[Federal Register Volume 88, Number 133 (Thursday, July 13, 2023)]
[Rules and Regulations]
[Pages 44710-44721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-14707]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 83
[EPA-HQ-OAR-2020-0044; FRL-6530.8-02-OAR]
RIN 2060-AV18
Rescinding the Rule on Increasing Consistency and Transparency in
Considering Benefits and Costs in the Clean Air Act Rulemaking Process
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: The Environmental Protection Agency (EPA) is finalizing the
rescission of the rule entitled, ``Increasing Consistency and
Transparency in Considering Benefits and Costs in the Clean Air Act
Rulemaking Process'' (hereinafter, the ``Benefit-Cost Rule''). The EPA
is rescinding the rule because the changes advanced by the rule were
inadvisable, untethered to the Clean Air Act (CAA), and not necessary
to effectuate the purposes of the Act.
DATES: This final rule is effective on August 14, 2023.
ADDRESSES: The EPA has established a docket for this rulemaking under
Docket ID No. EPA-HQ-OAR-2020-0044. All documents in the docket are
listed on the https://www.regulations.gov/ website. Although listed in
the index, some information is not publicly available, e.g.,
Confidential Business Information or other information whose disclosure
is restricted by statute. Certain other material, such as copyrighted
material, is not placed on the internet and will be publicly available
only in hard copy form. Publicly available docket materials are
available electronically through https://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Leif Hockstad, Office of Air Policy
and Program Support, Office of Air and Radiation, U.S. EPA, Mail Code
6103A, 1200 Pennsylvania Avenue NW, Washington, DC 20460; telephone
number: (202) 343-9432; email address: [email protected].
SUPPLEMENTARY INFORMATION:
Preamble Acronyms and Abbreviations
The EPA uses multiple acronyms and terms in this preamble. While
this list may not be exhaustive, to ease the reading of this preamble
and for reference purposes, the EPA defines the following terms and
acronyms here:
APA Administrative Procedure Act
BCA Benefit-Cost Analysis
CAA Clean Air Act
CBI Confidential Business Information
CDC Centers for Disease Control and Prevention
CFR Code of Federal Regulations
CRA Congressional Review Act
E.O. Executive Order
EPA Environmental Protection Agency
FR Federal Register
HAP Hazardous Air Pollutants
MACT Maximum Achievable Control Technology
NAAQS National Ambient Air Quality Standards
NRDC National Resources Defense Council
NTTAA National Technology Transfer and Advancement Act
OIRA Office of Information and Regulatory Affairs
OMB Office of Management and Budget
RIA Regulatory Impact Analysis
RFA Regulatory Flexibility Act
SAB Science Advisory Board
UMRA Unfunded Mandates Reform Act
U.S. United States
U.S.C. United States Code
Organization of this document. The information in this preamble is
organized as follows:
I. General Information
A. Does this action apply to me?
B. What is the Agency's authority for taking this action?
II. Background
III. Summary of the Final Rescission Rule
IV. Responses to Significant Comments
V. Judicial Review
VI. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 14094: Modernizing Regulatory Review
B. Paperwork Reduction Act (PRA)
C. Regulatory Flexibility Act (RFA)
D. Unfunded Mandates Reform Act (UMRA)
E. Executive Order 13132: Federalism
F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
G. Executive Order 13045: Protection of Children From
Environmental Health Risks and Safety Risks
H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
I. National Technology Transfer and Advancement Act (NTTAA) and
1 CFR Part 51
J. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
K. Congressional Review Act (CRA)
I. General Information
A. Does this action apply to me?
This rule does not regulate the conduct or determine the rights of
any entity or individual outside the Agency, as this action pertains
only to internal EPA practices. However, the Agency recognizes that any
entity or individual interested in the EPA's regulations promulgated
under the CAA may be interested in this rule. In addition, this rule
may be of particular interest to entities and individuals interested in
how the EPA conducts and considers benefit-cost analyses (BCA).
B. What is the Agency's authority for taking this action?
The Agency is taking this action pursuant to CAA section
301(a)(1).\1\ Section 301(a)(1) provides authority to the Administrator
``to prescribe such regulations as are necessary to carry out his
functions'' under the CAA. As discussed in section III of this
preamble, the EPA has determined that the Benefit-Cost Rule was not
``necessary''
[[Page 44711]]
and lacked a rational basis under CAA section 301(a), and therefore the
EPA lacked authority to issue it; we are accordingly rescinding the
Rule.
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\1\ 42 U.S.C. 7601(a)(1).
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II. Background
On December 23, 2020, the EPA finalized the Benefit-Cost Rule.\2\
The Benefit-Cost Rule was a procedural rule establishing requirements
related to the development and consideration of BCA that the EPA would
have been required to undertake when promulgating certain proposed and
final regulations under the CAA. Specifically, the Benefit-Cost Rule
(1) required a BCA for all significant proposed and final regulations
under the CAA; (2) codified specific practices for developing the BCA;
(3) required certain presentations of the BCA results in the preamble;
and (4) required the EPA to consider the BCA in promulgating the
regulation except where prohibited. The final Benefit-Cost Rule was
effective upon publication in the Federal Register based on the
procedural-rule exemption from delayed-effective-date requirements in
the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(A). After
publication, several parties filed petitions for review of the Benefit-
Cost Rule in the U.S. Court of Appeals for the District of Columbia,
and these consolidated cases are currently in abeyance.\3\
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\2\ 85 FR 84130.
\3\ State of New York v. EPA, No. 21-1026 (D.C. Cir.); Cal.
Cmtys. Against Toxics v. EPA, No. 21-1041 (D.C. Cir.); Envt'l Def.
Fund v. EPA, No. 21-1069 (D.C. Cir.). State of New York v. EPA, No.
21-1026 (D.C. Cir.), Doc. No. 1886762 (Feb. 23, 2021) (abeyance
order).
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On January 20, 2021, President Biden signed Executive Order (E.O.)
13990, ``Protecting Public Health and the Environment and Restoring
Science To Tackle the Climate Crisis,'' \4\ which, among other things,
directed the EPA to immediately review and consider suspending,
revising, or rescinding the Benefit-Cost Rule. Accordingly, the EPA
conducted a comprehensive review of both the legal and factual
predicates for the Benefit-Cost Rule and, in particular, the need for
the regulations that the Agency promulgated in the Benefit-Cost Rule.
Based on this review, the EPA determined that the changes to Agency
practice required by the Benefit-Cost Rule were inadvisable, not
needed, and untethered to the CAA. Therefore, in May 2021, the EPA
published an interim final rule rescinding the Benefit-Cost Rule
(hereinafter, the ``Interim Final Rule'').\5\ The Interim Final Rule
became effective on June 14, 2021, which was 30 days after its
publication in the Federal Register.
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\4\ 86 FR 7037 (January 25, 2021).
\5\ 86 FR 26406 (May 14, 2021).
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While procedural rules are exempt from the notice-and-public-
comment requirements in the APA, the EPA nonetheless decided to
voluntarily seek post-promulgation public comment on the Interim Final
Rule.\6\ This final action considers and responds to the public
comments the EPA received on the Interim Final Rule. The EPA's process
is consistent with Administrative Conference of the United States
Recommendation 95-4, which recommends that agencies consider providing
post-promulgation notice and comment even where an exemption is
justified, be it a substantive rule relying on the ``good cause''
exception to notice and comment, 5 U.S.C. 553(b)(B), or a procedural
rule such as this one.\7\
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\6\ Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council,
Inc., 435 U.S. 519, 524 (1978) (``Agencies are free to grant
additional procedural rights in the exercise of their
discretion.'').
\7\ See ACUS Recommendation 95-4, Procedures for
Noncontroversial and Expedited Rulemaking (1995).
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III. Summary of the Final Rescission Rule
In the Interim Final Rule, the EPA concluded that the Benefit-Cost
Rule should be rescinded in its entirety. The EPA has reviewed and
considered comments received on the Interim Final Rule, as discussed in
section IV, but none of the comments received have led the EPA to
materially change our view, as explained in the Interim Final Rule,
that the Benefit-Cost Rule is not needed and does not further the CAA's
goals. As such, the EPA is finalizing the rescission of the Benefit-
Cost Rule with this action. Consistent with and as discussed further in
the Interim Final Rule, the rationales for rescission are summarized
below.
In the Benefit-Cost Rule, the Agency stated that it had authority
to promulgate the Rule under CAA section 301(a) because the Rule's
additional procedures were necessary to ensure consistency and
transparency in CAA rulemakings. However, as discussed in the Interim
Final Rule, the Agency failed to articulate a rational basis for the
Benefit-Cost Rule and did not explain how the existing CAA rulemaking
process had created or was likely to create inconsistent or non-
transparent outcomes, i.e., that an actual or even theoretical problem
existed. After reviewing each element of the Benefit-Cost Rule, we have
determined that the additional procedures required were not needed,
useful, or advisable policy changes. In some cases, the new procedures
established by the Benefit-Cost Rule could have hindered the EPA's
compliance with the CAA and may not have even furthered the Rule's
stated purposes of consistency and transparency. Our rationale for
rescinding each of the four independent elements of the Benefit-Cost
Rule is severable and discussed in the Interim Final Rule and
summarized below. In addition, as noted in the Interim Final Rule, the
existing public process provides ample ability for the public to
participate in the EPA's CAA rulemakings.
First, the EPA has determined that the Agency failed to provide a
rational basis to support the Benefit-Cost Rule or explain why the Rule
was needed or reasonable. The Benefit-Cost Rule did not provide any
record evidence that the guidance and administrative processes already
in place presented problems that justified the mandate imposed by the
Rule. Indeed, the Benefit-Cost Rule failed to point to a single example
of a rule promulgated under the CAA where problems emerged that would
have been avoided had the mandate imposed by the rule been in place.
Furthermore, there was no discussion of how the requirements of the
Benefit-Cost Rule would have improved the Agency's ability to
accomplish the CAA's goals to protect and enhance air quality.
Moreover, there has been an unbroken, bipartisan, decades-long
commitment from Presidential Administrations to conduct BCAs for
economically significant regulations issued in the United States. These
analyses are rigorous, publicly available, subject to interagency
review, and are conducted according to extensive peer-reviewed
guidelines from OMB and the EPA. We are therefore finalizing rescission
of the Benefit-Cost Rule on the basis that it failed to articulate a
rational basis justifying its promulgation.
Second, the Benefit-Cost Rule's expansion of BCA to all
``significant'' CAA rulemakings, rather than just those that are
significant under monetary thresholds of E.O. 12866, is unnecessary.
The Benefit-Cost Rule greatly expanded the universe of CAA rulemakings
for which the EPA would have been required to conduct resource-
intensive BCAs without justifying why such expansion was necessary or
appropriate. In many cases, rules may be designated ``significant'' by
the Office of Management and Budget (OMB) for reasons other than
economic significance such that other types of assessments of economic
impact are appropriate. Requiring BCA for all rules designated
``significant'' by OMB, even when the primary issues of importance
[[Page 44712]]
are not economic, would have unnecessarily complicated the rulemaking
process, potentially diverted the Agency's resources from those aspects
of the rule that warrant additional consideration (i.e., the reasons
why the rule was designated significant), and could have delayed rules
needed for protection of public health and the environment. Existing
directives under E.O. 12866 and guidance regarding BCAs for
economically significant rules, while retaining flexibility for
agencies to analyze costs, benefits, and other factors for non-
economically significant rules, strike the better balance between
agency resources and the information provided by additional economic
analysis for such rules. Simply put, a BCA is not warranted for every
CAA rule that is designated as significant under E.O. 12866.
Third, the codification of specific practices for the development
of BCA is inadvisable because it is contrary to best practices for
preparing BCAs and could have prevented the EPA from relying on best
available science. As articulated by OMB and EPA guidelines, best
practices for conducting a high-quality BCA cannot be established using
a set formula, and the Benefit-Cost Rule's codification of specific
practices would have prevented situation-specific tailoring of the
regulatory analysis to the policies being proposed. In addition, best
practices evolve over time, and the Benefit-Cost Rule would have locked
the EPA into using outdated practices until those practices were
amended via rulemaking, which could have delayed incorporation of new
scientific information and methods. Some of the Benefit-Cost Rule's
``best practice'' requirements did not even derive from the EPA's
Guidelines for Preparing Economic Analyses (hereinafter ``Economic
Guidelines''),\8\ OMB's Circular A-4,\9\ or the EPA's Science Advisory
Board (SAB) advice. As discussed in more detail in the Interim Final
Rule, a number of the specific provisions required by the Benefit-Cost
Rule, in particular those related to health-benefits assessments, would
have promoted particular types of data in a way that could have
conflicted with the use of best scientific practices or arbitrarily
caused the Agency to disregard important or high-quality data. The
Benefit-Cost Rule's attempt to craft a one-size-fits-all approach to
BCAs in fact demonstrated the difficulty and inadvisability of
codifying specific practices appropriate for every BCA.
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\8\ U.S. EPA. 2010. Guidelines for Preparing Economic Analyses.
https://www.epa.gov/environmental-economics/guidelines-preparing-economic-analyses.
\9\ Exec. Office of the President, OMB, Circular A-4: Regulatory
Analysis (Sept. 17, 2003), available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf.
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Fourth, the Benefit-Cost Rule required the EPA to present net-
benefit calculations in regulatory preambles in a manner that would
have been misleading and inconsistent with economic best practices.
Specifically, the Rule required a presentation of only the benefits
``that pertain to the specific objective (or objectives, as the case
may be) of the CAA provision or provisions under which the significant
regulation is promulgated.'' 40 CFR 83.4(b). The Rule also required
that if any benefits and costs accrue to non-U.S. populations, they
must be reported separately to the extent possible. This information is
duplicative of existing information provided in EPA's Regulatory Impact
Analyses (RIAs) because EPA already presents these types of benefits in
disaggregated form in its RIAs, so these presentational requirements
would not have provided additional transparency. EPA is careful,
however, not to use these disaggregated subsets of benefits in
calculating total net benefits. Both EPA and OMB guidelines, and
economic best practice generally, are clear that the purpose of a BCA
is to assess the economic efficiency of policies, and in order to do so
accurately, net benefits are calculated by subtracting total costs from
total benefits, regardless of whether the benefits and costs arise from
intended or unintended consequences and regardless of the particular
recipients of the benefits or costs. Even though the Benefit-Cost Rule
did not specifically require incorrect partial net-benefit calculations
that excluded certain impacts due to the regulation, we are concerned
that retaining the Rule's presentational requirements could have
invited such misleading partial calculations. In fact, in one of the
rules that was promulgated during the same time period as the Benefit-
Cost Rule's requirements were being considered, the EPA used
calculations of segregated benefits--like those required under the
Benefit-Cost Rule--to create tables of misleading ``net'' benefit
calculations (i.e., benefits minus costs) that only accounted for a
subset of the rule's benefits.\10\
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\10\ See 84 FR 32520, 32572 tbl.10-12 (July 8, 2019).
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Fifth, we are rescinding the Benefit-Cost Rule because the Rule did
not reconcile its requirement that the Agency ``consider'' in its CAA
rulemakings the required BCAs with the various and varied substantive
mandates of the CAA. The Benefit-Cost Rule did not even identify the
CAA provisions to which it would apply. This identification is critical
because the statute, not Agency procedural rules, dictate what the
Agency may or may not ``consider'' in the context of exercising
authority. For those CAA provisions where EPA is prohibited from
considering costs, the Benefit-Cost Rule's requirement to prepare a BCA
and include it in the judicially reviewable rulemaking record solely
for the purpose of providing ``additional information'' is not
necessary to effect any purpose under the Act. Even for those CAA
authorities that permit consideration of cost or other economic
factors, the Benefit-Cost Rule did not establish why BCA specifically
is an appropriate way to consider cost. The rule failed entirely to
grapple with the varied ways in which Congress granted authority or
directed the EPA whether and how to consider benefits, costs, and other
factors, and how the Benefit-Cost Rule's requirement to consider BCA
should be reconciled with the need to adhere to particular statutory
language and context. As noted in the Interim Final Rule, we are
finalizing rescission of the Benefit-Cost Rule's requirement to prepare
and consider BCA (followed by a subsequent attempt to reconcile that
analysis with the CAA's mandates) in favor of the Agency's current
``statute first'' approach to decision making. That is, we believe the
traditional process of statutory interpretation is superior, wherein we
first look to the text of the relevant statutory provision to determine
whether Congress intended or permitted the Agency to consider cost or
economic factors, and, if yes, we then examine the statutory context,
legislative history, and nature of the program or environmental problem
to be addressed to determine a reasonable manner of considering that
cost or economic factor.
Finally, we are finalizing rescission of the Benefit-Cost Rule on
the basis that its requirements are not needed with respect to process,
and that the pre-existing administrative process, including existing
procedures under the APA and, where applicable, CAA section 307(d),
provide for ample consistency and transparency. These requirements are
more than adequate to accomplish the general good-government goals of
``consistency'' and ``transparency,'' and the Benefit-Cost Rule failed
to provide any support for its contention that the pre-existing process
was deficient so as to warrant the Rule's new procedures.
[[Page 44713]]
IV. Responses to Signficant Comments
This section of the preamble summarizes significant comments
received on the Interim Final Rule \11\ and the EPA's responses to
those comments. All comments made on the Interim Final Rule and the
EPA's responses can be found in the document, ``Summary of Public
Comments and Responses for Rescinding the Rule on Increasing
Consistency and Transparency in Considering Benefits and Costs in the
Clean Air Act Rulemaking Process,'' available in the docket for this
rulemaking.
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\11\ 86 FR 26406.
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Comment: Some commenters supported retaining the Benefit-Cost Rule
and opposed the Interim Final Rule rescinding it. Several of these
commenters cited their 2020 comments on the proposed Benefit-Cost Rule,
asserting that in those comments, they had raised examples of prior
analyses being performed by the EPA that were inconsistent in their
approaches or methodologies or inappropriately relied upon a ``misuse
of co-benefits.'' The commenters claimed that leaving the Benefit-Cost
Rule in place would have addressed their concerns.
Response: The commenters to the Interim Final Rule did not provide
in their comments, with any kind of specificity, examples of how the
Benefit-Cost Rule would have resolved any problems those commenters had
with prior BCAs performed by the EPA. Nevertheless, the EPA has
examined the prior comments that were referenced to determine whether
any commenter demonstrated that there was a significant problem of
inconsistency or transparency that the Benefit-Cost Rule's requirements
would have resolved. After examining the rulemaking record for the
Benefit-Cost Rule, we do not agree with these commenters that they
identified concrete examples of how the Benefit-Cost Rule would have
improved their perceived flaws. To the contrary, the comments in
support of the Benefit-Cost Rule proposal simply alleged broadly that
the EPA had ``historically used inconsistent approaches'' to BCA, that
there was a need to ``correct past practices,'' that there was
``inconsistency in methodologies,'' and that EPA had ``misused co-
benefits.'' We do not agree that these general complaints about past
inconsistency, without any specificity, provide an adequate basis for
establishing a concrete problem, nor do they explain how the Benefit-
Cost Rule would have addressed any such problem.
Comment: A commenter contended that the EPA should not make a major
change, such as rescinding the Benefit-Cost Rule, through an Interim
Final Rule. The commenter stated that this action, by itself, is an
indication that the EPA has already made up its mind to rescind the
rule. The commenter added that, in developing the Benefit-Cost Rule,
the EPA went through a proposed rulemaking process, so in rescinding
the rule, or revising it, the EPA should go through a similar process
and revise the Benefit-Cost Rule only to the extent necessary to
address any concerns that remain after properly considering public
comments.
Response: Agencies are always free to adopt additional notice-and-
comment procedures, but to the extent that the commenter suggests that
such procedures were required in this instance, we do not agree. The
Benefit-Cost Rule was a procedural rule, i.e., a rule of agency
organization, procedure, or practice. A procedural rule does not
regulate any party outside of the EPA but instead exclusively governs
the EPA's internal process for conducting business. As discussed in
section IV of the Interim Final Rule, procedural rules are exempt from
the APA's notice-and-comment requirements, and therefore it was
permissible and appropriate to make the rescission of that rule
effective using an interim final rule. However, EPA recognizes the
value of transparency and public input and therefore voluntarily sought
public comment on its decision to rescind, consistent with
Administrative Conference of the United States Recommendation 95-4,
which recommends that agencies consider providing post-promulgation
notice and comment even where an exemption is justified, be it a
substantive rule relying on the ``good cause'' exception to notice and
comment, 5 U.S.C. 553(b)(B), or a procedural rule such as this one.
Comment: Several commenters requested that the EPA revise rather
than rescind the Benefit-Cost Rule in its entirety. These commenters
said that they do not agree that the issues raised by the EPA were
significant enough to warrant rescinding the Benefit-Cost Rule. Some
commenters urged the EPA to reconsider each provision of the Benefit-
Cost Rule on an individual basis, seek public comment on the issue, and
amend the provisions after considering the comments. Another commenter
contended that the EPA should have amended the scope of the Benefit-
Cost Rule to address concerns raised in the Interim Final Rule
regarding burdensome requirements for some non-economically significant
rules. One commenter noted that, rather than rescinding the rule, the
EPA could have revised the rule to retain some provisions as regulation
and left some as guidance, as the Agency's Science Advisory Board (SAB)
had suggested as a possible improvement in its comments on the Benefit-
Cost Rule. Some commenters contended that EPA's decision to repeal the
Benefit-Cost Rule is in direct conflict with the January 27, 2021
memorandum, ``Restoring Trust in Government Through Scientific
Integrity and Evidenced-Based Policymaking.'' These commenters stated
that ensuring ``evidence-based decisions'' that are ``guided by the
best available science and data'' requires the EPA to undertake a
rigorous and objective BCA and to present the analysis, including key
uncertainties, in a transparent manner.
Other commenters agreed with EPA's decision as explained in the
Interim Final Rule that the rule should be rescinded in its entirety.
These commenters further stated that fixing the rule through targeted
amendments was not viable because the problematic elements were
significant and difficult to address in piecemeal fashion. The
commenters agreed the problems were substantive and the Benefit-Cost
Rule as a whole should be rescinded.
Response: We disagree that the EPA should have revised the Benefit-
Cost Rule rather than rescind it. The EPA conducted a comprehensive
review of both the legal and factual predicates for the Benefit-Cost
Rule and, in particular, the need for an imposition of and codification
of ``one-size-fits-all'' requirements governing economic analyses for a
large subset of regulations promulgated under the CAA. We do not agree
that revision rather than rescission would have resolved our concerns
with the Benefit-Cost Rule. The problematic elements of the Rule were
significant, and many of those problems extended across the entirety of
the rule and could not be excised and resolved on a case-by-case basis.
For example, one particularly problematic element of the Benefit-Cost
Rule was its codification of methodologies and practices that we think
are better suited to guidance. As explained in the preamble to the
Interim Final Rule and in section III of this preamble, and as
recognized by OMB itself, guidance allows the EPA to tailor economic
analyses to the regulatory question and problem at hand, and it also
facilitates using up-to-date methodologies in those analyses without
first undergoing a notice-and-comment rule revision. Therefore, some
[[Page 44714]]
of the revisions suggested by commenters, such as amending the scope of
the Benefit-Cost Rule to exclude non-economically significant rules,
would not have addressed this fundamental problem.
With respect the SAB's suggestion, we do not agree that the SAB was
specifically endorsing revision of the Benefit-Cost Rule over
rescission. The one sentence in the SAB's cover letter in which it
``urges EPA to carefully consider which aspects of BCA should be
included in the final [Benefit-Cost] rule versus which aspects should
be in guidance,'' should be read in context of the significant and
detailed concerns detailed by the SAB with many of the Rule's specific
requirements.\12\ The more accurate overall message from the SAB's
report is that the proposed rule as drafted would have been problematic
if implemented, and that at the very least the EPA should consider
retaining some requirements as guidance ``given the case-by-case nature
of BCA.'' In some instances, the SAB acknowledged that while it was
providing specific recommendations regarding how to improve certain
sections of the rule, complete overhaul was preferable.\13\ We also
disagree with the commenters who assert that repealing the Benefit-Cost
Rule is in direct conflict with the January 27, 2021 memorandum,
``Restoring Trust in Government Through Scientific Integrity and
Evidenced-Based Policymaking.'' To the contrary, the Benefit-Cost Rule
was not necessary to making ``evidence-based decisions'' ``using best
available science and data,'' and as we have explained, could have
hindered that outcome.
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\12\ U.S. EPA SAB. 2020. Science Advisory Board (SAB)
Consideration of the Scientific and Technical Basis of EPA's
Proposed Rule titled ``Increasing Consistency and Transparency in
Considering Benefits and Costs in the Clean Air Rulemaking
Process.'' EPA-SAB-20-012. September 30. (``SAB (2020)''), available
at https://sab.epa.gov/ords/sab/f?p=100:12:6591070354315:::12::.
\13\ SAB (2020) at 12.
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Comment: Numerous commenters agreed with the EPA's assertion that
the Benefit-Cost Rule codified certain practices that conflicted with
the best science, particularly for quantifying the health benefits of a
rule. Other commenters disagreed with the EPA's assertion that the
Benefit-Cost Rule codified certain practices that conflicted with the
best science. These commenters asserted that the Benefit-Cost Rule
directed the EPA to base its decisions on the best available science
and in accordance with best practices from science and fields such as
economics. The commenters argued that this requirement was a broadly
supported principle for sound regulatory decision making that has
enjoyed bipartisan support for decades, as stated in E.O. 13563 and
E.O. 12866. One commenter asserted that the Benefit-Cost Rule required
the use of best practices for risk assessment/characterization and
would have prevented the Agency from taking shortcuts in analyses or
applying assumptions that are not identified or supportable.
Response: We agree that the EPA should use the best available
scientific information and best scientific practices for BCAs. However,
we disagree that the Benefit-Cost Rule was necessary to promote best
practices. Indeed, in section III.C.3 of the preamble of the Interim
Final Rule, we provided several examples of how implementation of some
of the Benefit-Cost Rule's requirements could have undermined the
scientific integrity of the EPA's BCAs for CAA regulations rather than
strengthened them. We also disagree that the Benefit-Cost Rule's
requirements regarding risk assessments and characterization would have
prevented the Agency from taking shortcuts or applying unsupportable
assumptions. As discussed in section III.C.3 of the Interim Final Rule,
those requirements could have led to inferior selection of health
studies or the potential exclusion of some health endpoints altogether.
By imposing a requirement that studies or analyses used to quantify
concentration-response relationships should ``consider how exposure is
measured,'' and favor ``particularly those that provide measurements at
the level of the individual and that provide actual measurements of
exposure,'' the Benefit-Cost Rule introduced a bias against methods
that in some cases may have been both higher quality and more
appropriate by discouraging consideration of studies that combine both
measured and modeled concentrations.\14\ We have also noted how, rather
than codifying a best practice, the Benefit-Cost Rule's requirement to
limit assessment of human health benefit endpoints to instances where
there is ``a clear causal or likely causal relationship between
pollutant exposure and effect'' was unsupportable. It did not derive
from the Economic Guidelines, Circular A-4, or SAB advice, and in fact
was criticized by the SAB.\15\ Finally, as noted in the Interim Final
Rule, we are concerned that the Benefit-Cost Rule's imposition of
highly specific and stringent requirements for assessing benefits in
conjunction with substantially less stringent requirements for
assessing costs would have led to unbalanced BCAs. Moreover, these
requirements only applied to health benefits, which created an
inconsistency with other categories of benefits (e.g., visibility,
ecological effects) that were not subject to the requirements. By
rescinding the Benefit-Cost Rule, the EPA is not forswearing BCAs,
which it has undertaken for decades consistent with the Executive
Orders cited by the commenters. Rather, we think undertaking those BCAs
pursuant to guidelines issued by EPA and OMB, which provide for
flexibility and tailoring in order to permit incorporation of evolving
science and best practices, will produce higher quality analyses than
if EPA conducted BCAs subject to the Benefit-Cost Rule's rigid
codification of particular practices that were frozen at a moment in
time, and in some cases, were substantively problematic.
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\14\ 85 FR 84155 (40 CFR 83.3(a)(9)(iii)(D)).
\15\ See, e.g., SAB 2020 at 2-7 (suggesting that there are a
number of ways to interpret causal relationship and the Benefit-Cost
Rule is not clear what evidence would be acceptable to demonstrate
causality), 8 (recommending that the EPA allow inclusion in its
benefits analyses of effects for which causal or likely causal
relationships may be less certain, but the impact would be
substantial).
---------------------------------------------------------------------------
Comment: Some commenters agreed with the EPA's assertion that the
Benefit-Cost Rule would have locked the EPA into using outdated
practices until the rule could be amended. Another commenter said the
Benefit-Cost Rule would have weakened the integrity of the BCA process
for CAA regulations by hindering EPA's ability to use the best
scientific data available. Another commenter asserted that if the
Benefit-Cost Rule had conflicted with future changes to the Economic
Guidelines, the EPA would have had to undergo a lengthy notice-and-
comment process to make updates to its rule, as opposed to just
updating the Economic Guidelines already in existence, and this process
could seriously delay the EPA's ability to adapt to changes in best
practices and could hinder the promulgation of public health and
environmental protections.
Other commenters argued that the Benefit-Cost Rule would not have
stopped the adoption of new practices, but instead would have required
the EPA to notify the public and seek public comment on the basis for
the Agency's decision to adopt the new procedures. Some of these
commenters said that 40 CFR 83.3(a)(11)(v) of the Benefit-Cost Rule
specifically authorized departures from the Rule's requirements if the
EPA
[[Page 44715]]
provided a ``reasoned explanation,'' including a discussion of the
``likely effect of the departures on the results of the BCA.'' The
commenters argued that, in response to changes in best practices, the
EPA could at any time simply amend the Rule separate from or in
parallel with a new covered CAA rulemaking after seeking notice and
comment and providing a reasoned explanation. The commenters asserted
that rescission of the Benefit-Cost Rule allows the EPA to make ad hoc
decisions without notification or explanation. Another commenter
contended that the Benefit-Cost Rule did not force the EPA to revise
the rule if best practices change over time. The commenter pointed out
that the Benefit-Cost Rule did not provide a specific definition of
best practices, and the requirements of 40 CFR 83.3(a)(1) through (12)
were predominantly general in nature without prescribing exact methods.
The commenter said that many of the requirements in 40 CFR 83.3(a)
addressed what information the EPA was required to provide, not the
specific methodology the EPA had to use to estimate benefits and costs.
Response: We agree that with the Benefit-Cost Rule in place, if the
latest or best scientific practice differed from the Rule's
requirements, the EPA would have been required to amend the Rule in
order to be consistent with best practice. The process of revising a
rule often takes a year or more to complete, which would have prevented
the EPA from keeping up with evolving best practices and required the
EPA to rely on potentially outdated methods until a revised rulemaking
could be completed. We maintain this is inconsistent with making
decisions based on the best scientific data available. As discussed in
section III.C.2 of the Interim Final Rule, by freezing and defining
what constituted ``best practices'' at a single point in time, the
Benefit-Cost Rule elevated ``consistency'' over the exercise of sound
judgment based on latest scientific knowledge and, given that revision
by rulemaking could take a long time, would have slowed or discouraged
progress in the development and use of newer and better methods.
Promulgating updates to the Benefit-Cost Rule every time the Rule
became outdated ``in parallel with'' substantive, statutorily required
CAA rules would have been no small regulatory burden; it would have
required a significant amount of agency resources to do so and created
uncertainty in the CAA rule, by linking that rule to an unsettled
regulatory change to the Benefit-Cost Rule that was itself open to
challenge and judicial review.
We also do not agree with commenters that the requirement in 40 CFR
83.3(a)(11)(v) that the EPA include in every BCA ``[a] reasoned
explanation for any departures from best practices in the BCA,
including a discussion of the likely effect of the departures on the
results of the BCA'' was an authorization for the Agency to diverge
from the Benefit-Cost Rule. That provision states that the EPA has to
explain why it has diverged from ``best practices,'' not from the
Benefit-Cost Rule. ``Best practices'' is a term not defined in the
Benefit-Cost Rule, and is on its face subject to interpretation. Far
from providing clear guidance to the Agency on when it would have been
permitted to take an updated approach to BCA absent a change to the
Benefit-Cost Rule, we think that provision itself bred a great deal of
uncertainty--how, for example, is the Agency to know whether it has
adequately explained the ``likely effect'' of its departures from best
practices (which, if the Agency is taking such departure, it likely
does not believe to be ``best practice'')? As further evidence of how
best practices change over time, we note that the Economic Guidelines
are in the process of being updated as part of a periodic review
undertaken by the EPA. In addition, President Biden issued a memorandum
on January 20, 2021, on Modernizing Regulatory Review,\16\ which
directs OMB in consultation with other agencies to recommend revisions
to Circular A-4. The confluence of updates to these two documents,
which provided the ostensible underpinning to the regulatory
requirements of the Benefit-Cost Rule, only highlights the misguided
nature of attempting to freeze ``best practices'' at one moment in
time.
---------------------------------------------------------------------------
\16\ 86 FR 7223.
---------------------------------------------------------------------------
Finally, we do not agree with the commenters who asserted that the
regulatory requirements of 40 CFR 83.3(a)(1) through (12) were
predominantly general in nature. For example, as noted in the Interim
Final Rule, those provisions contained highly prescriptive (but in many
cases vague and confusing) requirements for benefits assessment and
uncertainty analyses (with no corresponding requirements for how costs
are calculated and considered). In contrast, since guidance is
inherently less prescriptive than regulation, it can be more flexible
in allowing agencies to keep up with the evolution of best practices to
support CAA regulations.
Comment: Some commenters agreed with the EPA's assertion that the
Benefit-Cost Rule was inconsistent with the mandates in the CAA that
prohibited the EPA from considering cost for some types of rulemakings.
They agreed with the EPA that the Benefit-Cost Rule's rationale for
including BCA in the records and preambles of rulemakings in which the
agency is prohibited from considering cost is not ``necessary'' to
carry out the statute within the meaning of CAA section 301(a).
Other commenters disagreed with the EPA's assertion that the
Benefit-Cost Rule was inconsistent with the mandates in the CAA that
prohibited the EPA from considering cost for some types of rulemakings.
These commenters argued that the Benefit-Cost Rule applied with respect
to a significant rule implementing the CAA only when the CAA required
or permitted consideration of cost. These commenters contended that the
Benefit-Cost Rule did not violate the CAA because it required (at 40
CFR 83.2(b)) EPA to consider the results of a BCA except in those
circumstances where the applicable CAA provision(s) prohibited that
consideration. These commenters added that when not prohibited by the
statute, the Benefit-Cost Rule left the EPA significant discretion in
how it would consider the BCAs in individual CAA rules to account for
the significant differences among statutory provisions as long as the
Agency provided the public with a description in the preamble. Another
commenter said that 40 CFR 83.4(d) provided the EPA with clear
direction and appropriate discretion in when and how to consider the
results of BCAs in making regulatory decisions.
One commenter stated that, while the EPA may be prohibited from
considering costs in some cases, such as with revisions to the NAAQS,
this did not negate the need for the Rule's requirements with regard to
how the EPA calculates benefits. The commenter also stated that the EPA
routinely presents cost information in addition to benefits even in
cases where the EPA is prohibited from considering costs, such as in
the RIA for the 2015 ozone NAAQS revision. The commenter contended that
such information is still beneficial in that it informs the public on
the potential cost impacts of the EPA's regulatory actions, even if the
EPA cannot directly consider those cost impacts. Another commenter
argued that the actual text of the CAA's substantive authorities (and
most other statutory provisions) rarely prohibits benefit-cost
balancing and arguably may require it. The commenter stated that
Administrations have recognized that
[[Page 44716]]
the public has a right to know the projected benefits and costs of a
new rule even if the underlying statutory provision (as in the case of
CAA section 109 for setting NAAQS) has been interpreted to prohibit the
consideration of costs. The commenter said elevating BCA practices is
consistent with the recent Supreme Court decisions on BCA, particularly
Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208 (2009) and Michigan v.
EPA, 135 S. Ct. 2699 (2015). The commenter asserted that these
decisions apply the fundamental principle, established in Motor Vehicle
Mfrs. Ass'n, Inc. v. State Farm Mut. Auto. Ins. Co., 463U.S. 29, 43
(1983), that it is arbitrary for an agency to neglect an important
aspect of a regulatory problem. Another commenter also pointed out that
Michigan v. EPA, 135 S. Ct. 2699 (2015), concluded that when
interpreting CAA section 112(n)(1)(A), ``Read naturally in the present
context, the phrase `appropriate and necessary' requires at least some
attention to cost.''
Response: We disagree that provisions in the Benefit-Cost Rule's
regulations granting EPA discretion in how and when to consider the
results of the mandated BCA resolves the problems presented by the
Rule. Where the CAA prohibits the EPA from considering cost in
implementing a provision, it cannot be ``necessary'' to require the EPA
to conduct a BCA and include it in the decisional rulemaking record.
The EPA is already conducting BCAs pursuant to Executive Order in
situations where it is appropriate to do so, so commenters' assertions
that the Benefit-Cost Rule is necessary for public information ring
hollow, and the commenters did not address how incorporation of a BCA
into the agency's rulemaking record where Congress has instructed the
Agency not to consider cost is consistent with the CAA. As one
commenter pointed out, the Agency's current practice for rules like the
2015 ozone NAAQS, where the rule is economically significant but where
the statute does not permit the Agency to consider cost, is to conduct
RIAs but not to include those in the record. The Benefit-Cost Rule's
requirement that the EPA include the BCA in its record is a distinct
change from its current practice, and is both unnecessary and
inappropriate given the limits of EPA's statutory authority to consider
cost.
We are also unconvinced by the commenters who assert that the
Benefit-Cost Rule is not inconsistent with the CAA for those rules
promulgated under provisions that permit consideration of cost just
because the Rule left it to the Agency's discretion how it should
consider cost. The fact remains that the Rule did not explain why, for
any particular CAA provision, BCA is the best or even a reasonable way
for the agency to consider cost. For CAA rules that would have been
impacted by the Benefit-Cost Rule, the EPA believes it would have
needed to justify why complying with the Rule's requirement to conduct
and consider a BCA was reasonable under the given CAA provision; the
existence of the Agency's own procedural rule requiring analysis and
consideration of a factor does not create statutory authority to
consider a factor that Congress did not intend the Agency to consider.
We do not agree that what would have been a case-by-case post-hoc
rationalization of the Benefit-Cost Rule as it applied to any
particular provision is superior to the existing process of statutory
interpretation, where we first look to the CAA to try to ascertain
those factors Congress intended the Agency to consider, and whether the
statutory provision suggested how the EPA should consider any such
factor. We disagree that any of the court decisions cited by the
commenters evince any general principles that ``elevate'' BCA over any
other economic analysis. In Entergy, the Court upheld as reasonable the
EPA's choice to consider cost using a BCA given particular statutory
language in the Clean Water Act. In Michigan, the Court spoke only to
whether the EPA needed to consider cost at all in implementing a CAA
provision and explicitly did not opine on how the Agency might
reasonably consider cost. The Michigan Court's holding that a
particular CAA phrase required the Agency to consider cost is more
consistent with the EPA's findings today that it should look first to
the statute to determine what factors are required under a State Farm
analysis, rather than start from an Agency-generated procedural rule
that articulates a particular type of analysis irrespective of
statutory text.
Comment: Several commenters agreed with the EPA's assertion that
the administrative processes already in place before the Benefit-Cost
Rule was promulgated provide ample consistency and transparency in the
rulemaking process. One commenter asserted that rather than increasing
transparency, the Benefit-Cost Rule's requirements would have obscured
the basis of the EPA's decisions. Another commenter said that the
Benefit-Cost Rule did not support its contention that the pre-existing
procedural requirements established by Congress were deficient. A
commenter also noted that the EPA is already required to transparently
share its data, relevant statutory interpretations, and methodology
underlying its rulemaking, and concerned parties are able to supplement
that data, raise arguments that BCA should be integrated into a
rulemaking, make other recommendations for consideration of costs, or
share any concerns that the Agency has been insufficiently transparent.
Another commenter asserted that the EPA failed to articulate any
inconsistency or lack of transparency in existing BCAs that would call
for the drastic changes the Benefit-Cost Rule would impose, and that
the EPA violated numerous executive orders by, for example, failing to
consult with States on the Benefit-Cost Rule's federalism implications
and failing to assess regulatory costs and environmental justice
impacts.
Other commenters disagreed with the EPA's assertion that the
administrative processes already in place before the Benefit-Cost Rule
was promulgated provided ample consistency and transparency in the
rulemaking process. Several of these commenters referenced comments
they had submitted on the proposed Benefit-Cost Rule. The commenters
reiterated their comments on the proposed Benefit-Cost Rule that an
overriding goal of the Agency should be to present data regarding
benefits and costs to decisionmakers and the public as objectively and
accessibly as possible.
Some commenters also pointed out that the Benefit-Cost Rule
included additional procedural requirements to increase transparency in
the presentation of results, such as providing a summary of the overall
results of the BCA. A commenter noted that while the EPA cannot
consider the result of the BCA in setting NAAQS, the RIA does play an
important role in informing the public of the likely costs and benefits
of setting a new standard. The commenter argued that the Benefit-Cost
Rule further advanced transparency by requiring more objective analysis
and explanation of uncertainties in the benefit and cost estimation.
The commenter added that the analyses should be consistent with
Circular A-4, establishing the appropriate baseline, analyzing
alternatives, and estimating benefits and costs. The commenter added
that rules should be fully transparent about the many uncertainties
underpinning their cost and benefit estimates, including the many
embedded policy assumptions made in developing the various estimates of
costs and benefits associated with a rulemaking and the significance of
the impact of those
[[Page 44717]]
assumptions on the final policy decision. Another commenter asserted
that if the EPA decides to rescind the Benefit-Cost Rule, then the EPA
must still maintain transparency in calculating and reporting the
ancillary benefits associated with regulatory actions under the CAA and
all other sources of regulatory authority.
Response: We disagree that the administrative process already in
place before the Benefit-Cost Rule was promulgated is inadequate. For
CAA rules that are subject to the rulemaking requirements of CAA
section 307(d), which include many of the major CAA rulemakings that
would have been subject to the Benefit-Cost Rule, the CAA already
requires proposed rulemakings to include a statement of basis and
purpose, which must include ``(A) the factual data on which the
proposed rule is based; (B) the methodology used in obtaining the data
and in analyzing the data; [and] (C) the major legal interpretations
and policy considerations underlying the proposed rule.'' CAA section
307(d)(3). The CAA also requires that these statements ``set forth or
summarize and provide a reference to any pertinent findings,
recommendations, and comments by the Scientific Review Committee, . . .
and, if the proposal differs in any important respect from any of these
recommendations, an explanation of the reasons for such differences.''
Id. Finally, the CAA already requires, for rules subject to CAA section
307(d), that ``[a]ll data, information, and documents . . . on which
the proposed rule relies shall be included in the docket on the date of
publication of the proposed rule.'' Id. Those CAA rulemakings that are
not subject to these specific requirements are still subject to the
requirements that apply to all proposed rulemakings under the APA,
which similarly require the proposal to include ``reference to the
legal authority under which the rule is proposed; and either the terms
or substance of the proposed rule.'' APA section 553(b). EPA must also
provide an opportunity for comment on proposed rulemakings and respond
to all significant comments, and all final rules are subject to
judicial review for EPA's failure to adequately respond to significant
comments.
We agree that BCA requirements and analyses should be clear and
transparent, and we agree that EPA should follow OMB Circular A-4
guidance to present data regarding benefits and costs to decisionmakers
and the public as objectively and transparently as possible. We
disagree that this was not the case prior to the promulgation of the
Benefit-Cost Rule, and we disagree that EPA's analyses of its
regulatory actions are inconsistent with OMB Circular A-4. Then, as
now, in performing analyses of regulatory actions, the EPA follows the
guidance laid out by OMB Circular A-4 and the Economic Guidelines in
areas such as identifying the baseline, analyzing alternatives, and
estimating costs and benefits, including ancillary benefits. The
analyses and results are subject to internal review and an interagency
review process under E.O. 12866 that involves application of the
principles and methods defined in Circular A-4. The results of the
analyses, documented in RIAs, are also reviewed by OMB to ensure
consistency with Circular A-4. While BCAs are similar for different
rules, as instructed in Circular A-4 and the Economic Guidelines, the
analyses are often tailored to the specific source category by
considering a number of variables, such as the type of pollutants being
controlled, available data, and the location of the emission sources.
Additionally, we disagree with commenters who contended that the
Benefits-Cost Rule would have increased transparency in the
presentation of results. The EPA already disaggregates benefit and cost
estimates in BCAs, so these narrow presentational requirements do not
provide additional transparency. As discussed in the Interim Final
Rule, the Benefits-Cost Rule would have required the preambles of
significant proposed and final CAA regulations to include a separate
presentation that excluded certain categories of benefits that Circular
A-4 and the Economic Guidelines indicate should be considered. This
could have resulted in misleading net-benefit calculations that would
have inaccurately characterized the benefits of a rulemaking and would
have called into question the significance of the excluded benefits.
We disagree that RIAs are difficult to find as they are always
included in the docket for significant rulemakings. Additionally, all
of the RIAs are available online, and many can be found at EPA's
website sorted by source category: https://www.epa.gov/economic-and-cost-analysis-air-pollution-regulations/regulatory-impact-analyses-air-pollution. While the RIAs are technical in nature, the EPA takes steps
to provide information to aid in their interpretation by the public.
We also note that the overall summary of BCA results that one of
the commenters supports, which present the overall net benefits
associated with a rulemaking, are already recommended by Circular A-4
and are thus included in the RIAs for our rulemakings. The contents of
the summary tables already provided by the EPA are consistent with the
guidance for such summary tables in Circular A-4 for all rulemakings.
For significant rules, the EPA also follows Circular A-4 procedures
that require presenting a formal quantitative analysis of the relevant
uncertainties about benefits and costs.
Comment: Some commenters agreed with the EPA that the Benefit-Cost
Rule's presentation requirements would be misleading. These commenters
supported the EPA's assertion that requiring a separate presentation
that excluded certain categories of benefits that Circular A-4 and the
Economic Guidelines indicate should be considered could call into
question the significance of those benefits without justification. They
contended that excluding co-benefits from a presentation of benefits
would violate established economic principles, established best
practices, and longstanding practices of previous administrations. One
commenter cited Michigan v. EPA, stating that in its view, the Supreme
Court held that the EPA needed to consider all advantages and
disadvantages in deciding whether a regulation is appropriate, such as
in the case where a regulation controls emissions but has the indirect
effect of causing new health harms.
Another commenter noted that, out of the hundreds of pollutants the
EPA regulates under the CAA, the EPA only has sufficient information on
particulate matter, and more than 90 percent of all benefits that the
EPA quantifies in its BCAs are attributable to this one pollutant. The
commenter stated that when significant benefits are missing from the
monetized estimate, calculating a number that meaningfully represents a
rule's net benefits is simply a logical impossibility, and any
calculation that purports to do so is, as OIRA itself acknowledges,
``misleading'' at best.
Other commenters opposed rescinding the Benefit-Cost Rule's
requirements regarding the presentation of ancillary benefits and non-
domestic benefits. One commenter defended the Benefit-Cost Rule on the
basis that the Rule did not prescribe any specific requirement as to
how EPA must consider ancillary benefits or provide a formula for when
a rule ``passes'' a benefit-cost test; the Benefit-Cost Rule only
required the EPA to better inform the public about basic information
contained in BCAs and to differentiate in a clear fashion what the
ancillary benefits are in a given rule. Other commenters stated that
the Benefit-Cost Rule's requirement to present statutory-
[[Page 44718]]
objective benefits separately from ancillary co-benefits and non-U.S.
based benefits would enhance transparency and would not limit the
Agency's ability to recognize and account for these benefits. Another
commenter contended that, without the required clarity and accounting
for the sources of the benefits, the public and decisionmakers are more
likely to be misled in understanding the nature of the benefits and
whether those benefits could have been achieved more efficiently under
other provisions of the statute. A commenter re-iterated its previous
comment on the proposed Benefit-Cost Rule that presenting disaggregated
cost and benefit information allows for evaluation and consideration of
possibly disproportionate costs on one population from a rule where the
benefits are primarily focused on another population. The commenter
provided an example where it asserted that the EPA's BCA for the Clean
Power Plan estimated benefits using the global social cost of carbon
but compared those benefits to costs within the U.S. The commenter
asserted that such a comparison was misleading and could have caused
parties to not question EPA's justification of the Clean Power Plan
when they might have if the EPA had disaggregated the benefits and
costs as required by the Benefit-Cost Rule. Another commenter contended
that estimates of global benefits should be reported separately in a
manner consistent with Circular A-4. The commenter added that the EPA's
failure to abide by OMB Circular A-4 by reporting only global benefits
resulted in analyses that compared U.S. costs with global benefits--an
asymmetry that should be fully disclosed.
Some commenters contended that the EPA used ancillary benefits to
justify rules that did not quantify emission reductions or that showed
only minimal emission reductions from pollutants directly regulated.
Another commenter cited two greenhouse gas regulations, the EPA's Phase
2 rule for Medium and Heavy-Duty Engines and Vehicles and the Clean
Power Plan, where the EPA estimated substantial net economic benefits
due to the inclusion of the non-climate effects of climate policies as
co-benefits. Another commenter added that the EPA used ancillary
benefits to support six major CAA rules that did not quantify direct
benefits, and in 21 of 26 major non-particulate matter rulemakings
analyzed from 1997 to 2011, the particulate matter ancillary benefits
accounted for more than half of the total benefits. A commenter
contended that reliance on co-benefits to justify regulatory action
circumvents Congressional intent because it disregards the target of
the underlying statutory provision and circumvents the substantive
focus and procedural safeguards established under the law. The
commenter added that regulation through co-benefits also undermines the
very purpose of BCA by obscuring the question of whether the proposed
action accomplishes its intended purpose in a reasonable and resource-
efficient manner. One commenter suggested that the EPA can avoid using
cost-ineffective ``co-benefits'' in the BCA by requiring a robust
regulatory baseline that reflects all projected federal and state
emission reductions, as well as a robust alternatives analysis that
outlines the opportunity costs of pursuing ``co-benefits'' through sub-
optimal, if not unnecessary, measures to achieve standards.
Response: At the outset, we note that, by definition, a BCA
includes all the costs and benefits of a rulemaking, i.e., the net
benefits of a regulatory change, in order to ascertain the economic
efficiency of that change. We believe some commenters are mistaken in
their understanding of how the EPA currently presents net benefits and
also what the Benefit-Cost Rule required. To clarify, the EPA already
disaggregates benefit and cost estimates in its RIAs, per the
instructions in Chapter 11 of the Economic Guidelines (Presentation of
Analysis and Results) and the OMB Circular A-4 section on
characterizing uncertainty in benefits, costs, and net benefits. The
results of BCAs are presented in RIAs. Both guidance documents are
clear that net benefits are calculated by subtracting total costs from
total benefits, regardless of whether the benefits and costs arise from
intended or unintended consequences of the regulation. Section 6 of
Circular A-4 instructs that the ``analysis should look beyond the
direct benefits and direct costs of your rulemaking and consider any
important ancillary benefits and countervailing risks,'' where an
ancillary benefit is defined as a ``favorable impact of the rule that
is typically unrelated or secondary to the statutory purpose of the
rulemaking.'' \17\ This is particularly important in instances when
unintended effects are important enough to potentially change the rank
ordering of the regulatory options considered in the analysis or to
potentially generate a superior regulatory option with strong ancillary
benefits and fewer countervailing risks. Circular A-4 also notes that,
``In some cases the mere consideration of these secondary effects may
help in the generation of a superior regulatory alternative with strong
ancillary benefits and fewer countervailing risks.''
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\17\ We note that the specific term used in Circular A-4 is
``ancillary benefits'' and not ``co-benefits.''
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In our view, the Benefit-Cost Rule's requirements would not have
provided additional transparency, and we are concerned that the Rule's
requirements may have led to misleading net-benefit calculations. The
Benefit-Cost Rule required preambles of affected rules to include a
summary of both the overall BCA results as well as an additional
reporting of subsets of the total benefits of the rule. Specifically,
the Benefit-Cost Rule required a presentation of only the benefits
``that pertain to the specific objective (or objectives, as the case
may be) of the CAA provision or provisions under which the significant
regulation is promulgated.'' The Benefit-Cost Rule also required that
if any benefits and costs accrue to non-U.S. populations, they must be
reported separately to the extent possible. These presentational
requirements are duplicative of information the EPA already presents in
its RIAs, so they would not have provided additional transparency. If,
however, these subsets of benefits were compared to total costs and
deemed to be some type of limited net-benefits calculation, we think
that application of the information would be misleading and contrary to
best economic practice. In addition, requiring a separate presentation
that excluded certain categories of benefits that Circular A-4 and the
Economic Guidelines indicate should be considered might lead the public
to question the significance of those benefits without any
justification.
The remainder of the comments summarized above are outside the
scope of this action, and the question of whether the EPA should
rescind the Benefit-Cost Rule. Specifically, with respect to the
suggestion that the EPA should include in its baselines projected
federal and state emission reductions, the Benefit-Cost Rule would not
have changed how the Agency calculates baselines, and we do not agree
that the commenter's suggestion would be consistent with recommended
guidelines or advisable, to the extent that the commenter is including
in ``projected'' reductions any that are not finalized and on-the-
books. The EPA follows Circular A-4 and the EPA's Economic Guidelines,
which direct the EPA to develop baselines that include all significant
projected federal emission reductions for fully promulgated rules and
the future impacts of state regulation to the extent they are known
[[Page 44719]]
and on the books at the time of the rulemaking.
Regarding the suggestion that the EPA conduct a ``robust
alternatives analysis'' looking at lost opportunity costs of pursuing
co-benefits through ``sub-optimal'' if not unnecessary measures, the
comment is unclear but also appears to be beyond the scope of this
action. We disagree that the EPA has designed regulatory options to
meet its statutory obligations for the purpose of pursuing reductions
in other pollutants (or ancillary benefits). It is simply a fact that
many of the control technologies designed to reduce emissions of
specific pollutants also happen to reduce emissions of other
pollutants, in part because sources that are targeted under the Act
often tend to emit many kinds of pollutants and control of one
pollutant can often result in reductions of other non-targeted
pollutants.
Moreover, we disagree with comments that the EPA used ancillary
benefits to justify regulations or circumvent Congress, but in any
case, the Benefit-Cost Rule's requirement to report certain subsets of
benefits separately would not have addressed these concerns. In
general, the Agency undertakes RIAs in order to comply with E.O. 12866.
Those Clean Air Act rulemaking RIAs, in almost every instance, are not
part of the Agency's record basis for the action. They are not included
in the Agency's record basis for the action because they are not used
to justify the Agency's decision making. The net-benefits calculations
in RIAs, which, consistent with Circular A-4 and the Economic
Guidelines, include all benefits, are provided in order to comply with
E.O. 12866 and for illustrative and informational purposes only.
Therefore, even if the monetized particulate matter benefits associated
with a number of CAA rules were greater than the monetized benefits for
any other pollutant, it does not follow that the EPA justified
promulgation of these rules based on particulate matter benefits.
Instead, it indicates that the Agency may have more data and
information to monetize the benefits of reducing that particular
pollutant and that it is extremely common for required emissions
controls to result in ancillary benefits.
Commenters cited two examples of EPA RIAs that they claimed would
have been conducted differently had the Benefit-Cost Rule's
presentational requirements for ancillary benefits been in place--the
2016 Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium-
and Heavy-Duty Engines and Vehicles--Phase 2 Rule and the 2015 Clean
Power Plan, but we do not agree. Both examples adhered to OMB Circular
A-4. The RIAs provided separate reporting for all categories of both
benefits and costs (see summary beginning on page 8-71 of the Phase 2
Rule RIA and Tables ES-6 through ES-8 and additional details in Chapter
4 of the Clean Power Plan RIA). For example, for the Phase 2 Rule RIA,
benefits in the form of savings in fuel expenditures, increased vehicle
use associated with the fuel economy ``rebound'' effect, benefits of
greenhouse gas emission reductions, benefits of non-greenhouse gas
emissions reductions, and the economic value of improvements in U.S.
energy security are separately reported. We also disagree with the
commenter who cited the Clean Power Plan RIA's estimation of climate
benefits as an example of a misleading analysis that could have caused
parties to not question EPA's justification of the Clean Power Plan
when they might have if the EPA had disaggregated the climate benefits
as required by the Benefit-Cost Rule. In the RIA, the EPA strove to be
very transparent and provided a lengthy discussion of why EPA
appropriately centers attention on a global measure of the social cost
of carbon when estimating climate benefits resulting from reductions in
this global pollutant. In addition, the Agency clearly stated that the
monetized benefits analysis was not EPA's justification for the rule.
As explained in the preamble for the final rule, ``As required under
Executive Order 12866, the EPA conducts benefit-cost analyses for major
Clean Air Act rules. While benefit-cost analysis can help to inform
policy decisions, as permissible and appropriate under governing
statutory provisions, the EPA does not use a benefit-cost test (i.e., a
determination of whether monetized benefits exceed costs) as the sole
or primary decision tool when required to consider costs or to
determine whether to issue regulations under the Clean Air Act, and is
not using such a test here.''
Comment: One commenter noted that the Benefit-Cost Rule's limits on
the types of scientific data that the EPA can consider, as well as its
prescriptions regarding the presentation of certain categories of
benefits, would have impeded the adoption of additional public health
protections that are critically needed to ensure breathable air to
overburdened communities. Some commenters stated that the Benefit-Cost
Rule's failure to undertake any analysis of these potential
environmental justice impacts is directly contrary to the EPA's mission
under the CAA. Some commenters asserted that the Benefit-Cost Rule
would have interfered with the EPA's efforts to address distributional
and environmental justice impacts. These commenters said that
rescinding the Benefit-Cost Rule removed an unnecessary and
inappropriate impediment to the Agency's rigorous pursuit of its
mission, including its ability to advance environmental justice. The
commenters asserted that the Interim Final Rule reduced this risk and
associated negative environmental health and safety risks that often
disproportionately affect children and residents of environmental
justice communities. Some commenters said that the Interim Final Rule
was fully in line with the Administration's commitment to advancing
environmental justice, both broadly and through specific agency
actions. Another commenter contended that the Benefit-Cost Rule
disregarded the complex ways in which pollutants interact within and
across environmental media, thereby undermining environmental
protections and the existing regulatory programs that are essential to
public health, protection of ecosystems and wildlife, and local
economies.
Some commenters argued that the EPA's development of the Benefit-
Cost Rule did not adequately reflect the mandates of E.O. 12898 and
13045 or comply with the required analysis. A commenter contended that
E.O. 12898 applies to programs, policies, and activities, and the
Benefit-Cost Rule was clearly a policy, and therefore, should have been
subject to E.O. 12898 directives to consider environmental justice. One
commenter stated that the Benefit-Cost Rule would have codified value
judgments that could impact the evaluation and development of
regulations that can significantly affect health risks to children and
the pollution burdens on environmental justice communities. Another
commenter asserted that aggregating those health benefits that can be
quantified overlooks communities of color that have been subjected to
racist practices, such as redlining, that have confined them to
pollution hotspots or areas of disinvestment. Another commenter said
that the Benefit-Cost Rule would have applied benefits as an average
across societies instead of a distributional analysis and that this was
extremely problematic and even unethical because the approach masks
disparities in the location of polluting facilities and resultant air
pollution (and health outcomes).
Other commenters said that ongoing efforts are needed to ensure
that the EPA appropriately considers
[[Page 44720]]
environmental justice implications moving forward. A commenter asserted
that the EPA failed to recognize any environmental justice
considerations in both its reasoning for rescinding the Benefit-Cost
Rule and its explanation for returning to the pre-existing BCA process.
The commenter argued that building environmental-justice considerations
into the BCA process is needed to ensure that the EPA's future CAA
actions do not re-enforce the existing pollution-exposure discrepancies
underserved communities face. Similarly, another commenter asserted
that low-income communities and communities of color have long been
disproportionately harmed by air pollution and other forms of
environmental degradation. The commenter added that the Benefit-Cost
Rule would have obscured environmental-justice implications because the
EPA's BCA would be required to focus on calculated net benefits of
actions and would ignore distributional equities. Another commenter
requested that the EPA promulgate a better Benefit-Cost Rule to truly
realize equality under the law and environmental justice--a rule that
accurately accounts for cumulative and aggregate impacts of pollutants
on overburdened communities and gives unquantifiable and/or non-
monetary harms the attention they deserve.
Response: The EPA agrees that the Benefit-Cost Rule did not address
the environmental justice impacts raised by the commenters. While this
final rule rescinding the Benefit-Cost Rule will not directly address
environmental justice impacts, it should be noted that a cornerstone
goal of the EPA is to provide an environment where all people enjoy the
same degree of protection from environmental and health hazards and
equal access to the decision-making process to maintain a healthy
environment in which to live, learn, and work.
V. Judicial Review
Section 307(b)(1) of the CAA indicates which federal courts of
appeals are the proper forum for petitions of review of final actions
by the EPA under the CAA. This section provides, in part, that
petitions for review must be filed in the Court of Appeals for the
District of Columbia Circuit for (i) ``Any nationally applicable
regulations promulgated, or final actions taken, by the Administrator''
or (ii) when such action is locally or regionally applicable, if ``such
action is based on a determination of nationwide scope or effect and if
in taking such action the Administrator finds and publishes that such
action is based on such a determination.'' For locally or regionally
applicable final actions, the CAA reserves to the EPA complete
discretion whether to invoke the exception in (ii).
This final action is ``nationally applicable'' within the meaning
of section 307(b)(1). Pursuant to CAA section 307(b), any petitions for
review of this final action must be filed in the Court of Appeals for
the District of Columbia Circuit within 60 days from the date this
final action is published in the Federal Register.
VI. Statutory and Executive Order Reviews
Additional information about these statutes and Executive Orders
can be found at https://www.epa.gov/laws-regulations/laws-and-executive-orders.
A. Executive Order 12866: Regulatory Planning and Review and Executive
Order 14094: Modernizing Regulatory Review
This action is not a significant regulatory action as defined in
Executive Order 12866. The EPA does not anticipate that this rulemaking
will have an economic impact on regulated entities. This is a rule of
agency procedure and practice. EPA notes the release of E.O. 14094
after issuance of the interim final rule, which amended E.O. 12866. The
discussion in this final action relates to interpretation of E.O.
12866, which was the governing executive order for the duration of when
the rule was in effect. The same reasoning applies to the updated
definitions contained in E.O. 14094. That is, the Benefit-Cost Rule
expanded the universe of CAA rulemakings for which the EPA would be
required to conduct BCAs without justifying why such expansion was
necessary or appropriate.
B. Paperwork Reduction Act (PRA)
This action does not contain any information collection activities
and therefore does not impose an information collection burden under
the PRA.
C. Regulatory Flexibility Act (RFA)
I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. This
action would not impose any requirements on small entities. This action
would not regulate any entity outside the federal government and is a
rule of agency procedure and practice.
D. Unfunded Mandates Reform Act (UMRA)
This action does not contain any unfunded mandate as described in
UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect
small governments. The action imposes no enforceable duty on any state,
local or tribal governments or the private sector.
E. Executive Order 13132: Federalism
This action does not have federalism implications. It will not have
substantial direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among the various levels of government.
F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments
This action does not have tribal implications as specified in
Executive Order 13175. Thus, Executive Order 13175 does not apply to
this action.
G. Executive Order 13045: Protection of Children From Environmental
Health Risks and Safety Risks
The EPA interprets Executive Order 13045 as applying only to those
regulatory actions that concern environmental health or safety risks
that the EPA has reason to believe may disproportionately affect
children, per the definition of ``covered regulatory action'' in
section 2-202 of the Executive Order. This action is not subject to
Executive Order 13045 because it does not concern an environmental
health risk or safety risk.
H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
This action is not a ``significant energy action'' because it is
not likely to have a significant adverse effect on the supply,
distribution or use of energy and has not otherwise been designated as
a significant energy action by the Administrator of the Office of
Information and Regulatory Affairs.
I. National Technology Transfer and Advancement Act (NTTAA) and 1 CFR
Part 51
This rulemaking does not involve technical standards.
J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations
Executive Order 12898 (59 FR 7629, February 16, 1994) directs
federal
[[Page 44721]]
agencies, to the greatest extent practicable and permitted by law, to
make environmental justice part of their mission by identifying and
addressing, as appropriate, disproportionately high and adverse human
health or environmental effects of their programs, policies and
activities on minority populations (people of color and/or Indigenous
peoples) and low-income populations.
The EPA believes that this type of action does not concern human
health or environmental conditions and therefore cannot be evaluated
with respect to potentially disproportionate and adverse effects on
people of color, low-income populations and/or Indigenous peoples. This
action has no current or projected monetized costs or benefits nor does
it stipulate any changes that may adversely affect people of color,
low-income populations and/or Indigenous peoples. This rule pertains
only to internal EPA practices in how the EPA conducts and considers
benefit-cost analyses. While this rule does not directly address
environmental justice impacts, it should be noted that a cornerstone
goal of the EPA is to provide an environment where all people enjoy the
same degree of protection from environmental and health hazards and
equal access to the decision-making process to maintain a healthy
environment in which to live, learn, and work.
K. Congressional Review Act (CRA)
This rule is exempt from the CRA because it is a rule of agency
organization, procedure, or practice that does not substantially affect
the rights or obligations of non-agency parties.
List of Subjects in 40 CFR Part 83
Environmental protection, Administrative practice and procedures,
Reporting and recordkeeping requirements.
Michael S. Regan,
Administrator.
PART 83--[REMOVED AND RESERVED]
0
For the reasons stated in the preamble, and under the authority of 42
U.S.C. 7601, the EPA removes and reserves 40 CFR part 83.
[FR Doc. 2023-14707 Filed 7-12-23; 8:45 am]
BILLING CODE 6560-50-P