy baseline (no action) scenario. include a statement of need that Analysis and Management: The Journal of the Association for Public Policy Analysis and 2. Statement of Need. Some provides (1) a clear description of the Management, 24(4), pp.864–875. commenters supported the EPA problem being addressed, (2) the 28 Robinson, L.A. and Hammitt, J.K., 2013. Skills reasons for and significance of any of the trade: Valuing health risk reductions in 29 See EPA, Guidelines for Ensuring and failure of private markets or public benefit-cost analysis. Journal of Benefit-Cost Maximizing the Quality, Objectivity, Utility and institutions causing this problem, and Analysis, 4(1), pp.107–130. Sunstein, C.R., 2014. Integrity of Information Disseminated by the The real world of cost-benefit analysis: Thirty-six Environmental Protection Agency (https:// (3) the compelling need for federal questions (and almost as many answers). Columbia www.epa.gov/sites/production/files/2019-08/ government intervention in the market Law Review, pp.167–211. Farrow, S., 2013. How documents/epa-info-quality-guidelines_1.pdf). to correct the problem. This statement (not) to lie with benefit-cost analysis. The 30 https://www.whitehouse.gov/sites/ sets the stage for the subsequent Economists’ Voice, 10(1), pp.45–50. Farrow, S. and whitehouse.gov/files/omb/memoranda/2007/m07- Viscusi, W.K., 2011. Towards principles and 24.pdf. analysis of benefits and costs and allows standards for the benefit-cost analysis of safety. 31 https://www.epa.gov/risk/risk-characterization- one to judge whether the problem is Journal of Benefit-Cost Analysis, 2(3), pp.1–25. handbook (EPA 100–B–00–002, December 2000). being adequately addressed by the

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policy. Additional discussion of the additional evaluation of a voluntary related pending regulations’’; and stated regulatory statement of need can be program to address the problem that this is consistent with OMB’s found in OMB’s Circular A–4 (1993, B. articulated in the statement of need if Circular A–4. Introduction, The Need for Federal appropriate to the circumstances. Several commenters stated that the Regulatory Action) and the EPA’s Therefore, the EPA is finalizing the proposed requirements for developing a Guidelines (2010, Chapter 3). requirement that the BCA analyze the baseline will prevent ‘‘double- 3. Regulatory Options. Commenters benefits and costs of regulatory options. counting.’’ The commenters added that supporting the requirement to analyze The final rule requires the BCA to the issue of double counting of benefits the benefits and costs of at least three analyze at least three options that has been a particular concern with past regulatory options argued that the contribute to the stated objectives of the EPA BCAs under the CAA. Commenters proposed requirement provides decision CAA (unless the BCA explains the referenced a report that found that the makers and the public with important rationale for analyzing fewer than three simultaneous advancement of multiple perspective on not only the various options, as further described below) and CAA-related rulemakings resulted in options’ relative impact on net social to explain why they were selected. changes between proposed and final benefits, but also the sensitivity of Where there is a continuum of options BCAs’ baseline assumptions about stringency options on other individual (such as options that vary in stringency), implementation of other regulations that factors that comprise the overall the three options are required to include created inconsistencies in BCA forecasts. One commenter further at a minimum: The proposed or estimates between the proposed and suggested that the Agency also consider finalized option; a more stringent option final stages and revealed examples of including a fourth option, the that achieves additional benefits (and double-counting. One commenter implementation of voluntary programs presumably costs more) beyond those suggested that where ancillary benefits if appropriate to the circumstances. realized by the proposed or finalized exist and have not been counted before Some commenters opposed the option; and a less stringent option that by the EPA, the EPA must determine the requirement to analyze the benefits and costs less (and presumably generates most cost-effective regulatory means of costs of at least three regulatory options. fewer benefits) than the proposed or achieving them. The commenter argued These comments provided various finalized option. When a continuum of that this should ensure that the EPA reasons including, but not limited to: options is not applicable, an analysis of properly and efficiently utilizes its The EPA incorrectly assumes that a three regulatory options provides an regulatory authorities to achieve optimal continuum of options is possible; opportunity to analyze a variety of results to enhance societal well-being. requiring three regulatory options may parameters including different Some commenters opposed the lead to patently inappropriate or compliance dates, enforcement requirements for developing a baseline in a BCA in the proposed rule as they otherwise unacceptable options; methods, standards by size or location requiring three regulatory options may argued OMB and EPA policies already of facilities, and regulatory designs (e.g., lead the agency to put forward establish the process for establishing a performance vs. technology standards). intentionally poor choices; and baseline, for assuring that benefits will If fewer than three options are analyzed requiring three regulatory options may not be double-counted, and for being relative to the baseline, or if there is a lead to unintended consequences such transparent in those explanations. continuum of options and the options as leading the agency to evaluate Creating a new rule for the purpose of analyzed do not include at least one options that are infeasible and preventing an oversight in a pre-existing more stringent (or otherwise more impractical. mechanism for assessing BCA is costly) and one less stringent (or None of the comments received have unnecessarily ‘‘reinventing the wheel.’’ led the EPA to materially change its otherwise less costly) option than the The commenters further argued the views from the proposal. The EPA is proposed or finalized option, then the proposed requirements for developing a codifying into regulation a procedure final rule requires the BCA to explain baseline bias the analyses against that is already prescribed as a best why it is not appropriate to consider regulations that otherwise meet practice in OMB’s Circular A–4 (OMB, more alternatives. For further statutory requirements and provide 1993) and EPA’s Guidelines (EPA, discussion, see OMB’s Circular A–4 important environmental benefits, in 2010), which are the existing peer (specifically, see section E. Identifying contravention of the CAA’s public- reviewed guidance documents and Measuring Benefits and Costs, health protective mandate. implementing E.O. 12866. These General Issues, 3. Evaluation of Other commenters opposing the guidance documents provide additional Alternatives). proposed requirements contended that details for how to select appropriate 4. Baseline. Many commenters the EPA provides no specific cases to regulatory options for evaluation. supported the proposed requirement support its assertion that there is a risk OMB’s Circular A–4 also allows for the regarding the development of a baseline of ‘‘double-counting.’’ Some of the possibility of evaluating an option as consistent with best practices for commenters contended that recent whose selection would be prohibited BCA. Several commenters noted that research indicates some claimed under the specific statutory provision defining the baseline scenario is one of mechanisms of ‘‘double-counting’’ are under which the rule is being the most important elements of a either inaccurate or can be addressed by promulgated because the identification regulatory impact analysis, and multiple the EPA following its own guidelines on of these statutory constraints and an commenters supported the proposed BCA baselines assuming full estimate of their opportunity costs may requirements to develop a baseline that compliance with existing rules. The provide useful information to Congress appropriately considers relevant factors commenters added that the proposed under the Regulatory Right-to-Know based on transparent and reasonable rule provides no evidence that there is Act. The requirement to analyze at least assumptions. Additionally, some a gap that needs to be filled in this three regulatory options also provides commenters supported the explicit use regard beyond its existing guidance, for cases where a continuum of options of more than one baseline: ‘‘one baseline and, in fact, adds no additional insight is not possible, which is further clarified based solely on current standards and into these issues. below. Finally, there is nothing in this another based on the agency’s reasoned None of the comments received have final rule that would prevent an assumptions regarding the effect of all led the EPA to materially change its

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views from the proposal. The EPA is studies are helpful, but not the only methods will be more suitable than codifying into regulation a procedure source of information for monetizing others in a given scenario for a variety that is already prescribed as a best benefit and WTP studies are particularly of reasons, and some will be better able practice in OMB’s Circular A–4 (OMB helpful in estimating the value of to capture certain types of benefits than 1993) and EPA’s Guidelines (EPA 2010), mortality risk reduction, which others. Since research on all of these which are the existing peer reviewed typically comprise the bulk of methods is ongoing, the limitations and guidance documents implementing E.O. monetized benefits in CAA rules. qualifications of each method is best 12866. Nothing in the public comments Several commenters opposed described in guidance and the EPA has have suggested specific additional including the WTP concept in the decided not to include any requirements factors that should be codified into the proposed rule. The commenters related to particular valuation methods final rule as factors to be considered expressed concern that the proposed in this final rule. when developing the baseline in a BCA. rule will continue practices to propagate A BCA evaluates the social benefits Therefore, the EPA is finalizing the the understatement of CAA benefits, to and social costs of a policy action. The requirement to develop a suitable the detriment of all, but particularly to social benefits of a policy are measured baseline as proposed, as described low-income and minority communities. by society’s willingness-to-pay for the below. Several commenters stated that WTP is policy outcome. The social costs are The baseline in a BCA serves as a strongly affected by factors such as measured by the opportunity costs of basis of comparison with the regulatory ability to pay and by the awareness of adopting the policy. Opportunity cost is options considered. It is the best the respondent of the harms being the value of the next best alternative to assessment of the way the world would inflicted or avoided. A commenter then a particular activity or resource.32 A look absent the regulatory action. The asserted that a WTP analysis will lead BCA addresses the question of whether choice of a baseline requires to higher measured monetary benefits the benefits from the policy action are consideration of a wide range of for wealthier communities than for sufficient for those who gain to potential factors, including exogenous poorer communities for the same level theoretically compensate those changes in the economy that may affect of health and wellbeing benefit. At least burdened such that everyone would be relevant benefits and costs (e.g., changes two commenters focused on particular at least as well off as before the policy. over time in demographics, economic methods used for estimating WTP. In other words, many regulations can be activity, consumer preferences, and These commenters advised EPA against thought of as a requirement to divert technology); impacts of regulations that using survey approaches to estimate resources from activities with a higher have been promulgated by the agency or WTP because they contend that such net return in private markets alone to other government entities; and the studies often overstate WTP that does those with a higher net return when all degree of compliance by regulated not align with reality. impacts are counted, thus the entities with other regulations. None of the comments received have calculation of net benefits (benefits Accounting for other existing led the EPA to materially change its minus costs) helps ascertain the regulations in the baseline is especially views from the proposal on the economic efficiency of a regulation. important in order to avoid double appropriate measure of benefits and Where all benefits and costs can be counting of the incremental benefits and costs in a BCA. The EPA is codifying quantified and expressed in monetary into regulation a procedure that is costs from other existing regulatory units, BCA provides decision makers already prescribed as a best practice in actions affecting the same with a clear indication of the most OMB’s Circular A–4 (OMB, 1993) and environmental condition (e.g., ambient economically efficient alternative, that EPA’s Guidelines (EPA, 2010), which air quality). When the EPA determines is, the alternative that generates the are the existing peer reviewed guidance that it is appropriate to consider more largest net benefits to society (ignoring documents implementing E.O. 12866. than one baseline (e.g., one that distributional effects). As discussed in Section V.B of this accounts for another EPA regulation In keeping with best practices, the Preamble, the EPA agrees with the being developed at the same time that appropriate measures of benefits and SAB’s recommendation, per their would affect the same environmental costs to use in a regulatory BCA are review of the proposed rule, to provide condition), the final rule requires the social benefits and social costs. When more clarity in the definition of Benefit- BCA to provide a reasoned explanation assessing a regulation, the social Cost analysis and the measurement of for the baselines used and to identify benefits are the society-wide positive the key uncertainties in the forecast(s). benefits and costs. Therefore, in this changes in well-being, and social costs These requirements for developing a final rule EPA has provided a more are the society-wide opportunity costs, baseline are consistent with best fulsome definition of BCA to clarify that or reductions in well-being. WTP is the practices as outlined in OMB’s Circular it is consistent with OMB Circular A–4. correct measure of these changes in A–4 (1993) and EPA’s Guidelines (2010). The EPA disagrees with commenters 5. Measuring Benefits and Costs. who stated that the proposed rule did BCA. Willingness to pay means the largest Some commenters contended that the not acknowledge the existence of amount of money that an individual or proposal identifies the willingness to metrics other than willingness-to-pay, as pay (WTP) metric as the ‘‘correct discussed below. In addition, the EPA 32 Opportunity cost need not be assessed in measure’’ of changes from the baseline, disagrees with commenters who advised monetary terms. It can be assessed in terms of but the proposal fails to acknowledge to include more discussion in the rule anything that is of value to the person or persons the existence of other metrics and does about particular methods for estimating doing the assessing. For example, a grove of trees not justify their exclusion in favor of WTP. The EPA’s Guidelines and OMB’s used to produce paper may have a next-best- alternative use as habitat for spotted owls. WTP. One commenter further argued Circular A–4 include discussion of Assessing opportunity costs is fundamental to the proposal also fails to acknowledge particular methods for estimating WTP, assessing the true cost of any course of action. In or consider the greater difficulty in which can generally be broadly the case where there is no explicit accounting or estimating willingness-to-pay for non- categorized as either revealed preference monetary cost (price) attached to a course of action, ignoring opportunity costs could produce the market goods, such as air quality and or stated preference methods. As illusion that the action’s benefits cost nothing at all. associated health risk. Another described in these guidance documents The unseen opportunity costs then become the commenter further added that WTP and standard textbooks on BCA, some implicit hidden costs of that course of action.

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group would pay to receive the benefits Many comments pertained to whether will be overestimated and benefits will (or avoid the damages) resulting from a more specific or additional best be underestimated. policy change, without being made practices should be codified as None of the public comments worse off. The principle of WTP requirements in the final rule. For received have led the EPA to materially captures the notion of opportunity cost example, when estimating costs, some change its views from the proposal. The by measuring what individuals are recommended that the final rule be EPA disagrees with the comments that willing to forgo to enjoy a particular expanded to include procedural more specific procedures should be benefit. In general, economists tend to requirements for determining whether codified into regulation pertaining to view WTP as the most appropriate an engineering base cost estimation, the use of particular estimation methods measure of opportunity cost, but an partial-equilibrium model, general or models. The EPA also disagrees with individual’s ‘‘willingness-to-accept’’ equilibrium model, or a combination of commenters stating that the rule (WTA) compensation for not receiving these models should be used. One imposes uneven requirements. The EPA the improvement can also provide a commenter argued that when a is codifying into regulation procedures that are consistent with best practices valid measure of opportunity cost. WTP regulation will affect a sector that for estimating both benefits and costs as is generally considered to be more supplies a wide swath of the economy, discussed at length in OMB’s Circular readily measurable. Market prices then the final rule should specify that A–4 (OMB 1993) and the EPA’s provide rich data for estimating benefits the presumptive cost evaluation method and costs based on WTP if the goods Guidelines (EPA 2010), which are the be a general equilibrium model, and if existing peer reviewed guidance and services affected by the regulation a general equilibrium model is not used, are traded in well-functioning documents implementing E.O. 12866. In then the BCA should be accompanied this final rule, the EPA is codifying competitive markets. See Hanley and by a detailed explanation of why small Spash (1993), Freeman (2003), Just et al. these best practices as proposed, as price effects in the affected sector’s described below. (2005), and Appendix A of the EPA’s outputs would not be expected to have Guidelines (2010). Although the most appropriate economy-wide effects. Others pointed methods for estimating social costs and WTP provides a full accounting of an out that systems are so large and social benefits can often be regulation- individual’s preference for an outcome complex that evaluative tools are not specific, there are best practices for by identifying what the individual adequate for these types of analyses to selecting these methods. With this final would give up to attain that outcome. be accurate and useful for decision- rule, the EPA requires that all BCAs will WTP is measured in monetary terms to making. Another of these commenters rely on such best practices and will allow a comparison of benefits to costs said that although the EPA is correct to provide reasoned explanations for in the net benefit calculation. If the BCA highlight the potential value added to be methods selected. These best practices departs from these best practices (e.g., gained by using general equilibrium include the use of a framework that is where WTP is hard to measure), this models, there still are a number of appropriate for the characteristics of the final rule requires a robust explanation reasons why general equilibrium models regulation being evaluated. As for doing so. For further discussion, see may not yet be ready to be used as a discussed in OMB Circular A–4, a good OMB’s Circular A–4 (specifically, see principal analytic framework for regulatory analysis cannot be developed section E. Identifying and Measuring undertaking cost-benefit analysis of according to a formula. Conducting Benefits and Costs, General Issues, 2. environmental regulations. The high-quality analysis requires Developing a Baseline and Guidelines commenter argued that general competent professional judgment. (2010), Chapter 5. Baseline). equilibrium models provide insights Different regulations may call for While based on the same underlying rather than answers about the economic different emphases in the analysis, conceptual framework, social benefits effects of policies; for example, general depending on the nature and and social costs are often evaluated equilibrium models are calibrated using complexity of the regulatory issues and separately due to practical parameter estimates to ‘‘fit’’ the sensitivity of the benefit and cost considerations. The social benefits of predetermined values providing a estimates to the key assumptions. For reduced pollution are often attributable certain degree of ‘‘realism’’ but only up example, the extent to which to changes in outcomes not exchanged to a point. compliance cost is a sufficient measure in markets, such as improvements in of social costs will depend on whether public health or ecosystems. In contrast, Finally, some commenters argued that a regulation is expected to result in the social costs generally are measured the proposed rule provided an changes in prices and quantities within through changes in outcomes that are unbalanced treatment of benefits and and across markets. Other exchanged in markets. As a result, costs by setting more stringent standards considerations when selecting an different techniques are used to estimate for benefit estimation than cost estimation method include the ability of social benefits and social costs however, estimation, and therefore, aside from an estimation approach to capture in both cases the goal is to estimate being unnecessary and unjustified, they certain types of costs, to adequately measures of WTP to provide stated the proposed requirements were reflect the geographic and sectoral detail consistency. also biased and arbitrary. These and scope of the rule, and to reflect how 6. Methods for Estimating Benefits commenters’ recommended solution to costs may change over time, among and Costs. The EPA received a range of the proposed rule’s problem of treating other considerations. comments on the proposed costs and benefits differently is simply During the estimation process, the requirements regarding the methods for to withdraw the proposed rule and final rule requires analysts to consider estimating benefits and costs. Comments revert to relying on existing guidance, how social cost and benefit endpoints were divided on the idea of codifying like OMB’s Circular A–4 and the EPA’s may be affected by behaviors in the best practices, with many commenters Guidelines, which already offer a more baseline and potential behavioral supporting codification in a procedural balanced treatment to both costs and changes from the policy. For example, regulation, but others noting possible benefits. Other commenters stated the three broad frameworks for estimating inconsistency when practices are proposed rule arbitrarily fails to address social cost—compliance cost, partial updated in the future. the likelihood that compliance costs equilibrium, and general equilibrium—

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offer different scopes in terms of the and pre-existing market distortions are that strength of scientific evidence degree to which behavioral response expected to be significant. Market should be strongest when the benefits and other market imperfections are distortions are factors such as pre- are estimated. As further discussed in included. In general, analysts can existing taxes, externalities, regulations, OMB’s M 19–15, this concept is referred improve the accuracy of cost estimates or imperfectly competitive markets that to as ‘‘fitness for purpose,’’ whereby by reducing known biases due to the move consumers or firms away from information anticipated to have a higher omission of potentially important what would occur in the absence of impact must be held to higher standards behavioral responses or missing such distortions. For example, when an of quality.34 opportunity costs. However, adopting environmental regulation affects the real Once benefit endpoints are identified, more complex approaches can reduce wage such that individuals opt to work analysts need to decide whether and the precision of estimates due to data fewer hours, it can exacerbate pre- how to quantify changes in each and modeling limitations. A compliance existing inefficiencies in the labor endpoint. From among the endpoints cost approach typically identifies the market due to taxes, regulatory barriers, identified above, the EPA will quantify private expenditures associated with or other market imperfections. This effects for endpoints which scientific compliance in the regulated sector(s). represents a welfare cost not captured evidence is robust enough to support Compliance cost estimates typically by compliance cost estimates. The such quantification. If the Agency exclude behavioral responses outside of impacts of a regulation also may interact determines that some benefits should be the choice of compliance activity and with pre-existing distortions in other discussed only qualitatively, for may, therefore, not capture some markets, which may cause additional example, due to limited scientific opportunity costs associated with impacts on welfare either positively or evidence or limited resources for regulations. However, with adequate negatively. In cases such as these, a developing concentration response general equilibrium approach may be data, this approach can generate highly functions, the final rule requires the capable of identifying how the costs of detailed and relatively precise Agency to provide a reasoned complying with a regulation flow information on compliance options and explanation for that decision. through the economy, such as through costs, reflecting the heterogeneity of Additional requirements for choosing changes in substitution among factors of regulated entities. This can provide a and quantifying health endpoints are production, trade patterns, and demand reasonable estimate of the social cost of described further below. a regulation when changes in the for goods and services. These effects are Quantification is then followed by regulated sector’s outputs and input mix partially or wholly missed by valuation of these endpoints when data are expected to be minimal and no large compliance cost and partial equilibrium and methods allow. There are well- market effects are anticipated. A partial approaches. For further discussion, see defined economic principles and well- equilibrium analysis captures supply EPA’s Guidelines (2010), Chapter 8, established economic methods for and demand responses in the regulated Analyzing Costs, 8.1. The Economics of valuation as detailed in OMB and sector due to compliance activities and Social Cost. Agency guidance, including OMB’s may, therefore, provide a more complete The estimated social benefits reported Circular A–4 and the EPA’s Guidelines. estimate of compliance costs in addition in a BCA should link regulatory It will not always be possible to express to any lost profits and consumer welfare requirements to the value that in monetary units all of the important due to reductions in output. In other individuals place on the beneficial outcomes,33 benefits and costs. When it is not, the words, behavioral responses can have or benefit endpoints, that can be meaningfully expected as a result most efficient alternative will not important impacts on both the size and of those requirements. Benefits necessarily be the one with the largest distribution of benefits and costs, and assessment is, therefore, typically a quantified and monetized net-benefit therefore can provide a fuller picture of multi-step process. The starting point is estimate. In such cases, the EPA will the social impact of a particular identifying the changes in exercise its subject matter expertise in regulation. Partial equilibrium analyses environmental contaminants or stressors determining how important the non- may be extended to consider a small that are likely to result from policy quantified benefits or costs may be in number of related sectors in addition to options relative to the baseline. These the context of the overall analysis. Even those directly regulated (e.g., upstream changes are often characterized through when a benefit or cost cannot be markets that supply intermediate goods air quality modeling. The next step is to expressed in monetary units, the EPA to the regulated sector, or markets for identify the benefit endpoints that may will try to measure it in terms of its substitute or complementary products). be affected by changes in environmental physical units. If it is not possible to A partial equilibrium approach is quality, such as human health measure the physical units, the EPA preferred for estimating social cost improvements, ecological will describe material benefits or costs when the regulation will result in improvements, aesthetic improvements, qualitatively. appreciable behavioral change, but the and reduced materials damages. The effects will be confined primarily to a Finally, the valued endpoints should EPA recognizes that the strength of single market or a small number of be aggregated to the extent possible and scientific evidence for different health markets. When broader economy-wide supported by scientific and economic or environmental endpoints varies, and impacts are expected as a result of the practice to provide the basis for regulation, a partial equilibrium characterizing the benefits of each 33 As a practical matter, the value of any adverse policy option. approach will miss these effects. In this public health or welfare outcomes (sometimes case, a general equilibrium approach referred to as ‘‘disbenefits’’) resulting from the may be more appropriate to more regulatory requirements are usually also included 34 OMB’s M–19–15 refers back to OMB’s 2002 on the benefits side of the ledger in regulatory Guidelines, which characterize a subset of agency adequately estimate social cost. BCAs, although it is theoretically appropriate to information as ‘‘influential scientific, financial, or A general equilibrium approach, include them on the cost side. Such adverse statistical information’’ that is held to higher which captures linkages between outcomes could include adverse economic, health, quality standards. This is scientific, financial, or safety, or environmental consequences that occur statistical information that ‘‘the agency can markets across the entire economy, is due to a rule (e.g., adverse safety impacts from reasonably determine . . . will have or does have most likely to add value when both vehicle emission standards) and are not already a clear and substantial impact on important public relevant relationships among sectors accounted for in the direct cost of the rule. policies or important private sector decisions.’’

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In some instances, it may be possible criteria for selecting studies from the health endpoints with ‘‘an overall to value bundles of attributes or literature are too restrictive. Others framework outline of the systematic endpoints using reduced-form recommended that the EPA consider review principles it would follow for techniques, such as the hedonic different criteria entirely or require a the evaluation of human health hazard method. Care and professional more systematic review approach for data for the purposes of concentration- judgment are necessary in determining evaluating the scientific literature to response selection and quantification of the appropriateness of bundling of quantify health impacts. For example, benefits.’’ The SAB also advised the several endpoints versus modeling one commenter noted that while the list Agency to discuss how relevant advice separate endpoints. Even if bundling is of proposed criteria referred to study from the National Academies and the thought to be appropriate, it can be features that should be evaluated under SAB on systematic review as well as the useful to think through the multi-step a systematic review framework, it was approaches under development by the process above conceptually to: (a) not exhaustive or complete and does not EPA in the Consolidated Human Assess whether there are benefit provide a systematic approach for the Toxicity Assessment Guidelines 35 will endpoints not reflected in the reduced integration of this evidence to prioritize be evaluated and incorporated. The EPA form valuation estimate that should be studies that provide the accurate agrees with the recommendations from included through additional analysis, or characterization of health impacts. the SAB and commenters on the (b) compare the magnitudes of multi- Some commenters stated that the rule importance of using a systematic review step and reduced-form, revealed- would contradict advice the EPA has process to evaluate the scientific preference benefits estimates so that received from the National Academies literature for the purposes of each can provide a check on the and SAB and/or questioned why, in determining which health endpoints to reliability of the other. their view, the EPA is re-inventing the include in a BCA and what In summary, this final rule requires wheel. Some commenters emphasized concentration-response functions to use that, to the extent supported by the that best practices for characterizing to quantify changes in these endpoints. scientific criteria, as discussed above, as uncertainty should reflect more Therefore, the EPA is revising the well as practicable in a given probabilistic techniques and that EPA requirements in this section of the rule rulemaking, (1) BCAs will quantify all should also use a risk of bias approach as described below. benefits; (2) BCAs will monetize all the when selecting among studies. It is essential for analyses to benefits by following well-defined In their review of the proposed rule, characterize health effects for which the economic principles using well- the SAB also provided science indicates the likelihood that established economic methods, recommendations related to the changes in exposure would provide appropriate data and/or studies; and (3) selection and quantification of health positive benefits. The EPA requires that BCAs will qualitatively characterize endpoints. First, the SAB recommended BCAs performed under this final rule benefits that cannot be quantified or that the EPA clarify the requirements for will include benefit endpoints for which monetized. In addition, the final rule estimation of benefits to incorporate requires the Agency to explain any systematic review approaches, better the scientific evidence indicates there is departure from the best practices for the define causality, and include effects for (a) a causal or likely causal relationship BCA described in Circular A–4; this which causal or likely causal between pollutant exposure and effect, includes discussing the likely effect of relationships may be less certain. In and subsequently, (b) sufficient data and the departures on the size of the benefits particular, the SAB advised that no ‘‘one understanding to allow the agency to estimate. More discussion of these best size fits all’’ approach to causality reasonably model the anticipated practices and estimation methods is should be mandated because a variety of change in that effect in response to provided in OMB’s Circular A–4 and the approaches may need to be taken (some changes in environmental quality or EPA’s Guidelines, and the literature data driven, some based on systematic exposures expected as a result of the cited therein. review of the biology, toxicology and regulation under analysis. 7. Selecting and Quantifying Health epidemiology). Instead, the SAB As stated in the proposal, decisions Endpoints in a BCA. The EPA received recommended that the EPA should about whether and which changes in the numerous comments on the proposed include reference to and support for health endpoints should be quantified requirements for selecting and relevant guidance from current best should be informed by an evaluation of quantifying health endpoints in a BCA. Agency practices for evaluating the relevant scientific literature Many public commenters were critical causality. The SAB also advised that the studying the strength of the association of the lack of definitions for key terms EPA modify the proposed requirement between exposure to a pollutant and the in this section, especially ‘‘causal’’ and to include in the benefits analyses the health endpoint and the nature of the ‘‘likely causal’’ though some of these effects for which causal or likely causal concentration-response function (i.e., commenters supported the proposed relationships may be less certain, but the amount of change in the frequency requirements while providing more the impact would be substantial. or severity of the health endpoint specific definitions that could improve Second, the SAB provided expected as the distribution of air the terms. Other commenters were recommendations for how the EPA quality changes). Benefits may be generally critical of the proposed could adjust the proposed requirements quantified for associations that meet the requirements that any linkage between for selection of health endpoints to criteria for causality, considering, for regulatory requirements and benefits be provide greater clarity and transparency, example, the biologic plausibility, based on ‘‘a clear causal or likely causal especially with regard to the selection of consistency, temporality, strength, and relationship’’ and argued such concentration response functions. The specificity of the effect. requirements will restrict the SAB recommended that the final rule assessment of the health benefits of should clarify the specific scientific 35 For more information about the development of proposed CAA regulations. With respect rationale for endpoint selection and the Consolidated Human Toxicity Assessment to determining what concentration- promote transparency by defining Guidelines, see: https://yosemite.epa.gov/sab/ sabproduct.nsf//LookupWebProjects response functions to use to quantify specific terms used in the requirements, CurrentBOARD/ changes in the selected endpoints, some or the Agency should replace all of the DF0F42C34645448685258570005ADFFF? commenters argued that the proposed specific criteria on the selection of OpenDocument.

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In this final rule, the EPA is clarifying from the scientific literature that take described above, the final rule allows a that for human health endpoints, a into account the breadth and quality of BCA to reference this synthesis. systematic review process must be used the available evidence regarding the Conceptually, BCA requires a to evaluate the hazard data for the nature and magnitude of the risk to the comparison of expected costs and purposes of determining which populations affected by the regulation. expected benefits, so BCA for CAA endpoints to include in a BCA and what More weight should be given to higher regulations should include the concentration-response functions to use quality studies or analyses that have determination of expected benefits. to quantify changes in these endpoints. been peer reviewed. To the extent When sufficient data exist, a probability As described by Institute of Medicine possible, the studies or analyses should: distribution of risk is appropriate to use (IOM), ‘‘systematic review is a scientific (1) Be based upon human data when when determining the expected benefits investigation that focuses on a specific available; (2) specify the exposure route, for CAA regulations. When it is question and uses explicit, pre-specified duration, and levels, with preference infeasible to estimate a probability scientific methods to identify, select, given to those studies assessing distribution, measures of the central assess, and summarize the findings of exposure similar to those experienced tendency of risk may be used. Upper- similar but separate studies. The goal of by the general population; (3) employ a bound risk estimates must not be used systematic review methods is to ensure design or analysis that adequately without also presenting lower bound that the review is complete, unbiased, addresses relevant sources of potential and central tendency estimates. reproducible, and transparent’’ (IOM, critical confounding; (4) consider how 8. Uncertainty Analysis. Many public 2011). exposure is measured, particularly those commenters supported the proposed The systematic review process, at a that provide measurements at the level rule’s codification of best practices for minimum, consists of: Problem of the individual and that provide actual uncertainty analysis and further formulation and protocol development, measurements of exposure; and (5) be contended that the EPA’s past evidence identification, evidence able to reliably distinguish the presence uncertainty analyses in CAA BCA vary evaluation, and evidence integration or absence (or degree of severity) of in their quality, scope, and rigor. Some (National Research Council, 2014). health outcomes. Studies demonstrating of these commenters provided Problem formulation should identify the more of the attributes listed above, and additional recommendations for specific question to be addressed in the those which demonstrate the uncertainty analyses in the BCA review and the protocol should specify considerations to a greater extent, are including using probability the methods used to address the expected to provide more accurate distributions of risk when calculating question, making these methods and the concentration-response relationships benefits. For example, one commenter review process transparent. Evidence and associated risk estimates. Consistent recommended that the EPA analyze assumptions embedded in the EPA’s identification should follow a search with the general process of systematic environmental Benefits Mapping and strategy written into the protocol that review, the evaluation should Analysis Program (BenMAP) tool 37 in explicitly states the inclusion and emphasize transparency and its uncertainty assessment as well as exclusion criteria for studies. replicability in the evaluation process. further aligning with numerous EPA Importantly, a study’s inclusion in the When utilizing multiple review should not depend upon that recommendations from the SAB and the concentration-response functions to National Academies. Some commenters study’s findings. When feasible, the estimate impacts on a single health evidence evaluation should include a recommended that the EPA should also outcome, the BCA must quantify risks in quantify the effect of the major sources risk of bias assessment to determine such a way that the heterogeneity in the how confidently conclusions can be of uncertainty and variability on the risk estimated health impacts is clearly estimates, benefit estimates, and cost drawn from the data. For example, the characterized. The EPA will present EPA began incorporating a risk of bias estimates as well as transparently results in a manner that promotes documenting key assumptions that assessment into its Integrated Science transparency in the assessment process Assessments (ISAs), starting with the drive uncertainty analyses. by selecting and clearly identifying Some commenters opposed the EPA’s recently published ozone ISA (EPA, concentration-response functions best 36 proposed requirements for an 2020). Finally, evidence integration characterizing risk for affected should provide a structured approach to uncertainty analysis in the BCA, stating populations, as well as evidence that these proposed provisions are drawing conclusions considering all necessary to demonstrate the sensitivity appropriate and available lines of arbitrary, capricious and not of the choice of the concentration- appropriate. One of these commenters scientific evidence, including response function on the magnitude and epidemiologic, toxicologic, and said that the EPA unjustifiably weights the uncertainty associated with air the burden of uncertainty assessment on mechanistic lines of evidence. pollution-attributable effects. Evidence benefits rather than costs by placing Applying the systematic review from epidemiologic, experimental, and process described above, the final rule more prescriptive requirements on the controlled human exposure studies may analysis of the uncertainty of benefits, requires the EPA to identify suggest that certain demographic concentration-response relationships thus skewing the assessment of subgroups are subject to risks that differ uncertainty towards benefits more than from the general population; in these 36 The EPA prepares ISAs to provide the scientific costs, and by depicting benefits as more foundation for setting standards for the 6 criteria air instances, it may be appropriate to uncertain than costs. Additional pollutants under the National Ambient Air Quality select concentration-response commenters opposed to the EPA’s Standards program. This assessment is a relationships that quantify risks among proposal argued that the proposed comprehensive review, synthesis, and evaluation of these specific subgroups, abiding by the the most policy-relevant science, including key requirements add seemingly endless science judgments that are important to inform the overall framework of the systematic layers of analyses and potentially development of the risk and exposure assessments, review process. import substantive constraints and as well as other aspects of the NAAQS review. The In cases where existing Agency judgments under the guise of preamble to the ISAs describes the five-level causal framework for evaluating weight of evidence and documents (e.g., ISA for criteria characterizing uncertainty. drawing scientific conclusions and causal pollutants) provide the review and judgments. See https://www.epa.gov/isa. synthesis consistent with the process 37 https://www.epa.gov/benmap.

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The SAB also made several preferably quantitatively, sources of making. Some commenters further recommendations related to the uncertainty in the assessment of costs, stated that providing information on the proposed requirements for uncertainty changes in air quality, assessment of data, models, assumptions, and analysis. First, the SAB recommended likely changes in health and welfare uncertainties will increase public that the preamble of the final rule endpoints, and the valuation of those participation by improving the dialog discuss the broader purposes of changes. The EPA will be required to between the EPA and stakeholders and uncertainty analysis beyond simple also present benefit and cost estimates creating a better-informed public. transparency. Second, the SAB in ways that convey their uncertainty, Several commenters objected to the explained that because best practices including acknowledging unquantified transparency provisions of the rule with require that the analysis be appropriate benefits and costs, where appropriate. one commenter stating that it is unclear for the policy context, uncertainty Because information on the range of what is meant by the statement that the analysis should only be required to the outcomes from policy may be an EPA’s presentation of BCA results extent feasible ‘‘and appropriate.’’ important consideration in decision- should be ‘‘reproducible to the extent Third, the SAB advised that the making, the final rule requires EPA to reasonably possible.’’ Commenters discussion in the final rule be also characterize the range of likely argued that the preamble offers no basis broadened to reflect the fact that outcomes. BCAs will be required to for concluding that the EPA in the past outcomes other than the expected value include a reasoned explanation for the has not been transparent in presenting may be very important for policies scope of the uncertainty analysis and to the results of their analysis of regulatory involving low-probability, high specify specific quantitative or options. Other commenters further consequence hazards. Also, when qualitative methods chosen to analyze contended that the proposed presenting quantitative results, the SAB uncertainties. Quantitative uncertainty requirements would obscure the basis recommended that the final rule require analyses may consider both statistical for the EPA’s decisions and the proposal the EPA to clearly note when there are and model uncertainty where the data is inappropriate to require ‘‘consistency unquantified benefits or costs that could are sufficient to do so. Furthermore, across the Clean Air Act’’ given the be significant. Finally, the SAB where data are sufficient to do so, the differences in statutory obligations for recommended that the EPA rule requires BCAs to consider sources different pollutants. Several of these acknowledge in the final rule that of uncertainty both independently and commenters claimed that the EPA’s uncertainty analysis will not correct jointly. The BCA should also discuss the regulatory assessments already are errors resulting from the inclusion of extent to which qualitatively assessed transparent, and the proposed rule ‘‘poor science’’, which arguably has a costs or benefits are characterized by would lead to confusion on the greater impact on policy choices than uncertainty. regulatory analysis and not increase the lack of uncertainty analysis. Probabilistic uncertainty analysis transparency. One of these commenters None of the public comments involves greater effort than other further claimed that BCA does not received have led the EPA to materially quantitative characterizations of increase transparency because it can change its views from the proposal. The uncertainty but can add insights into the distract from the statutory basis of EPA disagrees with the comment that role of uncertainty in a BCA. When regulations, since most CAA standards the requirement to conduct uncertainty simpler quantitative analysis may not are health-based or technology-based analysis is arbitrary, capricious and not sufficiently describe uncertainty, and standards, which involve a unique set of appropriate. The EPA is codifying into where probability distributions for factors to consider. regulation procedures that are relevant input assumptions are available None of the comments received have consistent with the principle of and can be feasibly and credibly led the EPA to materially change its transparency discussed at length in combined, BCAs should characterize views from the proposal. The EPA OMB’s Circular A–4 (OMB, 1993) and how the probability distributions of the disagrees with the comment that it is the EPA’s Guidelines (EPA, 2010), relevant input assumption uncertainty inappropriate to impose consistent which are the existing peer reviewed would impact the resulting distribution requirements related to transparency guidance documents implementing E.O. of benefit and cost estimates. The EPA across the CAA given the differences in 12866. The EPA agrees with the should report probability distributions statutory obligation for different principles emphasized in the SAB’s for each health benefit whenever pollutants in various provisions of the comments on the proposed rule. The feasible. In addition to characterizing Act. The requirements in this final rule Agency has reviewed the discussion of these distributions of outcomes, it is aimed at providing transparency do not uncertainty analysis below to ensure it useful to emphasize summary statistics bar the Agency from complying with is consistent with these principles and or figures that can be readily understood any requirements of the Act. The EPA has made clarifying revisions in this and compared to achieve the broadest is codifying into regulation procedures preamble and final regulatory text public understanding of the findings. In that are consistent with the principle of where helpful. The final rule includes instances when calculating expected transparency discussed at length in requirements pertaining to uncertainty values is not feasible or appropriate due OMB’s Circular A–4 (OMB, 1993) and analysis as provided below. to data or other limitations, the EPA the EPA’s Guidelines (EPA, 2010), For various reasons, including the should strive to present a range of which are the existing peer reviewed reason that the future is unpredictable, benefits and costs. Additional guidance documents implementing E.O. the benefits and costs of future discussion of these best practices related 12866. For example, the practice of regulatory options are not known with to uncertainty analysis is provided in ensuring that results are reproducible is certainty. The EPA is finalizing OMB’s Circular A–4, Treatment of taken directly from OMB’s Circular A– requirements for BCAs to identify Uncertainty, and throughout the EPA’s 4. Therefore, after reviewing public uncertainties underlying the estimation Guidelines. comments, the EPA is finalizing the of both benefits and costs and, to the 9. Principle of Transparency. Several transparency requirements as proposed. extent feasible and appropriate, commenters supported the general This final rule provides that BCA of quantitatively analyze those that are concept of transparency in conducting significant CAA regulations will most influential. Specifically, the final BCA, because transparency improves include, at a minimum, a detailed and rule requires the EPA to characterize, the quality of regulatory decision- clear explanation of:

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• The overall results of the BCA. The requirements, many commenters Circular A–4 that states that the ‘‘.... benefits, costs, and net benefits of each supported providing additional details analysis should focus on benefits and regulatory option evaluated in the BCA and disaggregated data with a focus on costs that accrue to citizens and will be presented in a manner designed the specific objective of the CAA residents of the United States;’’ and in to be objective, comprehensive, and provision or provisions under which the the case where a regulation is evaluated easily understood by the public. rule is promulgated. These commenters that ‘‘is likely to have effects beyond the • How the benefits and costs were supported the increased transparency borders of the United States, these estimated, including the assumptions that this presentation of BCA results in effects should be reported separately.’’ made for the analysis. BCAs must the preamble will provide to the public One commenter stated that separate include a clear explanation of the on an EPA rulemaking action. Some reporting of domestic impacts would models, data, and assumptions used to commenters were supportive of adding assist EPA in transparently fulfilling the estimate benefits and costs, and the even more requirements to enhance CAA’s primary purpose ‘‘to protect and evaluation and selection process for transparency (e.g., to include a enhance the quality of the Nation’s air these analytical decisions. This disaggregation of impacts on small resources.’’ Many other commenters explanation must also include an entities). were opposed to disaggregated reporting explanation of procedures used to select Other commenters opposed the of domestic and non-domestic benefits among input parameters for the benefit proposal’s presentational requirements, and costs. Some stated that separate and cost models. Such an explanation especially the requirement to provide an reporting is unnecessary and could include methods used to quantify additional reporting in the preamble of counterproductive. For example, one risk and to model the fate and transport the public health and welfare benefits commenter stated that identification of pollutants. that pertain to the specific objective of • and communication of subcategories of A description, consistent with the the CAA provision under which the rule benefits (such as benefits accruing best available scientific information, of is promulgated. Commenters interpreted outside the United States), where the non-monetized and non-quantified this proposed requirement as barring practical, is already accommodated and benefits and costs of the action. The consideration of all benefits that do not frequently done under existing description must include available stem directly from the statutory procedures. Others stated that a policy evidence on all non-monetized and non- objective and they argued that such of breaking out non-domestic benefits quantified benefits and costs, including ancillary benefits developed for a BCA only ‘‘when examined’’ de-values non- explanations as to why they are not are important for the EPA to take into domestic benefits and ignores the being monetized or quantified and what consideration. Some commenters stated impacts that occur outside of the United the potential impact of those benefits that distinguishing between benefits States but that harm individuals in and and costs might be on the overall results ‘‘targeted by the statutory provision’’ outside of the United States directly and of the BCA. versus ‘‘other welfare effects’’ can be a • indirectly. Others emphasized that The primary sources and potential complex, controversial, and ultimately certain classes of effects cannot be effects of uncertainty. The BCA must fruitless endeavor, and that analysts meaningfully disaggregated. Some present the results of the assessment of should not assume, absent explicit argued that a BCA which does not allow the sources of uncertainty that are likely statutory language, that any statute has for benefits and costs to be calculated to have a substantial effect on the the objective of barring consideration of outside of the United States fails to results. Any data and models used to important indirect effects. For example, include the ‘‘best available science’’. any broad statutory language, like analyze uncertainty must be fully These commenters stated that EPA’s ‘‘reasonable’’ or ‘‘appropriate,’’ should identified, and the quality of the request for comment on separate be read broadly to authorize available data must be discussed. presentation of domestic benefits and Finally, to the extent permitted by consideration of all important effects, costs vs. non-domestic benefits law, the Agency must ensure that all whether direct or indirect. The SAB did presumes, wrongly, that ‘‘non- information (including data and models) not comment on this element of the domestic’’ benefits and costs can be used in the development of the BCA is proposed rule. accounted separately while meeting the publicly available while consistent with The proposed rule also solicited agency’s obligations to use the ‘‘best protections for privacy, confidentiality, comment as to whether non-domestic available science’’ and reasoned confidential business information (CBI), benefits and costs of regulations, when decision-making. One commenter and national and homeland security. If examined, should be reported separately pointed to recent National Academies data and models are proprietary, the from domestic benefits and costs of such findings that the calculation of a Agency must make available, to the regulations, analogous to the proposed domestic benefit in the case of extent practicable, the underlying requirement for a separate presentation greenhouse gas emissions reductions inputs and assumptions, equations, and of benefits limited to those targeted by cannot be credibly done using current methodologies used by EPA. the relevant statutory provision or Additional discussion of these best provisions. The EPA received wide models, as they ignore important practices related to transparency is ranging comments on this issue. Many spillover effects given the global nature provided in OMB’s Circular A–4, commenters voiced support for of climate change (National Academies Transparency and Reproducibility of separately reporting, or only reporting, 2017). Results, and throughout the EPA’s domestic benefits and costs. These None of the comments received Guidelines (2010). commenters stated that separate pertaining to the proposed additional reporting of domestic and non-domestic presentation of benefits limited to those F. Requirements for the Presentation of benefits and costs would allow targeted by the relevant statutory BCA Results stakeholders to better understand who provision have led the EPA to materially In the proposed rule, the EPA would experience the costs and benefits change its views from the proposal. The proposed to codify a standardized before regulatory action is taken. Several EPA disagrees with the comment that presentation of the results of the BCA in commenters also stated that a distinguishing the benefits pertaining to the preamble of significant regulations. disaggregated reporting would be the CAA statutory objective means that Regarding these presentational consistent with guidance in OMB other benefits (or disbenefits) are not to

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be considered. The proposed Following the principle of or otherwise appropriate ways of presentational requirements do not bar transparency, the EPA agrees with obtaining ancillary benefits, as they may consideration of any part of the BCA. As commenters that when presenting the be the primary target of an alternative described in Section V.D of this results of a BCA, it is important to regulation that may more efficiently preamble, the final rule requires that the clearly distinguish between the social address such pollutants, through a more Agency consider the BCA in the benefits attributable to the specific flexible regulatory mechanism, better decision-making process when pollution reductions or other geographic focus, or other factors. This permitted to do so. However, the EPA environmental quality goals that are may be relevant when certain benefits declines to formulate a specific test or targeted by the statutory provisions that are the result of changes in pollutants mandate of how to consider the BCA or give rise to the regulation, and other that the EPA regulates under a different what weight the BCA, or particular welfare effects. The disaggregation of section of the CAA or under another elements of it, should be given in such welfare effects will be important to statute. a future rulemaking. The precise details ensure that the BCA may provide, to the In this final rule, the EPA is codifying of what test would be appropriate could maximum extent feasible, transparency into regulation several presentational differ from one CAA provision to in decision-making. These other welfare requirements for the preamble of all another, and the EPA has not proposed effects could include both favorable and future significant CAA regulations. or requested comment on how such adverse impacts on societal welfare. First, in order to ensure standardized tests would be formulated under those Analogous to how a regulation’s presentation of the summary of the BCA specific provisions. interactions with existing imperfections results consistent with E.O. 12866 in On the issue of separate reporting of or distortions in other markets (e.g., due CAA rulemakings, the EPA is codifying domestic and non-domestic benefits and to pre-existing taxes) could lead to into regulation the requirement to costs, the EPA agrees with commenters additional social costs, a regulation present a summary in the preamble of who stated that this disaggregation could ameliorate or exacerbate other the overall BCA results, including total would enhance transparency. Separate pre-existing externalities. For example, benefits, costs, and net benefits. Within reporting is consistent with both more stringent vehicle emissions this summary presentation, if any guidance in OMB’s Circular A–4 and standards could affect upstream refinery benefits and costs accrue to non-U.S. with the CAA which is concerned with emissions or reduce the marginal cost of populations they must be reported ‘‘enhanc[ing] the quality of the Nation’s driving due to greater fuel efficiency separately to the extent possible. air resources so as to promote the public and could lead to an increase in vehicle Second, to enhance transparency health and welfare and the productive miles traveled that affects road safety, about the extent to which a rule is capacity of its population’’ (CAA congestion, and other transport-related achieving its statutory objectives, the 101(b)). The EPA disagrees with externalities. EPA is required to provide, in addition commenters who stated that a Other welfare effects could also occur to a clear reporting of the overall results disaggregation would de-value non- as a direct or indirect result of the of the BCA, an additional presentation domestic benefits and ignore the compliance approaches used by in the preamble of the public health and impacts that occur outside of the United regulated entities. For example, changes welfare benefits that pertain to the States but that harm individuals in and in other environmental contaminants specific objective (or objectives, as the outside of the United States directly and may arise from the regulated sources. case may be) of the CAA provision or indirectly. A separate reporting does not Likewise, the use of an abatement provisions under which the rule is prohibit calculating or considering non- technology that reduces the emissions of promulgated. This second presentation domestic benefits, but rather helps to hazardous air pollutants into one would include a listing of the benefit allow costs and benefits to be compared medium (e.g., air) may change the categories arising from the in an apples-to-apples manner, whether emissions of another pollutant into the environmental improvement that is domestic or not. same medium (e.g., coming out of the targeted by the relevant statutory Aside from separate reporting of same smokestack) or cause changes in provision, or provisions and would domestic impacts, the EPA disagrees emissions of pollutants into another report the monetized value to society of with commenters who stated that medium (e.g., water) by the regulated these benefits. If these benefit categories additional disaggregation of benefit and sources. Changes in other cannot be monetized, the final rule cost results in the preamble presentation environmental contaminants may also requires the EPA to report the quantified are needed to enhance transparency. For occur as a result of market interactions estimates of these benefits to the extent example, CAA rules will continue to induced by the regulation. For example, practicable and to provide a qualitative comply with the requirements of the a regulation may cause consumers or characterization if they cannot be Regulatory Flexibility Act so it is firms to substitute away from one quantified. Similarly, if the statute unclear why an additional requirement commodity towards another, whose directs or allows the Agency to consider to discuss or present impacts to small increased production may be associated costs, the EPA should also provide a entities is needed in this final rule. with changes in various environmental disaggregation of all relevant cost Therefore, the EPA is finalizing the contaminants or other externalities. categories to the extent feasible in this presentational requirements as The welfare effects associated with section. This requirement would serve proposed, as described in detail below, these changes should be accounted for as a supplement to the BCA that is along with two additional requirements. in a BCA to the extent feasible, as it is developed and presented according to First, the final rule requires that any the total willingness to pay for all best practices as outlined in Section V.E benefits and costs accruing to non-U.S. changes induced by a regulation that of this preamble. It does not replace or populations be reported separately to determines their relative importance in change any part of the RIA or the the extent possible in the summary of evaluating economic efficiency. section of the preamble that summarizes BCA results in the preamble. Second, Disaggregating benefits into those the BCA results consistent with E.O. the final rule requires that the BCA targeted and ancillary to the statutory 12866. include a description in the preamble of objective of the regulation may cause Finally, as described in Section V.D of how the Agency considered the results the EPA to explore whether there may this Preamble, to provide the public of the BCA. be more efficient, lawful and defensible, with as much information and

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transparency as possible, the EPA will provide useful data to help the EPA understand whether a regulation be required per the final rule to identify improve environmental outcomes while achieved its objectives—for example, when the CAA provision or provisions minimizing regulatory burdens, whether the regulation, once under which the future rule is promulgate better regulations, and implemented, promoted economic promulgated permit consideration of the improve the analytical framework the efficiency as expected compared to a BCA, and if so, the Agency is required Agency uses to make regulatory baseline without the regulation. to provide a description in the preamble decisions. However, some questioned Retrospective analyses may also lead to of how the results of the BCA were the need and appropriateness of a rule- improved methods for prospective considered. If the provision or based approach to institutionalizing the analysis and ultimately improvements provisions under which the rule is practice of retrospective analysis of in regulatory design. The Agency also promulgated prohibit the consideration existing regulations. Some commenters agrees with those commenters that said of the BCA, the final rule requires the stated that the Agency should not guidance was a more appropriate way to Agency to identify the specific compel companies to provide better institutionalize best practices provision which bars such information necessary to conduct high when planning for and conducting consideration. The presentational quality retrospective analysis unless the retrospective analysis. This approach is requirements described above should be impacted industry is interested and also consistent with recent provided in the same section of the willing to participate in a retrospective recommendations the EPA received preamble of future CAA significant review prior to beginning the from the SAB during the course of their rulemakings. information collection process. Others review of the forthcoming update of the EPA’s Guidelines. In that review, the G. Additional Comment Responses recommended that the EPA adopt specific guidance establishing a SAB recommends that the EPA should 1. Planning for Retrospective retrospective analytic process within its consider expanding discussion in the Analysis. As discussed in the ANPRM, rulemaking procedures. One commenter Guidelines of how regulatory a lack of data, and a lack of a regularized specified that this guidance should approaches can be designed to promote process for ongoing or retrospective include criteria for selecting the set of effective retrospective analysis and, in review after rules have been rules to be studied and establishing at the future, possibly devote a chapter to implemented, inhibits the EPA’s ability the outset a rule design that facilitates best practices for conducting such to gain insights about the realized costs such analyses; that the plan for ex post analysis. and benefits of actions that may help review should identify at the time of Given this advice, the EPA is not inform how the Agency designs future rulemaking the measurable outcomes to including a requirement in this final regulations and conducts prospective be chosen for retrospective analysis, the rule that retrospective analysis be BCA of future rules. Many previous data needs, the time period for undertaken for all significant administrations have periodically evaluation, and set out and justify a regulations. Instead, EPA is committing undertaken programs of retrospective specific plan for data collection. Others to taking additional steps to better review or issued executive orders urging stated that any potential requirements institutionalize the practice of or requiring agencies to reassess existing regarding retrospective analysis should conducting high quality retrospective regulations and to eliminate, modify, or be concretely proposed in a separate review and analysis, which could be strengthen those regulations that have notice that fully explains the need for a accomplished through the development become outmoded in light of changed of guidance on best practices for rule-based solution to this issue and that circumstances. But for the most part, conducting retrospective analysis and allows a new and adequate opportunity retrospective review has not become how to plan for different types of for public comment. Finally, some institutionalized practice within the retrospective analysis within its commenters voiced concern that EPA. When they occur, these reviews rulemaking procedures including how retrospective economic analyses have rarely involve ex post BCA of the to address data needs. This guidance always been problematic and have many original EPA regulations. The EPA could, for example, include criteria for practical challenges. These commenters received many comment letters on the identifying rules that might be most noted the difficulty in obtaining ANPRM voicing support for increased amenable to retrospective analysis and updated, accurate data for use in retrospective analysis of Agency rules or direction on how to identify analytic programs to evaluate the effectiveness of retrospective analyses and believe the requirements for such analysis at the regulations, to design future EPA should focus its efforts to invest in outset when a regulation is improvements to increase efficiency, high-quality, robust economic analyses promulgated. Data needs could be and to improve methods of ex ante using best-available science and identified and avenues for ex post data analysis. In the proposed rule, the EPA following best economic practices in collection integrated into the regulation requested comments on this issue, BCAs prepared for current rulemakings. (while also accounting for the cost and including whether EPA should include Additionally, some commenters argued time needed for firms to collect such a requirement for conducting that retrospective analyses could lead to information). In this way, the EPA could retrospective analysis of significant unacceptable regulatory and legal learn from past experience and improve CAA rulemakings and how the Agency uncertainty especially should both policy designs and analytic can overcome the challenges for previously implemented regulations be approaches to prospective benefit and conducting retrospective analysis in undone and past investments based on cost estimation. Regardless of the cases where the EPA’s ability to collect those regulatory decisions be specific administrative procedure information about the costs of undermined or reversed. pursued for institutionalizing compliance is limited or otherwise The EPA agrees with commenters that retrospective analysis at the EPA, it is influenced by other statutes. conducting retrospective analyses of an the intention of the Agency to engage The EPA received comments from a implemented regulation can provide experts, including academics and variety of stakeholders supporting the valuable information that, if considered, practitioners, and to ultimately peer idea of conducting more retrospective can more fully inform public decision- review any guidance that is developed. analysis. Many commenters emphasized making. In many cases, retrospective 2. Comments pertaining to Executive that retrospective analyses could analysis provides an opportunity to Order 12898. Numerous commenters

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contended that the EPA’s proposed rule Benefits in the Rulemaking Process; Advance D. Regulatory Flexibility Act (RFA) did not consider E.O. 12898 (Federal notice of proposed rulemaking. (83 FR 27524, Actions To Address Environmental June 13, 2018). I certify that this action would not Justice in Minority Populations and 2. OMB (Office of Management and have a significant economic impact on Low-Income Populations) and Budget). (1996). Economic Analysis of a substantial number of small entities Federal Regulations Under Executive Order under the RFA. This action would not commenters stated that the proposal 12866. language incorrectly asserts that ‘‘this impose any requirements on small 3. OMB (Office of Management and entities. This action would not regulate proposed action is not subject to Budget). (2003). Circular A–4, ‘‘Regulatory Executive Order 12898 . . . because it Analysis.’’ any entity outside the federal does not establish an environmental 4. U.S. EPA (U.S. Environmental Protection government and is a rule of agency health or safety standard.’’ Commenters Agency). (2010). Guidelines for Preparing procedure and practice. further stated that air pollution Economic Analyses. E. Unfunded Mandates Reform Act 5. Arrow, K., M. Cropper, G. Eads, R. Hahn, disproportionately impacts minority (UMRA) communities and the proposed rule L. Lave, R. Noll, P. Portney, M. Russell, R. would obstruct efforts to address this Schmalensee, V. Smith, and R. Stavins. This action does not contain any 1996a. Benefit-Cost Analysis in unfunded mandate as described in disparity. Commenters further argued Environmental, Health, and Safety the proposed rule was unclear on how Regulation: A Statement of Principles. UMRA, 2 U.S.C. 1531–1538, and does the proposal’s BCA analysis Washington, DC: American Enterprise not significantly or uniquely affect small requirements would ascribe benefits to Institute, The Annapolis Center, and governments. The action imposes no communities of color that frequently Resources for the Future. enforceable duty on any state, local or bear the brunt of environmental risks. 6. Arrow et al. 1996b. Is There a Role for tribal governments or the private sector. Benefit-Cost Analysis in Environmental, One of these commenters contended F. Executive Order 13132: Federalism that, although the list of elements to Health, and Safety Regulation? Science 272: consider in the BCA includes vulnerable 221–222. This action does not have federalism and highly impacted communities, the 7. Institute of Medicine (IOM). 2011. Finding What Works in Health Care: implications. It would not have proposal failed to describe how these Standards for Systematic Reviews. substantial direct effects on the states, communities are to be ‘‘considered.’’ Washington, DC: The National Academies on the relationship between the national The EPA considered these comments Press. https://www.nap.edu/catalog/13059/ government and the states, or on the but reiterates that this rule, as a finding-what-works-in-health-care-standards- distribution of power and procedural rule, is focused on best for-systematic-reviews. responsibilities among the various practices for conducting BCA analysis 8. National Research Council. 2014. levels of government. for CAA rulemaking with an aim to Review of EPA’s Integrated Risk Information increase consistency and transparency System (IRIS) Process. G. Executive Order 13175: Consultation and Coordination With Indian Tribal for these BCA analyses. As such, it does VII. Statutory and Executive Order Governments not establish an environmental health or Reviews safety standard and is not subject to E.O. Additional information about these This action does not have tribal 12898. However, the EPA asserts that implications as specified in Executive with the focus on increased statutes and Executive Orders can be found at https://www.epa.gov/laws- Order 13175. Thus, Executive Order transparency and providing access to 13175 does not apply to this action. the underlying data as provided in this regulations/laws-and-executive-orders. final rule’s provisions, the requirements A. Executive Order 12866: Regulatory H. Executive Order 13045: Protection of will increase the consistency and Planning and Review and Executive Children From Environmental Health transparency of E.O. 12898 analyses. Order 13563: Improving Regulation and Risks and Safety Risks The additional information available as Regulatory Review a result of compliance with this final The EPA interprets Executive Order rule’s requirements will provide a better This action is a significant regulatory 13045 as applying only to those foundation for upcoming E.O. 12898 action that was submitted to the OMB regulatory actions that concern analyses of future CAA rulemakings and for review. Any changes made in environmental health or safety risks that will improve the understanding of the response to OMB recommendations the EPA has reason to believe may underlying issues highlighted by the have been documented in the docket. disproportionately affect children, per commenters. The EPA does not anticipate that this the definition of ‘‘covered regulatory rulemaking will have an economic action’’ in section 2–202 of the VI. References impact on regulated entities. This is a Executive Order. This action is not The following is a listing of the rule of agency procedure and practice. subject to Executive Order 13045 documents that are specifically because it does not concern an referenced in this document. The docket B. Executive Order 13771: Reducing environmental health risk or safety risk. includes these documents and other Regulations and Controlling Regulatory Costs I. Executive Order 13211: Actions information considered by the EPA, Concerning Regulations That including documents referenced within This action is not subject to Executive Significantly Affect Energy Supply, the documents that are included in the Order 13771 because this final rule is a Distribution or Use docket, even if a referenced document is rulemaking of agency organization, not physically located in the docket. For procedure, or practice. This action is not a ‘‘significant assistance in locating these other energy action’’ because it is not likely to documents, please consult the person C. Paperwork Reduction Act (PRA) have a significant adverse effect on the listed under the ‘‘For Further This action does not contain any supply, distribution or use of energy Information Contact’’ section above. information collection activities and and has not otherwise been designated 1. U.S. EPA (U.S. Environmental Protection therefore does not impose an as a significant energy action by the Agency). Increasing Consistency and information collection burden under the Administrator of the Office of Transparency in Considering Costs and PRA. Information and Regulatory Affairs.

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J. National Technology Transfer and policy alternatives. The social benefits federal, state, or local government Advancement Act (NTTAA) of a policy are measured by society’s records; the internet; widely distributed This rulemaking does not involve willingness-to-pay for the policy media; or disclosures to the general technical standards. outcome. The social costs are measured public that are required to be made by by the opportunity costs of adopting the federal, state, or local law. K. Executive Order 12898: Federal policy. BCA addresses the question of Regulatory options means: Actions To Address Environmental whether the benefits for those who gain (1) The proposed or finalized option, Justice in Minority Populations and from the action are sufficient to, in and at a minimum the following; Low-Income Populations principle, compensate those burdened (2) A more stringent option which The EPA believes that this action is by costs such that everyone would be at contributes to the stated objectives of not subject to Executive Order 12898 (59 least as well off as before the policy. The the Clean Air Act and that achieves FR 7629, , 1994) because it calculation of net benefits (benefits additional benefits (and presumably does not establish an environmental minus costs) answers this question and costs more) beyond those realized by the health or safety standard. helps ascertain the economic efficiency proposed or finalized option; and of the policy. Where all regulation (3) A less stringent option which L. Congressional Review Act (CRA) attributable benefits and costs can be contributes to the stated objectives of This rule is exempt from the CRA quantified and expressed in monetary the Clean Air Act and that costs less because it is a rule of agency units, BCA provides decision makers (and presumably generates fewer organization, procedure, or practice that with a clear indication of the most benefits) than the proposed or finalized does not substantially affect the rights or economically efficient alternative, that option. obligations of non-agency parties. is, the alternative that generates the Sensitivity Analysis means an analysis largest net benefits to society (ignoring that is used to assess how the final List of Subjects in 40 CFR Part 83 distributional effects). results or other aspects of an analysis Environmental protection, Compliance cost means the private change as input parameters change, Administrative practice and procedure, cost that a regulated entity incurs to particularly when only point estimates Reporting and recordkeeping comply with a regulation, such as of parameters are available. Typically, a requirements. through planning, design, installation, sensitivity analysis measures how a and operation of pollution abatement model’s output changes as one of the Andrew Wheeler, equipment. input parameters change. Joint Administrator. Data means the set of recorded factual sensitivity analysis (varying more than For the reasons set forth in the material commonly accepted in the one parameter at a time) is sometimes preamble, the EPA amends title 40, scientific community as necessary to useful as well. chapter I of the Code of Federal validate research findings in which Significant regulation means a Regulations by adding part 83 to read as obvious errors, such as keystroke or proposed or final regulation issued follows: coding errors, have been removed and pursuant to authority provided by the that is capable of being analyzed by both Clean Air Act that is determined to be PART 83—INCREASING the original researcher and an a ‘‘significant regulatory action’’ CONSISTENCY AND TRANSPARENCY independent party. pursuant to Section 3(f) of E.O. 12866 or IN CONSIDERING BENEFITS AND Endpoint is the specific manifestation is otherwise designated as significant by COSTS IN CLEAN AIR ACT of the documented effect that is to be the Administrator. RULEMAKING PROCESS quantified for the benefits analysis. It is Social benefits, or benefits, means the a metric (e.g., number of hospital sum of all positive changes in societal Sec. admissions) that acts as a surrogate for well-being experienced as a result of the Subpart A—Analysis of Air Regulations some aspect of a health or public regulation or policy action. 83.1 What definitions apply to this subpart? welfare effect (e.g., respiratory system Social costs, or costs, means the sum 83.2 How do the provisions of this subpart effects). of all opportunity costs, or reductions in apply? Expected value is the probabilistically societal well-being, incurred as a result 83.3 What requirements apply to EPA’s weighted outcome that defines a of the regulation or policy action. These preparations of Benefit-Cost Analyses statistical mean and a measure of the opportunity costs consist of the value (BCAs) under the Clean Air Act? central tendency of a set of data. For a 83.4 What additional requirements apply to lost to society of all the goods and EPA’s presentation of BCA results for all variable with a discrete number of services that will not be produced and significant rules promulgated under the outcomes, the expected value is consumed as regulated entities Clean Air Act? calculated by multiplying each of the reallocate resources to comply with the possible outcomes by the likelihood that Authority: 42 U.S.C. 7601(a)(1). regulation. each outcome will occur and then Systematic Review Process is the Subpart A—Analysis of Air summing all of those values. process for evaluating the scientific Regulations Model means a simplification of literature that includes: reality that is constructed to gain (1) Identification of the specific § 83.1 What definitions apply to this insights into select attributes of a question to be addressed in the review; subpart? physical, biological, economic, or social (2) Pre-specified methods used to Baseline means the best assessment of system. A formal representation of the address the question, making these the way the world would evolve absent behavior of system processes, often in methods and the review process the regulation. It is the primary point of mathematical or statistical terms. The transparent); comparison for assessing the effects of basis can also be physical or conceptual. (3) A search strategy written into the the regulatory options under Opportunity cost means the value of protocol that explicitly states the consideration. the next best alternative to a particular inclusion and exclusion criteria for Benefit-cost analysis (BCA) means an activity or resource. studies; and evaluation of the social benefits and Publicly available means lawfully (4) A description of the structured social costs of a policy action and other available to the general public from approach used to draw conclusions

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considering all appropriate and proposed or finalized option; a more (8) The BCA must include, to the available lines of evidence, including stringent option that achieves additional extent supported by scientific literature epidemiologic, toxicologic, and benefits (and presumably costs more) as well as practicable in a given mechanistic lines of evidence. beyond those realized by the proposed rulemaking: or finalized option; and a less stringent (i) A quantification of all benefits; § 83.2 How do the provisions of this option that costs less (and presumably subpart apply? (ii) A monetization of all the benefits generates fewer benefits) than the that follows well-defined economic (a) After December 23, 2020, the proposed or finalized option. When a principles using well-established Agency must prepare a benefit-cost continuum of options is not applicable, economic methods, appropriate data analysis (BCA) for all significant the regulatory options can include and/or studies; and proposed and final regulations, except variation of key parameters, such as (iii) A qualitative characterization of that the requirement to prepare a BCA different compliance dates, enforcement for significant final regulations does not benefits that cannot be quantified or methods, standards by size or location monetized. apply to final regulations proposed on of facilities, and regulatory designs. If (9) The process of selecting and or before December 23, 2020. Except fewer than three options are analyzed quantifying human health benefit where explicitly stated otherwise, the relative to the baseline, or if there is a endpoints in the BCA must be provisions of this subpart do not apply continuum of options and the options conducted according to paragraphs to any other type of agency action, analyzed do not include at least one (a)(9)(i) through (vii) of this section: including individual party more stringent (or otherwise more , enforcement activities, or costly) and one less stringent (or (i) The process of selecting human actions taken in permit proceedings. otherwise less costly) option than the health benefit endpoints will be based (b) Except where the provision or proposed or finalized option, then the upon scientific evidence that indicates provisions under which a significant Agency must provide an explanation of there is: regulation is promulgated prohibit the why it is not appropriate to analyze (A) A clear causal or likely causal consideration of the BCA, the Agency more options. relationship between pollutant exposure must consider the BCA in promulgating (4) The BCA must include a baseline and effect, and the regulation. that appropriately considers relevant (B) Sufficient data and understanding factors and relies on transparent and to allow the agency to reasonably model § 83.3 What requirements apply to EPA’s the anticipated change in that effect in preparations of Benefit-Cost Analyses reasonable assumptions. The baseline (BCAs) under the Clean Air Act? must account for, but is not limited to, response to changes in environmental the following factors: quality or exposures expected as a result (a) A BCA prepared pursuant to this (i) Exogenous changes in the economy of the regulation under analysis. subpart must be developed by the that may affect benefits and costs (e.g., (ii) For human health endpoints, a Agency in accordance with best changes in demographics, economic systematic review process must be used available scientific information and best activity, consumer preferences, or to evaluate the hazard data for the practices from the economic, technology); purposes of determining which engineering, physical, and biological (ii) Regulations promulgated by the endpoints to include in a BCA and what sciences according to paragraphs (a)(1) Agency or other government entities; concentration-response functions to use through (12) of this section. and to quantify changes in these endpoints. (1) The BCA must include the (iii) The degree of compliance by A study’s inclusion in the review must following information: regulated entities with other regulations. not depend upon that study’s findings. (i) A statement of need as defined in In rulemaking actions where the More weight should be given to higher paragraph (a)(2) of this section; Agency determines it is appropriate to quality studies or analyses that have (ii) An examination of regulatory consider more than one baseline (e.g., been peer reviewed. options as defined in paragraph (a)(3) of one that accounts for another EPA (iii) The studies or analyses used to this section; and regulation being developed at the same (iii) To the extent feasible, an quantify the concentration-response time that affects the same environmental relationships should take into account assessment of all benefits and costs of condition), the BCA must include a these regulatory options relative to the the breadth and quality of the available reasoned explanation for the selection of evidence regarding the nature and baseline scenario. the baselines used and must identify the (2) The BCA must include a statement magnitude of the risk to the populations key uncertainties in the forecast(s). affected by the regulation. To the extent of need that provides a clear description (5) In preparing the BCA, the Agency possible, the studies or analyses should of the problem being addressed, the must rely on the use of a framework that be: reasons for and significance of any is appropriate for the characteristics of failure of private markets or public the regulation being evaluated and must (A) Based upon human data when institutions causing this problem, and provide an explanation for the approach available; the compelling need for federal adopted. (B) Specific to the exposure route, government intervention in the market (6) The Agency must consider how duration, and levels, with preference to correct the problem. costs and benefits may be affected by given to those studies assessing (3) The BCA must include an analysis consumer and producer behavior in the exposure similar to those experienced of the benefits and costs of regulatory baseline and potential behavioral by the general population; options, which would contribute to the changes from the policy scenarios. (C) Employ a design or analysis that stated objectives of the Clean Air Act (7) The BCA must include an adequately addresses relevant sources of and an explanation as to why these estimation of benefits that links potential critical confounding; regulatory options were selected. Where regulatory requirements to the value (D) Consider how exposure is there is a continuum of options (such as that individuals place on the change in measured, particularly those that options that vary in stringency), the benefit endpoints that can be provide measurements at the level of the regulatory options must include at a meaningfully attributed to those individual and that provide actual minimum (as provided in § 83.1): The requirements. measurements of exposure; and

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(E) Reliably distinguish the presence changes in air quality, assessment of quantified benefits and costs, including or absence (or degree of severity) of likely changes in health and welfare explanations as to why they are not health outcomes. endpoints, and the valuation of those being monetized or quantified and (iv) When utilizing multiple changes. For example, the BCA could discussions of what the potential impact concentration-response functions to characterize statistical, model or of those benefits and costs might be on estimate impacts on a single health parameter uncertainty. the overall results of the BCA. endpoint, the BCA must quantify risks (iii) Where data are sufficient to do so, (iv) A presentation of the results of an in such a way that the heterogeneity in the BCA must include a consideration of assessment of the sources of uncertainty the estimated health impacts is clearly sources of uncertainty both that are likely to have a substantial characterized. independently and jointly. effect on the results of the BCA and (v) The presentation of results should (iv) To the extent feasible and present the results of this assessment. characterize the sensitivity of the choice appropriate, the BCA must also include The presentation must identify any data of the concentration-response function a consideration, and transparent and models used to analyze uncertainty on the magnitude and the uncertainty acknowledgement of, the extent to in the BCA, and the quality of the associated with estimated benefits. which qualitatively-assessed costs or available data shall be discussed. (vi) When sufficient data exist, a benefits are characterized by (v) A reasoned explanation for any probability distribution of risk is uncertainty. departures from best practices in the appropriate to use when determining (v) When simpler quantitative BCA, including a discussion of the the expected benefits for CAA analysis may not sufficiently describe likely effect of the departures on the regulations. When it is infeasible to uncertainty, and where probability results of the BCA. estimate a probability distribution, distributions for relevant input (12) To the extent permitted by law, measures of the central tendency of risk assumptions are available and can be the Agency must ensure that all may be used. Upper-bound risk feasibly and credibly combined, the information (including data and models) estimates must not be used without also BCA must include a characterization of used in the development of the BCA is presenting lower bound and central how the probability distributions of the publicly available while consistent with tendency estimates. relevant input assumption uncertainty protections for privacy, confidentiality, (vii) Consistent with the general would impact the resulting distribution confidential business information (CBI), systematic review process, the of benefit and cost estimates. and national and homeland security. If evaluation and model specification (vi) Except as provided in this data and models are proprietary, the processes conducted under all paragraph, the BCA must include a Agency must make available, to the subsections of (9) must emphasize characterization of the range of likely extent practicable, the underlying transparency and replicability. This outcomes, including expected value inputs and assumptions used, includes: estimates of benefits and costs as well equations, and methodologies used by (A) An explanation of the basis for as distributions about each of the EPA. significant judgments, assumptions, estimates. In cases where estimates (b) [Reserved] data, models, and inferences used or based on expected values are not relied upon in the assessment and feasible or appropriate, the BCA must § 83.4 What additional requirements apply decisions regarding the selection and present a range of benefits and costs. to EPA’s presentation of BCA results for all quantification of health endpoints; and (11) The BCA must include a significant regulations promulgated under (B) A description of the sources, presentation that includes the following the Clean Air Act? extent and magnitude of significant elements: (a) The Agency must provide a uncertainties associated with the (i) A presentation of the overall summary in the preamble of each assessment. results of the BCA (benefits, costs, and significant regulation of the overall BCA (10) The BCA must include an net benefits of each regulatory option results, including total benefits, costs, identification of uncertainties evaluated in the BCA) in a manner and net benefits. Within this summary, underlying the estimation of both designed to be objective, if any benefits and costs accrue to non- benefits and costs and, to the extent comprehensive, reproducible to the U.S. populations they must be reported feasible and appropriate, quantitatively extent reasonably possible, and easily separately to the extent possible. analyze those that are most influential; understood by the public. (b) The Agency must provide an and must present benefits and cost (ii) A description of how the benefits additional presentation in the preamble estimates in ways that convey their and costs were estimated in the BCA, of each significant regulation of the uncertainty, including acknowledging including the assumptions made for the public health and welfare benefits that unquantified benefits and costs, where analysis. The description must include pertain to the specific objective (or appropriate. The BCA must include a the models, data, and assumptions used objectives, as the case may be) of the reasoned explanation for the scope and to estimate benefits and costs, and the CAA provision or provisions under specific quantitative or qualitative evaluation and selection process for which the significant regulation is methods chosen to analyze these analytical decisions. The promulgated. uncertainties. Specifically, the description must also include an (1) This presentation must list the explanation must include the following: explanation of procedures used to select benefit categories arising from the (i) To the extent feasible and among input parameters to the benefit environmental improvement that is appropriate, the BCA must apply and cost models, and any methods used targeted by the relevant statutory quantitative methods to analyze to quantify risk and to model fate and provision and report the monetized uncertainties that have the largest transport of pollutants. value to society of these benefits. potential effect on benefits or cost (iii) A description, consistent with the (2) If these benefit categories cannot estimates and include a description of best available scientific information, of be monetized, the Agency must report such methods. the non-monetized and non-quantified the quantified estimates of these (ii) The BCA must characterize, benefits and costs of the action. The benefits to the extent possible and preferably quantitatively, sources of description must include available provide a qualitative characterization if uncertainty in the assessment of costs, evidence on non-monetized and non- they cannot be quantified.

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(c) When the CAA provision or significant regulation is promulgated provision which bars such provisions under which the significant does not prohibit the consideration of consideration. regulation is promulgated require the the BCA, the Agency must provide a (e) The summary, description and consideration of specific costs, the description in the preamble of how the presentations specified in paragraphs Agency must provide a transparent Agency considered the BCA. If the (a), (b), (c), and (d) of this section must presentation of how those specific costs provision or provisions under which the be placed in the same section in the relate to total costs, to the extent significant regulation is promulgated preamble of the regulation. possible. prohibit the consideration of the BCA, [FR Doc. 2020–27368 Filed 12–22–20; 8:45 am] (d) When the CAA statutory provision the Agency must identify the specific or provisions under which the BILLING CODE 6560–50–P

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