84130 Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Rules and Regulations 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 83 

[EPA–HQ–OAR–2020–0044; FRL 10018–56– 

OAR] 

RIN 2060–AU51 

Increasing Consistency and 

Transparency in Considering Benefits 

and Costs in the Clean Air Act 

Rulemaking Process 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: This rule establishes 

processes that the Environmental 

Protection Agency (EPA) will be 

required to undertake in promulgating 

regulations under the Clean Air Act 

(CAA) to ensure that information 

regarding the benefits and costs of 

regulatory decisions is provided and 

considered in a consistent and 

transparent manner. The EPA is 

establishing procedural requirements 

governing the preparation, 

development, presentation, and 

consideration of benefit-cost analyses 

(BCA), including risk assessments used 

in the BCA, for significant rulemakings 

conducted under the CAA. Together, 

these requirements will help ensure that 

the EPA implements its statutory 

obligations under the CAA, and 

describes its work in implementing 

those obligations, in a way that is 

consistent and transparent. 

DATES: This final rule is effective 

December 23, 2020, but does not apply 

to final rules for which a proposal was 

published prior to the effective date. 

ADDRESSES: The EPA has established a 

docket for this action under Docket ID 

No. EPA–HQ–OAR–2020–0044. All 

documents in the docket are listed on 

the http://www.regulations.gov website. 

Although listed in the index, some 

information is not publicly available, 

e.g., CBI 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 http://

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: Leif 

Hockstad, Office of Air Policy and 

Program Support, Office of Air and 

Radiation, Environmental Protection 

Agency, Mail Code 6103A,1200 

Pennsylvania Avenue NW, Washington, 

DC 20460; (202) 343–9432; email 

address: hockstad.leif@epa.gov. 

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: 

ANPRM Advanced Notice of Proposed 

Rulemaking 

BCA Benefit-cost analysis 

BenMAP Benefits Mapping and Analysis 

Program (BenMAP) 

CAA Clean Air Act 

CBI Confidential business information 

CFR Code of Federal Regulation 

CRA Congressional Review Act 

EPA Environmental Protection Agency 

IOM Institute of Medicine 

NAAQS National Ambient Air Quality 

Standards 

NHTSA National Highway Traffic Safety 

Administration 

NPRM Notice of Proposed Rulemaking 

IRIS Integrated Risk Information System 

ISA Integrated Science Assessments 

PII Personally identifiable information 

SAB Science Advisory Board 

WTA Willingness-to-accept 

WTP Willingness to pay 

Organization of this document. The 

following outline is provided to aid in 

locating information in this preamble. 

I. Executive Summary 

A. Purpose of the Regulatory Action 

B. Summary of the Major Provisions of the 

Regulatory Action 

II. General Information 

A. Does this action apply to me? 

B. What is the Agency’s authority for 

taking this action? 

III. Background 

A. Summary of Executive Orders, 

Guidances, and Court Rulings Related to 

Regulatory BCA 

B. Summary of Proposed Rule 

IV. Description of the Final Rule 

V. Responses to Significant Comments 

A. Purpose of the Action 

B. Authority To Promulgate a Procedural 

Rule 

C. Definitions 

D. Preparation and Consideration of BCA 

in Rulemaking 

E. Best Practices for the Development of 

BCA 

1. Key Elements of a BCA 

2. Statement of Need 

3. Regulatory Options 

4. Baseline 

5. Measuring Benefits and Costs 

6. Methods for Estimating Benefits and 

Costs 

7. Selecting and Quantifying Health 

Endpoints in a BCA 

8. Uncertainty Analysis 

9. Principle of Transparency 

F. Requirements for the Presentation of 

BCA Results 

G. Additional Comment Responses 

1. Planning for Retrospective Analysis 

2. Comments Pertaining to Executive Order 

12898 

VI. References 

VII. Statutory and Executive Order Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

B. Executive Order 13771: Reducing 

Regulations and Controlling Regulatory 

Costs 

C. Paperwork Reduction Act 

D. Regulatory Flexibility Act 

E. Unfunded Mandates Reform Act 

F. Executive Order 13132: Federalism 

G. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

H. Executive Order 13045: Protection of 

Children From Environmental Health 

Risks and Safety Risks 

I. Executive Order 13211: Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution or Use 

J. National Technology Transfer and 

Advancement Act 

K. Executive Order 12898: Federal Actions 

To Address Environmental Justice in 

Minority Populations and Low-Income 

Populations 

L. Congressional Review Act 

I. Executive Summary 

A. Purpose of the Regulatory Action 

Thorough and careful economic 

analysis is informative for developing 

sound environmental policies. High 

quality economic analyses enhance the 

effectiveness of environmental policy 

decisions by providing policy makers 

and the public with information needed 

to assess the likely consequences of 

various actions or options. 

Transparency about how these 

economic analyses are developed and 

how they are used in decision-making is 

essential to allowing interested parties 

to hold decision makers accountable for 

their decisions. BCA, a type of economic 

analysis, can serve an integral 

informative role in the regulatory 

development process. It provides 

detailed information about the value of 

benefits and costs of a policy to affected 

parties and whether a policy change has 

the potential to improve the aggregate 

well-being of society. 

The purpose of this action is to codify 

procedural best practices for the 

preparation, development, presentation, 

and consideration of BCA in regulatory 

decision-making under the CAA. This 

codification will help ensure that the 

EPA implements its statutory 

obligations under the CAA, and 

describes its work in implementing 

those obligations, in a way that is 

consistent and transparent. This 

transparency is important to allow 

interested parties to understand and 

evaluate the adequacy and accuracy of 

the BCA and the role the analysis 


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Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Rules and Regulations 84131 

1The ERDDAA requires the EPA to make 

available to the SAB proposed criteria documents, 

standards, limitations, or regulations, together with 

relevant scientific and technical information on 

which the proposed action is based. On the basis 

of this information, the SAB may provide advice 

and comments. The SAB final report on the 

proposed rule is available at: https://

yosemite.epa.gov/sab/sabproduct.nsf/0/ 

82e89c7a596e9efa852585a50064d32e!

OpenDocument&TableRow=2.3#2. 

2 Information about the SAB review of the 

forthcoming update of the EPA’s Guidelines is 

available at: https://yosemite.epa.gov/sab/

sabproduct.nsf//LookupWebProjects

CurrentBOARD/30D5E59E8DC91C22852584

03006EEE00?OpenDocument. 

played in significant regulatory 

decision-making. 

The Agency is taking this action 

pursuant to CAA section 301(a). 42 

U.S.C. 7601(a)(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. Such authority extends 

to internal agency procedures that 

increase the Agency’s ability to provide 

consistency and transparency to the 

public in regard to the rulemaking 

process under the CAA. See NRDC v. 

EPA, 22 F.3d 1125, 1148 (D.C. Cir. 1994) 

(‘‘[Section 301] is sufficiently broad to 

allow the promulgation of rules that are 

necessary and reasonable to effect the 

purposes of the Act.’’). 

B. Summary of the Major Provisions of 

the Regulatory Action 

This final rule consists of three 

elements. First, it requires the EPA to 

prepare a BCA for all future significant 

proposed and final regulations under 

the CAA. The rule also requires that the 

Agency consider the BCA in 

promulgating the regulation except 

where the statutory provision or 

provisions under which a significant 

regulation is promulgated prohibit it. 

Second, the rule requires EPA to 

develop the BCA using the best 

available scientific information and in 

accordance with best practices from the 

economic, engineering, physical, and 

biological sciences. The final rule 

codifies best practices consistent with 

the EPA’s Guidelines for Preparing 

Economic Analyses (hereafter 

‘‘Guidelines’’) and the Office of 

Management and Budget’s (OMB) 

Circular A–4, and also requires that risk 

assessments used to support BCAs 

should follow best methodological 

practices for risk characterization and 

risk assessment. 

Third, the rule imposes additional 

procedural requirements to increase 

transparency in the presentation and 

consideration of the BCA results. 

Specifically, the rule provides that the 

preambles of significant proposed and 

final CAA regulations must include a 

section that contains: 

a. A summary presentation of the 

overall BCA results for the rule, 

including total costs, benefits, and net 

benefits; 

b. An additional reporting of the 

public health and welfare benefits that 

pertain to the specific objective(s) of the 

CAA provision(s) under which the rule 

is promulgated; 

c. A transparent presentation of how 

specific costs contemplated in the CAA 

provision(s) under which the rule is 

promulgated (to the extent specified), 

relate to total costs, to the extent 

possible; and 

d. When the CAA statutory provision 

or provisions under which the rule is 

promulgated permit consideration of the 

BCA, a description of how the Agency 

considered the BCA. 

Together, these requirements will 

help ensure that the EPA implements its 

statutory obligations under the CAA in 

a way that is consistent and transparent. 

The provisions of the final rule codify 

best practices for the preparation, 

development, presentation, and 

consideration of BCA as articulated in 

the principles and requirements of 

Executive Order 12866. This final rule 

does not change any other requirements 

pertaining to CAA rules specified in 

executive orders and existing guidance 

documents. For example, this final rule 

does not change the requirements for 

what types of analysis should be 

included in regulatory impact analyses 

prepared under E.O. 12866. 

II. 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 EPA’s regulations may be 

interested in this rule. For example, this 

rule may be of particular interest to 

entities and individuals concerned with 

how the EPA conducts BCA. 

B. What is the Agency’s authority for 

taking this action? 

The Agency is taking this action 

pursuant to CAA section 301(a). 42 

U.S.C. 7601(a)(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. Such authority extends 

to internal agency procedures that 

increase the Agency’s ability to provide 

consistency and transparency to the 

public in regard to the rulemaking 

process under the CAA. See NRDC v. 

EPA, 22 F.3d 1125, 1148 (D.C. Cir. 1994) 

(‘‘[Section 301] is sufficiently broad to 

allow the promulgation of rules that are 

necessary and reasonable to effect the 

purposes of the Act.’’). 

This is a rulemaking of agency 

organization, procedure, or practice. 

This procedural rule would not regulate 

any person or entity outside the EPA 

and would not affect the rights or 

obligations of outside parties. As a rule 

of Agency procedure, this rule is exempt 

from the notice-and-comment and 

delayed effective-date requirements set 

forth in the Administrative Procedure 

Act. See 5 U.S.C. 553(a)(2),(b)(A),(d). 

Nonetheless, the Agency voluntarily 

sought public comment on the proposed 

rule because it believed that the 

information and opinions supplied by 

the public would inform the Agency’s 

views. Vt. Yankee Nuclear Power Corp. 

v. Nat. Res. Def. Council, Inc., 435 U.S. 

519, 524 (1978) (‘‘Agencies are free to 

grant additional procedural rights in the 

exercise of their discretion.’’) In 

addition, even assuming arguendo that 

the notice-and-comment requirements 

of the Act applied to this action, EPA 

has determined that there would be 

good cause, consistent with 5 U.S.C. 

553(d)(3), for making this final rule 

effective immediately because the goals 

of the rule, ensuring transparency and 

consistency in BCAs for significant CAA 

rulemakings, are crucial for ensuring 

confidence in EPA decision-making. 

Because this is a procedural rule that 

only applies internally to ensure that 

EPA follows existing best practices with 

respect to BCA and to ensure that EPA 

explains how EPA considered the 

results, the rationale for delayed 

effectiveness to allow time to adjust to 

the new requirements does not apply. 

In addition, the EPA received 

comments and recommendations on the 

proposed rule from the EPA Science 

Advisory Board (SAB), pursuant to its 

statutory duties to offer advice and 

comments on the scientific and 

technical basis of certain planned EPA 

actions pursuant to the Environmental 

Research, Development, and 

Demonstration Authorization Act of 

1978 (ERDDAA).1 Finally, the EPA also 

reviewed comments received from the 

SAB during the course of its review of 

the forthcoming update of the EPA’s 

Guidelines.2

III. Background 

A. Summary of Executive Orders, 

Guidances, and Court Rulings Related 

to Regulatory BCA 

As the EPA works to advance its 

mission of protecting public health and 


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84132 Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Rules and Regulations 

3Executive Order 11821—Inflation Impact 

Statements, Federal Register, VOL. 39, NO. 231— 

Friday, November 29, 1974 (pages 41501–41502) . 

4https://obamawhitehouse.archives.gov/omb/ 

inforeg_chap1#tnfrp. 

5Executive Order 11949—Economic Impact 

Statements, Federal Register, VOL. 42, NO. 3— 

Wednesday, January 5, 1977 (page 1017). https://

www.govinfo.gov/content/pkg/FR-1977-01-05/pdf/ 

FR-1977-01-05.pdf. 

6Executive Order 12044—Improving Government 

Regulations, Federal Register, VOL 43, NO. 58— 

Friday, March 24, 1978 (Pages 12659–12670). 7Executive Order 12291—Federal Regulation, 

Federal Register, Vol 46—February 19, 1981 (Page 

13193). 

the environment, it seeks to ensure that 

its analyses of regulatory decisions 

provided to the public continue to be 

rooted in sound, transparent, and 

consistent approaches to evaluating 

benefits and costs. 

The Supreme Court noted in Michigan 

v. EPA that ‘‘[c]onsideration of cost 

reflects the understanding that 

reasonable regulation ordinarily 

requires paying attention to the 

advantages and the disadvantages of 

agency decisions.’’ Michigan v. EPA, 

135 U.S. 2699, 2707 (2015). Many 

environmental statutes, including the 

CAA, contemplate the consideration of 

costs as part of regulatory decisionmaking in many instances. Several of 

these statutes, including the CAA, 

contain provisions that explicitly 

require some form of cost consideration 

when establishing a standard. 

Additionally, several other statutory 

provisions use terminology that in 

context implicitly direct or allow the 

EPA to consider costs, alone or in 

conjunction with benefits and other 

factors. For example, section 

112(n)(1)(A) of the CAA directs the 

Administrator to ‘‘regulate electric 

utility steam generating units under 

[section 112], if the Administrator finds 

such regulation is appropriate and 

necessary.’’ ‘‘Read naturally in the 

present context, the phrase ‘appropriate 

and necessary’ requires at least some 

attention to cost.’’ Michigan, 135 S. Ct. 

at 2707 (2015). Therefore, in light of the 

varying statutory provisions in the CAA 

that apply to or otherwise address cost 

consideration, the Agency is finalizing 

procedural requirements to provide 

analysis to the public that will present 

all of the benefits and costs in a 

consistent manner for all significant 

CAA rulemakings. 

Thorough and careful economic 

analysis is informative for developing 

sound environmental policies. High 

quality economic analyses enhance the 

effectiveness of environmental policy 

decisions by providing policy makers 

and the public with information needed 

to systematically assess the likely 

consequences of various actions or 

options. BCA, a type of economic 

analysis, can serve an integral 

informative role in the regulatory 

development process. In general terms, 

a BCA is an evaluation of both the 

benefits and costs to society as a result 

of a policy and the difference between 

the two (i.e., the calculation of net 

benefits (benefits minus costs)). It 

provides information about whether a 

policy change has the potential to 

improve the aggregate well-being of 

society. 

The usefulness of BCA in informing 

the development of environmental 

regulations has been recognized both 

within and outside government for 

decades. As discussed below, 

Presidential Executive Orders and 

statutes have been in place for decades 

formally requiring the preparation of 

BCA in the development of major 

Federal regulations, and the courts have 

examined the use of BCA in several 

regulatory contexts. In addition, the 

usefulness of formal BCA in informing 

regulatory policy debates on protecting 

and improving public health, safety, and 

the natural environment has been 

emphasized in the academic literature. 

For example, as explained in seminal 

work by prominent economists Arrow et 

al. (1996a, 1996b), BCA ‘‘can provide an 

exceptionally useful framework for 

consistently organizing disparate 

information, and in this way, it can 

greatly improve the process and, hence, 

the outcome of policy analysis. If 

properly done, BCA can be of great help 

to agencies participating in the 

development of environmental 

regulations . . .’’ (1996b). Arrow et al. 

recommend that ‘‘Benefit-cost analysis 

should be required for all major 

regulatory decisions,’’ and that ‘‘the 

precise definition of ‘major’ requires 

judgment.’’ 

Benefit-cost analyses have been an 

integral part of executive branch 

rulemaking for decades. Presidents 

since the 1970s have issued executive 

orders requiring agencies to conduct 

analysis of the economic consequences 

of regulations as part of the rulemaking 

development process. President Ford’s 

1974 Executive Order (E.O.) 11821 

required government agencies to 

prepare inflation impact statements 

before issuing major regulations.3 These 

inflation impact statements essentially 

turned into benefit-cost analyses based 

on the understanding that a regulation 

would not be truly inflationary unless 

its costs to society exceeded the benefits 

it produced,4 and the E.O. was renamed 

as Economic Impact Statements with 

E.O. 11949 in 1976.5 President Carter’s 

1978 E.O. 12044, Improving 

Government Regulations, included 

formal requirements for conducting 

regulatory analysis at a minimum ‘‘for 

all regulations which will result in (a) 

an annual effect on the economy of $100 

million or more; or (b) a major increase 

in costs or prices for individual 

industries, levels of government or 

geographic regions.’’ 6 Regulatory 

analyses under E.O. 12044 were 

required to contain ‘‘a succinct 

statement of the problem; a description 

of the major alternative ways of dealing 

with the problem that were considered 

by the agency; an analysis of the 

economic consequences of each of these 

alternatives and a detailed explanation 

of the reasons for choosing one 

alternative over the others.’’ 

In 1981, President Reagan issued E.O. 

12291, Federal Regulation, which 

imposed the first requirements for 

conducting formal benefit-cost analysis 

in the development of new major 

Federal regulations. Among its 

provisions, E.O. 12291 explicitly 

required that: ‘‘(a) Administrative 

decisions shall be based on adequate 

information concerning the need for and 

consequences of proposed government 

action; (b) Regulatory action shall not be 

undertaken unless the potential benefits 

to society for the regulation outweigh 

the potential costs to society; (c) 

Regulatory objectives shall be chosen to 

maximize the net benefits to society; (d) 

Among alternative approaches to any 

given regulatory objective, the 

alternative involving the least net cost to 

society shall be chosen; and (e) 

Agencies shall set regulatory priorities 

with the aim of maximizing the 

aggregate net benefits to society, taking 

into account the condition of the 

particular industries affected by 

regulations, the condition of the 

national economy, and other regulatory 

actions contemplated for the future.’’ 7

Under E.O. 12291, major regulations 

included ‘‘any regulation that is likely 

to result in: (1) An annual effect on the 

economy of $100 million or more; (2) A 

major increase in costs or prices for 

consumers, individual industries, 

Federal, State, or local government 

agencies, or geographic regions; or (3) 

Significant adverse effects on 

competition, employment, investment, 

productivity, innovation, or on the 

ability of United States-based 

enterprises to compete with foreignbased enterprises in domestic or export 

markets.’’ 

In 1993, E.O. 12291 was revoked and 

replaced by President Clinton’s E.O. 

12866, Regulatory Planning and Review, 

which is still in effect today. E.O. 12866 


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Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Rules and Regulations 84133 

8While the analytical requirements are the same, 

the dollar thresholds do not exactly coincide 

because the $100 million threshold is not adjusted 

for inflation under E.O. 12866. 

9https://obamawhitehouse.archives.gov/thepress-office/2011/01/18/executive-order-13563- 

improving-regulation-and-regulatory-review. 

10Enforcing the Regulatory Reform Agenda (82 

FR 12285, March 1, 2017). 

11https://www.govinfo.gov/content/pkg/FR-2017- 

03-31/pdf/2017-06576.pdf. 

12https://obamawhitehouse.archives.gov/omb/ 

circulars_a004_a-4/. Circular A–4 refines and 

replaces OMB’s ‘‘best practices’’ document of 1996, 

which was issued as a guidance in 2000 and 

reaffirmed in 2001. All these versions of the 1996 

document were superseded by Circular A–4. 

13https://www.govinfo.gov/content/pkg/FR-2017- 

03-31/pdf/2017-06576.pdf. 

14https://obamawhitehouse.archives.gov/omb/ 

circulars_a004_a-4/. 

15https://www.epa.gov/environmentaleconomics/guidelines-preparing-economicanalyses. 

16The EPA is in the process of a periodic update 

of the Guidelines. The EPA anticipates that among 

the changes within this update, the current Section 

9.2.3.3, ‘‘Impacts on employment’’, will be replaced 

with a discussion based on more recent literature 

and feedback from the Economy Wide Modeling 

Science Advisory Board Panel. For more details 

regarding Chapter 9, see: https://www.epa.gov/sites/ 

production/files/2017-09/documents/ee-0568- 

09.pdf. For more details regarding the update of the 

Guidelines in general, see: https://yosemite.epa.gov/ 

sab/sabproduct.nsf//

LookupWebProjectsCurrentBOARD/

30D5E59E8DC91C2285258403006EEE00

?OpenDocument. 

requires that for all significant 

regulatory actions pursuant to Section 

3(f), an agency provide ‘‘an assessment 

of the potential costs and benefits of the 

regulatory action, including an 

explanation of the manner in which the 

regulatory action is consistent with a 

statutory mandate . . .’’ For regulatory 

actions meeting criteria listed under 

Section 3(f)(1)—that is, any regulatory 

action that is ‘‘likely to result in a rule 

that may . . . have an annual effect on 

the economy of $100 million or more or 

adversely affect in a material way the 

economy, a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local, or tribal governments or 

communities’’—E.O. 12866 further 

requires that this assessment include a 

quantification of benefits and costs to 

the extent feasible. In addition, E.O. 

12866 states that, to the extent 

permitted by law, agencies ‘‘should 

assess both the costs and the benefits of 

the intended regulation and, recognizing 

that some costs and benefits are difficult 

to quantify, propose or adopt a 

regulation only upon a reasoned 

determination that the benefits of the 

intended regulation justify its costs’’; 

‘‘in choosing among alternative 

regulatory approaches . . . should 

select those approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety, and other advantages; 

distributive impacts; and equity), unless 

a statute requires another regulatory 

approach’’; and that ‘‘[e]ach agency 

shall base its decisions on the best 

reasonably obtainable scientific, 

technical, economic, and other 

information concerning the need for, 

and consequences of, the intended 

regulation.’’ 

In 1995, the Unfunded Mandates 

Reform Act of 1995 (UMRA) included 

analytical requirements for all 

regulatory actions that include federal 

mandates ‘‘that may result in the 

expenditure by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

(adjusted annually for inflation) in any 

one year.’’ An action contains a federal 

mandate if it imposes an enforceable 

duty on state, local or tribal 

governments, or the private sector. The 

analytical requirements under UMRA 

are similar to the analytical 

requirements under E.O. 12866, and 

thus the same analysis may permit 

compliance with both analytical 

requirements.8

More recent Executive Orders also 

reaffirm the requirements and principles 

in E.O. 12866. E.O. 13563, issued in 

2011 and still in effect today, reaffirms 

the requirements and other principles 

and definitions in E.O. 12866 and 

embraces benefit-cost analysis: ‘‘In 

applying these principles, each agency 

is directed to use the best available 

techniques to quantify anticipated 

present and future benefits and costs as 

accurately as possible.’’ 9 More recently, 

E.O. 13777, issued in 2017, directs 

agencies to identify regulations that 

‘‘impose costs that exceed benefits.’’ 10

E.O. 13783, also issued in 2017, 

similarly reaffirms the importance of 

benefit-cost analysis: ‘‘In order to ensure 

sound regulatory decision-making, it is 

essential that agencies use estimates of 

costs and benefits in their regulatory 

analyses that are based on the best 

available science and economics.’’ 11

The Office of Management and 

Budget’s (OMB’s) Circular A–4 (OMB 

2003), which remains in effect today, 

provides guidance to Federal agencies 

on the development of regulatory 

analysis as required under E.O. 12866 

and a variety of related authorities.12 In 

developing Circular A–4, OMB first 

developed a draft that was subject to 

public comment, interagency review, 

and external peer review. As 

summarized in E.O. 13783, ‘‘. . . OMB 

Circular A–4 . . . was issued after peer 

review and public comment and has 

been widely accepted for more than a 

decade as embodying the best practices 

for conducting regulatory cost-benefit 

analysis.’’ 13 The document encourages 

transparency in practices, including the 

expression of costs and benefits in 

monetary units that allow for the 

evaluation of ‘‘incremental benefits and 

costs of successively more stringent 

regulatory alternatives’’ such that an 

agency can ‘‘identify the alternative that 

maximizes net benefits.’’ 14

EPA’s Guidelines for Preparing 

Economic Analyses (hereafter, the 

Guidelines) 15 complements Circular A– 

4 by providing the Agency with more 

detailed peer-reviewed guidance on 

how to conduct BCA and other types of 

economic analyses for both 

environmental regulatory actions and 

non-regulatory management strategies, 

with the intent of improving compliance 

with E.O. 12866 and other executive 

orders and statutory requirements (e.g., 

Small Business Regulatory Enforcement 

Fairness Act of 1996 provisions). The 

Guidelines are updated periodically— 

building on work issued in 1983 (then 

titled Guidelines for Performing 

Regulatory Impact Analysis), 2000, and 

most recently in 2010—to account for 

growth and development of economic 

tools and practices. The Guidelines 

establish a scientific framework for 

analyzing the benefits, costs, and other 

economic impacts of regulations and 

policies, including assessing the 

distribution of costs and benefits among 

various segments of the population. In 

addition to presenting the wellestablished scientific foundations for 

economic analysis, the Guidelines 

incorporate recent advances in 

theoretical and applied work in the field 

of environmental economics. Updates of 

the Guidelines are led by the EPA’s 

National Center for Environmental 

Economics in consultation with 

economists from across the Agency and 

OMB. All chapters undergo an external 

peer review, either through EPA’s 

Science Advisory Board or through 

independent reviews by external 

experts, prior to be being finalized.16

Given the history described above 

pertaining to the use of BCA by 

executive agencies, and given that 

several statutes, including the CAA, 

include provisions that require some 

form of cost consideration, the federal 

courts have also developed significant 

case law regarding regulatory cost 

consideration and the usefulness of 

BCA. This case law addresses when, 

and if, such use is required or 

permissible and how it may be 

employed in reasoned decision-making. 


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17See, e.g., Whitman v. Am. Trucking Ass’ns, 531 

U.S. 457 (2001) (holding that Section 109(b) of the 

CAA unambiguously barred cost considerations 

when setting the National Ambient Air Quality 

Standards. 

18 Id. 

19A regulatory impact analysis, or ‘‘regulatory 

analysis’’ for brevity, as prepared under E.O. 12866, 

consists of a benefit-cost analysis and any related 

cost-effectiveness analyses and assessments of 

economic and distributional impacts (OMB 2003). 

20See, e.g., U.S. EPA, Regulatory Impact Analysis 

of the Proposed Revisions to the National Ambient 

Air Quality Standards for Ground-Level Ozone 

(2014), https://www3.epa.gov/ttn/ecas/regdata/ 

RIAs/20141125ria.pdf. 

As a general matter, while certain 

statutory provisions may prohibit 

reliance on BCA or other methods of 

cost consideration in decision-making,17

such provisions do not preclude the 

Agency from providing additional 

information regarding the impacts of a 

proposed or final rule to the public. For 

example, while the CAA prohibits the 

EPA from considering cost when 

establishing or revising requisite 

National Ambient Air Quality Standards 

(NAAQS) for criteria pollutants,18 the 

EPA nonetheless provides Regulatory 

Impact Analyses (RIAs) 19 to the public 

for these rulemakings.20

The Supreme Court has held that 

agencies may conduct and consider a 

BCA even when a statute does not 

explicitly require one. In Entergy Corp. 

v. Riverkeeper, Inc., 556 U.S. 208, 222– 

224 (2009), the Supreme Court clarified 

that neither American Textile Mfrs. Inst. 

V. Donovan, 452 U.S. 490 (1981) 

(American Textile Mfrs.) nor Whitman 

v. Am. Trucking Ass’ns, 531 U.S. 457 

(2001) (American Trucking), stands for 

the broad proposition that statutory 

silence in regard to a potential factor 

always implies prohibition of 

consideration of that factor. Therefore, 

the Supreme Court concluded that the 

EPA was permitted to use BCA in 

determining the content of regulations 

promulgated under Clean Water Act 

section 1326(b). The Court reasoned 

‘‘that [CWA] § 1326(b)’s silence is meant 

to convey nothing more than a refusal 

to tie the agency’s hands as to whether 

cost-benefit analysis should be used, 

and if so to what degree.’’ Id. at 222; see 

also id. at 212, 219–20, 226. 

The Supreme Court noted that its 

decisions in American Trucking and 

American Textile Mfrs. ‘‘do not 

undermine this conclusion.’’ 556 U.S. at 

223. The Court highlighted that in 

American Trucking, it had held that the 

text of section 109 of the Clean Air Act, 

‘‘interpreted in its statutory and 

historical context . . . unambiguously 

bars cost considerations’’ when air 

quality standards are set pursuant to 

that provision. American Trucking, 531 

U.S. at 471, quoted in Entergy Corp., 556 

U.S. at 223. The Entergy Corp. Court 

further elaborated that ‘‘[t]he relevant 

’statutory context’ [in American 

Trucking] included other provisions in 

the [CAA] that expressly authorized 

consideration of costs, whereas § 109 

did not.’’ 556 U.S. at 233. The Court 

concluded, not that American Trucking 

stands for the proposition that statutory 

silence always unambiguously bars cost 

consideration, but, rather that American 

Trucking ‘‘stands for the rather 

unremarkable proposition that 

sometimes statutory silence, when 

viewed in context, is best interpreted as 

limiting agency discretion.’’ 556 U.S. at 

223. The Court further noted that in 

American Textile, the Court had relied, 

in part, on the absence of mention of 

BCA in the statute to hold that the 

agency was not required to conduct a 

BCA when setting certain health and 

safety standards. 556 U.S. at 223. 

‘‘[U]nder Chevron, that an agency is not 

required to [engage in cost-benefit 

analysis] does not mean that an agency 

is not permitted to do so.’’ Id. Thus, the 

Supreme Court has confirmed that a 

statute need not have explicitly required 

that the agency conduct a BCA in its 

decision-making process for the agency 

to do so. 

The Supreme Court additionally 

acknowledged in Entergy Corp. that 

‘‘whether it is ‘reasonable’ to bear a 

particular cost may well depend on the 

resulting benefits.’’ 556 U.S. at 225–226. 

This concept was further elaborated 

upon by the Court in Michigan v. EPA, 

which held, in the context of the term 

‘‘appropriate and necessary’’ contained 

in Section 112(n)(1)(A) of the CAA, that 

the term required consideration of cost. 

135 S. Ct. 2699, 2706 (2015). In doing 

so, the Supreme Court stated that ‘‘[o]ne 

would not say that it is even rational, 

never mind ‘appropriate,’ to impose 

billions of dollars in economic costs in 

return for a few dollars in health or 

environmental benefits’’, concluding 

that ‘‘[n]o regulation is ‘appropriate’ if it 

does significantly more harm than 

good.’’ Id. at 2707. The D.C. Circuit 

recently echoed this concept in Mingo 

Logan Coal Co. v. EPA. While the D.C. 

Circuit panel ultimately concluded that 

the cost issue had been forfeited by 

petitioners, in response to then Judge 

Kavanaugh’s dissent which argued that 

cost consideration should be required, 

the panel stated, ‘‘[i]ndeed, we do not 

quibble with his general premise—and 

that of the many legal luminaries he 

cites—that an agency should generally 

weigh the costs of its action against its 

benefits.’’ 829 F.3d 710, 723 (D.C. Cir. 

2016). In general, when cost 

consideration is either required or 

permitted by the CAA, the courts have 

not mandated a specific approach for 

cost consideration but have granted the 

Agency broad discretion in determining 

its methodology. See Michigan, 135 S. 

Ct. at 2711 (‘‘We need not and do not 

hold that the law unambiguously 

required the Agency, when making this 

preliminary estimate, to conduct a 

formal cost-benefit analysis in which 

each advantage and disadvantage is 

assigned a monetary value. It will be up 

to the Agency to decide (as always, 

within the limits of reasonable 

interpretation) how to account for 

cost.’’); see also Sierra Club v. Costle, 

657 F.2d 298, 345 (D.C. Cir. 1981) 

(‘‘[S]ection 111(a) explicitly instructs 

the EPA to balance multiple concerns 

when promulgating a NSPS.’’); id. at 321 

(‘‘The text gives the EPA broad 

discretion to weigh different factors in 

setting the standard.’’); Lignite Energy 

Council v. EPA, 198 F.3d 930, 933 (D.C. 

Cir. 1999) (‘‘Because section 111 [of the 

CAA] does not set forth the weight that 

[should be] assigned to each of these 

factors, we have granted the agency a 

great degree of discretion in balancing 

them’’); Husqvarna AB v. EPA, 254 F.3d 

195, 200 (D.C. Cir. 2001) (‘‘Section 213 

[of the CAA] . . . simply directs the 

EPA to consider cost. . . . Because 

section 213 does not mandate a specific 

method of cost analysis, we find 

reasonable the EPA’s choice to consider 

costs on the per ton of emissions 

removed basis.’’). 

Additionally, courts have noted the 

usefulness of BCA and have utilized the 

information provided therein to inform 

their analysis when reviewing agency 

regulations. Several of these cases 

utilize information from agency-created 

BCAs and/or RIAs as evidence that an 

agency ignored alternatives or acted in 

an arbitrary and capricious manner 

when taking action. 

For example, in Advocates for 

Highway and Auto Safety v. FMCSA, 

429 F.3d. 1136 (D.C. Cir. 2005), the D.C. 

Circuit relied in part on a BCA in 

invalidating, as arbitrary and capricious, 

a final rule promulgated by Federal 

Motor Carrier Safety Administration 

(FMCSA) intended to ensure that 

drivers of commercial motor vehicles 

received adequate training. In its 

analysis, the D.C. Circuit highlighted an 

incongruity between methods of 

training shown to be effective and the 

final rule, noting that ‘‘[f]rom a purely 

economic perspective, the agency’s 

disregard of the Adequacy Report 

[containing a BCA] is baffling in light of 

the evidence in the record.’’ Id. at 1146. 

The D.C. Circuit pointed to a training 

regimen that ‘‘according to the agency’s 


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21See EPA, Evaluation of Existing Regulations (82 

FR 17793). All public comments are accessible 

online in our docket on the Regulations.gov website 

identified by Docket ID No. EPA–HQ–OA–2017– 

0190. 

22Available at: https://www.epa.gov/ 

environmental-economics/administrator-wheelermemorandum-increasing-consistency-andtransparency. 

own calculations, [would] produce 

benefits far in excess of costs.’’ Id. 

Noting the agency’s findings that ‘‘the 

program’s estimated 10–year cost of 

between $4.19 billion to $4.51 billion 

would yield a benefit ranging from $5.4 

billion to $15.27 billion, depending on 

analytic assumptions,’’ the court 

concluded that the BCA for the rule 

‘‘lends no support to FMCSA’s position. 

In the final rule, FMCSA says 

practically nothing about the projected 

benefits.’’ Id. 

In Public Citizen, Inc. v. Mineta, 340 

F.3d 39 (2nd Cir. 2003), the Second 

Circuit determined that a National 

Highway Traffic Safety Administration 

(NHTSA) rule regarding tire pressure 

monitoring system (TPMS) requirements 

was arbitrary and capricious, as the 

NHTSA BCA showed that alternatives 

would be safer and more cost-effective. 

The court stated that it may ‘‘be difficult 

to weigh economic costs against safety 

benefits. But the difficulty of the task 

does not relieve the agency of its 

obligation to perform it under [certain 

vehicle safety laws] and State Farm.’’ Id. 

at 58 (citing Motor Vehicles Mfrs. Ass’n 

v. State Farm Mut. Auto. Ins. Co., 463 

U.S. 29 (1983)). The Second Circuit 

observed that NHTSA ‘‘instead, presents 

us with a rulemaking record that does 

not explain why the costs saved were 

worth the benefits sacrificed.’’ Id. The 

court noted that the BCA ‘‘discloses that 

the added cost for a system that worked 

all of the time, rather than half of the 

time, was less than $10 per car, and that 

the adoption of the four-tire, 25 percent 

standard alone was the most cost 

effective means of preventing crashes 

caused by significantly under-inflated 

tires.’’ Id. 

Finally, in NRDC v. EPA, 824 F.2d 

1258 (1st Cir. 1987), the First Circuit 

vacated, in part, and remanded rules for 

long-term disposal of high-level 

radioactive waste under Nuclear Waste 

Policy Act of 1982 based in part on the 

Agency’s selection of a 1,000-year 

design criterion rather than a longerterm one. The court determined that it 

was unreasonable agency action to not 

adopt cheap methods of increasing 

protections. In doing so, the court 

observed that ‘‘[l]ikewise, EPA’s Final 

[RIA] of 40 CFR part 191 demonstrates 

that more rigorous site selection could 

produce sites with such impermeable 

geologic media that compliance with the 

individual protections for a much longer 

duration would not even require the 

extra cost of ‘very good’ engineered 

canisters.’’ Id. at 1289. 

B. Summary of the Proposed Rule 

With the history discussed above in 

mind as a backdrop and following E.O. 

13777 noted above, the EPA opened a 

public docket 21 in April 2017 to solicit 

feedback and identify regulations that 

‘‘impose costs that exceed benefits.’’ 

Among the public comments received, a 

large cross-section of industry 

stakeholders stated that the agency 

either underestimated costs, 

overestimated benefits, or evaluated 

benefits and costs inconsistently in its 

rulemakings. Per E.O. 13777 and based 

on these public comments, the EPA 

decided to take further action to 

evaluate opportunities for reform. 

In June 2018, the EPA issued an 

Advance Notice of Proposed 

Rulemaking (ANPRM), ‘‘Increasing 

Consistency and Transparency in 

Considering Costs and Benefits in the 

Rulemaking Process’’ (83 FR 27524, 

June 13, 2018), to solicit public input on 

potential approaches for increasing 

consistency and transparency in how 

the EPA considers benefits and costs in 

the rulemaking process. Informed by the 

public comments received on that 

ANPRM, on May 13, 2019, the 

Administrator issued a memorandum 22

to EPA’s Assistant Administrators 

announcing the intention to propose 

statute-specific rules that outline how 

consistency and transparency concepts 

will be implemented in future 

rulemakings. The memorandum 

outlined the following principles for 

developing these regulatory proposals, 

consistent with applicable laws and 

regulations: Ensuring that the Agency 

balances benefits and costs in regulatory 

decision-making; increasing consistency 

in the interpretation of statutory 

terminology; providing transparency in 

the weight assigned to various factors in 

regulatory decisions; and promoting 

adherence to best practices in 

conducting the technical analysis used 

to inform decisions. 

In June 2020, the EPA issued a Notice 

of Proposed Rulemaking (NPRM), 

‘‘Increasing Consistency and 

Transparency in Considering Costs and 

Benefits in the Rulemaking Process’’ (85 

FR 35612, June 11, 2020). The proposed 

rule was the first statute-specific 

rulemaking in this effort. The EPA 

proposed to codify the procedural 

requirements governing the 

development of BCA, including risk 

assessments used as inputs to the BCA, 

for significant rulemakings conducted 

under the CAA, and proposed 

additional procedural requirements to 

increase transparency in the 

presentation of the benefits and costs 

resulting from significant CAA 

regulations. Together, these 

requirements were proposed to ensure a 

consistent approach to the EPA’s BCAs 

under the CAA and to provide 

transparency by requiring the provision 

of relevant information in all significant 

rulemakings. In the proposed rule, the 

EPA also solicited comment on how the 

Agency should take into consideration 

the results of a BCA in future 

rulemakings under specific provisions 

of the CAA, among other topics. 

Discussion of topics where the EPA 

solicited comment, and comments and 

responses where EPA has made 

modifications in the final rule, is 

included in Section V of this preamble. 

Responses to the rest of the comments 

are provided in the Response to 

Comments Document. 

IV. Description of the Final Rule 

This final rule consists of three 

elements. In the first element, it requires 

the EPA to prepare a BCA for all future 

significant proposed and final 

regulations promulgated under the CAA 

and to consider the BCA in the decisionmaking process when permitted for 

consideration under the specific 

provision of the CAA under which the 

future regulation is promulgated. The 

EPA believes that in keeping with 

OMB’s Circular A–4 and Executive 

Order 12866 that the requirement to 

prepare a BCA would create consistency 

with well-understood and established 

processes and determinations for what 

constitutes a ‘‘significant’’ rulemaking. 

Therefore, in this final rule, a significant 

regulation will include any proposed or 

final regulation that is determined to be 

a ‘‘significant regulatory action’’ 

pursuant to Section 3(f) E.O. 12866 or is 

otherwise designated as significant by 

the Administrator. Consideration of the 

results of BCA in regulatory decisionmaking is also consistent with the 

requirements of E.O. 12866. If the 

provision or provisions under which the 

rule is promulgated prohibit the 

consideration of the BCA, the final rule 

requires the Agency to identify the 

specific provision that bars such 

consideration. 

The second element of the final rule 

requires EPA to develop the BCA using 

the best available scientific information 

and in accordance with best practices 

from the economic, engineering, 

physical, and biological sciences. The 

final rule codifies general best practices 

consistent with the existing guidances 

that EPA relies upon to develop high 


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quality regulations (e.g., EPA’s 

Guidelines for Preparing Economic 

Analyses (hereafter ‘‘Guidelines’’) and 

the Office of Management and Budget’s 

(OMB) Circular A–4), and also requires 

that risk assessments used to support 

BCAs should follow best 

methodological practices for risk 

characterization/assessment. The final 

rule does not replace any detailed 

guidance for Agency analysis, including 

Executive Orders (e.g., E.O. 12866), 

OMB Circulars (e.g., Circular A–4), and 

EPA documents (e.g., Guidelines for 

Preparing Economic Analyses). 

The specific best practices that are 

required in this final rule are as follows. 

The BCA must include a statement of 

need, an examination of regulatory 

options which would contribute to the 

stated objectives of the CAA, and to the 

extent feasible, an assessment of all 

benefits and costs of these regulatory 

options relative to the baseline scenario. 

The baseline used in the BCA must 

appropriately consider relevant factors 

and rely on transparent and reasonable 

assumptions. In preparing the BCA, the 

Agency must rely on the use of a 

framework for estimating costs and 

benefits that is appropriate for the 

characteristics of the regulation being 

evaluated and must provide an 

explanation for the approach adopted. 

In estimating costs and benefits, the 

Agency must consider how costs and 

benefits may be affected by consumer 

and producer behavior both in the 

baseline and in the policy scenarios. 

The BCA must include, to the extent 

supported by scientific literature as well 

as practicable in a given rulemaking: A 

quantification of all benefits; a 

monetization of benefits that follows 

well-defined economic principles using 

well-established economic methods, 

appropriate data and/or studies; and a 

qualitative characterization of benefits 

that cannot be quantified or monetized. 

Regarding the process of selecting 

health benefit endpoints for 

quantification, the final rule requires 

that this process will be based upon 

scientific evidence that indicates there 

is a clear causal or likely causal 

relationship between pollutant exposure 

and effect, and that sufficient data and 

understanding allows the agency to 

reasonably model the anticipated 

change in that effect in response to 

changes in environmental quality or 

exposures expected as a result of the 

regulation under analysis. The 

evaluation of the scientific evidence 

necessary to select and quantify health 

benefit endpoints should follow the 

systematic review process, must 

emphasize transparency and 

replicability, and give more weight to 

higher quality data, models, and/or 

analyses that have been peer reviewed. 

The models used to quantify the 

concentration-response relationships 

should take into account the breadth 

and quality of the available evidence 

regarding the nature and magnitude of 

the risk to the populations affected by 

the regulation. The presentation of 

results should characterize the 

sensitivity of the choice of the 

concentration-response function on the 

magnitude and the uncertainty 

associated with estimated benefits. 

The BCA must include an 

identification of uncertainties 

underlying the estimation of both 

benefits and costs and, to the extent 

feasible and appropriate, quantitatively 

analyze those that are most influential; 

and must present benefits and cost 

estimates in ways that convey their 

uncertainty, including acknowledging 

unquantified benefits and costs, where 

appropriate. The BCA must include a 

reasoned explanation for the scope and 

specific quantitative or qualitative 

methods chosen to analyze 

uncertainties. 

The final rule also requires that the 

overall results of the BCA (benefits, 

costs, and net benefits of each regulatory 

option evaluated in the BCA) be 

presented and described in a manner 

designed to be objective, 

comprehensive, reproducible to the 

extent reasonably possible, and easily 

understood by the public. To the extent 

permitted by law, the Agency must 

ensure that all information (including 

data and models) used in the 

development of the BCA is publicly 

available. If data and models are 

proprietary, the Agency must make 

available, to the extent practicable, the 

underlying inputs and assumptions 

used, equations, and methodologies 

used by EPA. The BCA shall provide 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. 

The third element of the final rule 

imposes additional procedural 

requirements to increase transparency 

in the presentation and consideration of 

the BCA results. Specifically, the rule 

requires the preamble of significant 

proposed and final CAA regulations to 

include a section that contains a 

summary presentation of the overall 

BCA results for the rule, including total 

benefits, costs, and net benefits. Within 

this summary presentation, if any 

benefits and costs accrue to non-U.S. 

populations they must be reported 

separately to the extent possible. This 

section of the preamble should also 

provide an additional reporting of the 

public health and welfare benefits that 

pertain to the specific objective(s) of the 

CAA provision(s) under which the rule 

is promulgated and a transparent 

presentation of how specific costs 

contemplated in the CAA provision(s) 

under which the rule is promulgated (to 

the extent specified), relate to total 

costs, to the extent possible. Finally, 

when the CAA statutory provision or 

provisions under which the rule is 

promulgated permit consideration of the 

BCA, this section of the preamble 

should contain a description of how the 

Agency considered the BCA. 

Together, these requirements will 

help ensure that the EPA implements its 

statutory obligations under the CAA 

with high quality regulations in a way 

that is consistent and transparent and 

that these procedures are made 

enforceable upon the Agency. The 

provisions of the final rule codify into 

regulation best practices for the 

preparation, development, presentation, 

and consideration of BCA as articulated 

in the principles and requirements of 

Executive Order 12866. 

V. Responses to Significant Comments 

The EPA had a 45-day public 

comment period on the proposed rule, 

and also hosted a virtual public hearing 

on July 1, 2020, which included 50 

speakers registered to provide 

testimony. In total, the EPA received 

24,740 public comments, including 

several mass mail campaigns and 513 

unique comment letters (including 

transcripts from the July 1 virtual public 

hearing). Of these, a total of 143 letters 

provided detailed, substantive 

comments. Commenters included 

environmental and health advocacy 

organizations, industry trade groups, 

academics, and State, Local, and Tribal 

governments. 

A. Purpose of the Action 

Commenters supporting the EPA’s 

proposed rulemaking argued that the 

proposed requirements, if finalized, 

would provide more clarity and 

transparency, make common sense, 

enhance public accountability and 

understanding of the scientific inputs 

that drive the EPA’s decisions, improve 

the integrity of the rulemaking process, 

and lead to better public policy. 

Commenters also stated that 

codification of best practices for 

conducting and presenting BCA would 

standardize procedures and would 

achieve consistency over time and 

provide for better transparency. Some 

commenters further argued the rule 

would deliver continued environmental 

improvement as well as a more 


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predictable and achievable set of 

outcomes for the regulated community. 

In addition, a commenter stated that 

EPA’s proposed rule, if finalized, would 

supersede, rather than duplicate, 

existing non-justiciable, non-statutory 

sources of guidance for Agency analysis, 

including EOs (e.g., E.O. 12866), OMB 

Circulars (e.g., Circular A–4), and EPA 

documents (e.g., EPA’s Guidelines). 

Commenters opposed to the proposed 

rule argued that the EPA does not 

explain how any of the Agency’s 

previous BCAs have fallen short of any 

applicable legal requirements or failed 

to deliver on their purported policy 

benefits. Commenters stated that EPA 

has also not specifically detailed how 

the Agency’s use of its own economic 

guidance (e.g., EPA’s Guidelines) and 

OMB’s Circular A–4 guidance has 

resulted in inadequate, inconsistent, or 

nontransparent practices or has 

compromised the Agency’s abilities and 

disagreed with the need for a 

rulemaking. These commenters said that 

the EPA’s proposal does not make the 

case that such shortcomings are so 

widespread among the EPA’s existing 

BCA practices that the proposal was 

necessary. These commenters further 

stated the EPA does not identify any 

deficiencies in existing laws, orders, 

and guidelines, and, therefore, did not 

fully demonstrate how the proposed 

changes will address the alleged 

problem. Some commenters further 

stated that the EPA’s proposed rule 

creates an excessively burdensome set 

of procedures for completing a BCA that 

would be difficult for the agency to 

satisfy and would be prohibitively 

costly to complete. One commenter 

stated that increasing transparency and 

consistency in the analysis upon which 

regulatory decisions are based should 

not come at the cost of undermining the 

flexibility and accuracy needed for 

regulatory decision-making on the wide 

variety of air pollutants and sources 

regulated under the CAA. The 

commenter added that many of the 

consistency and transparency goals in 

the proposal are already being met 

through existing EPA practices, 

particularly requirements in E.O. 12866, 

and contended that setting a 

prescriptive process for conducting 

BCAs will lead to inflexibility that 

could prove detrimental to public health 

and the environment. One commenter 

argued that, given the clear credibility 

and reliability of the peer-reviewed and 

longstanding methodologies for 

developing BCAs (as acknowledged by 

the EPA itself throughout the proposal), 

it was arbitrary and capricious for the 

EPA to constrain its methodologies. A 

few commenters objected to the 

proposal’s approach, as they believed 

that a regulation establishes rigid 

practices that then make it difficult for 

the EPA to readily adopt future 

improvements to best practices. On this 

issue, a few commenters further 

suggested that because analytical 

requirements evolve, the EPA should 

create a requirement to periodically 

update the best practices through a 

public notice and comment rulemaking 

process. 

The EPA disagrees with commenters 

that this rule is unnecessary. The EPA 

continues to believe that codifying best 

practices into regulation provides 

additional certainty and increases the 

consistency and transparency of its 

analysis of the benefits and costs of 

significant regulations under the CAA. 

The requirements promulgated in this 

action address the comments, by many, 

that the Agency has not consistently 

estimated, presented, and considered 

benefits and costs in line with best 

practices and principles set forth in 

longstanding executive orders governing 

regulatory analysis. Some commenters 

asserted that these inconsistencies were 

not identified by EPA and were not so 

widespread among the EPA’s existing 

BCA practices that the proposal was 

necessary. However, EPA has not had 

procedural enforceable regulations in 

place to ensure consistency in its past 

BCA practices. To the extent that 

commenters assert that EPA’s past 

practice has been consistent and 

transparent, it is not due to an 

enforceable standardized approach that 

would ensure such a result. Other 

commenters have noted the contrary 

belief, that EPA’s practices in regard to 

BCA have indeed been inconsistent and 

have lacked transparency. Without 

enforceable procedural regulations for 

BCA, future regulations may be 

promulgated without consideration of, 

and public accountability concerning, 

their costs and benefits. Thus, the EPA 

has determined that the Final Rule is 

necessary to ensure that BCA practices 

are implemented in a consistent fashion 

prospectively. The requirements 

provide a practical framework to ensure 

that the BCA of significant CAA 

regulations follow best practices and 

complement more detailed existing 

guidances the EPA relies upon (e.g., 

OMB’s Circular A–4 and EPA’s 

Guidelines) to develop quality 

regulations consistent with the CAA, 

and that these procedures are made 

enforceable upon the Agency. The final 

rule does not replace detailed guidance 

for Agency analysis, including 

Executive Orders (e.g., E.O. 12866), 

OMB Circulars (e.g., Circular A–4), and 

EPA documents (e.g., EPA’s Guidelines). 

B. Authority To Promulgate a 

Procedural Rule 

The EPA received comments on its 

legal authority to promulgate the 

proposed rule. We respond to some of 

the major comments below and to the 

rest in Chapter 4 of the Response to 

Comments Document. In particular, the 

EPA received comments that Section 

301(a)(1) of the CAA both does and does 

not provide adequate authority to 

promulgate the proposed rule. 

Commenters asserted that Section 

301(a)(1) explicitly authorizes the EPA 

Administrator ‘‘to prescribe such 

regulations as are necessary to carry out 

his functions’’ under the statute, noting 

the D.C. Circuit holding that Section 

301(a)(1) ‘‘is sufficiently broad to allow 

the promulgation of rules that are 

necessary and reasonable to effect the 

purposes of the Act.’’ NRDC v. EPA, 22 

F.3d 1125, 1148 (D.C. Cir. 1994). 

Commenters further noted how 

consistency and transparency advance 

the goals of the CAA. Other commenters 

argued that Section 301(a)(1) was not an 

adequate authority as the rule was not 

necessary, noting that Section 301(a)(1) 

does not provide the Administrator 

‘‘carte blanche authority to promulgate 

any rules, on any matters relating to the 

Clean Air Act, in any manner that the 

Administrator wishes,’’’ and only 

permits ‘‘the promulgation of rules that 

are necessary and reasonable to effect 

the purposes of the Act.’’ Id. 

The EPA agrees with the commenters 

stating that Section 301(a)(1) of the CAA 

provides adequate authority for this 

final rulemaking. The EPA has 

determined that the authority in Section 

301(a)(1) extends to internal agency 

procedures that increase the Agency’s 

ability to provide consistency and 

transparency to the public in regard to 

the rulemaking process under the CAA. 

In NRDC, the court stated that 

‘‘[a]lthough section 301 does not 

provide the Administrator ‘carte 

blanche authority to promulgate any 

rules, on any matter relating to the 

Clean Air Act, in any manner that the 

Administrator wishes,’ Spencer County, 

600 F.2d at 873, it is sufficiently broad 

to allow the promulgation of rules that 

are necessary and reasonable to effect 

the purposes of the Act.’’ Id. Further 

finding that ‘‘[w]here, as here, Congress 

has erected no clear impediment to the 

issuance of binding rules, section 301 

takes the agency as far as the second 

step of Chevron. Once there, the EPA 

provided a reasoned explanation for 

resorting to rulemaking.’’ Id. Likewise, 

the Agency is not aware of any clear 


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impediment to this rulemaking and this 

preamble provides a reasoned 

explanation of the purpose and need for 

this rulemaking. 

The Agency believes that the 

information provided as a result of the 

procedural requirements of this rule 

will increase transparency and 

consistency across CAA rulemakings; 

provide the public with additional 

information in the CAA rulemaking 

process; and provide the Agency with 

supplemental information for use by the 

Agency when it is appropriate to be 

considered. These outcomes will better 

allow the Agency to fulfill the purpose 

described in Section 101(b)(1) of the 

CAA ‘‘to protect and enhance the 

quality of the Nation’s air resources so 

as to promote the public health and 

welfare and the productive capacity of 

its population’’. Further, Section 101(c) 

of the CAA states that ‘‘a primary goal 

of [the Act] is to encourage or otherwise 

promote reasonable Federal, State, and 

local governmental actions, consistent 

with the provisions of [the] Act, for 

pollution prevention.’’ As noted above, 

the Supreme Court has stated that 

‘‘reasonable regulation ordinarily 

requires paying attention to the 

advantages and the disadvantages of 

agency decisions.’’ Michigan v. EPA, 

135 U.S. 2699, 2707 (2015). The 

information provided as a result of the 

procedural requirements of this rule 

will be in addition to the information 

provided by other methodologies and 

analyses as directed by specific CAA 

statutes and regulations. Such an 

approach is consistent with reasonable 

rulemaking standards. 

The EPA also received public 

comments asking for clarification as to 

whether the procedures in this final rule 

are enforceable against the Agency. The 

EPA received comments arguing that the 

procedures in this final rule are 

enforceable against the agency and 

comments that such procedures would 

not be and asking for clarification. The 

EPA agrees with commenters asserting 

that the procedures in this final rule are 

enforceable against the Agency. 

Generally, a court reviews an agency’s 

compliance with its regulations, even 

where the regulatory requirements go 

beyond what is required by statute. See, 

e.g., Service v. Dulles, 354 U.S. 363, 388 

(1957) (‘‘While . . . the Secretary was 

not obligated to impose upon himself 

these more rigorous substantive and 

procedural standards, neither was he 

prohibited from doing so, as we have 

already held, and having done so he 

could not, so long as the Regulations 

remained unchanged, proceed without 

regard to them.’’). See generally Wright 

& Miller, 32 FED. PRAC. & PROC. 

JUDICIAL REVIEW § 8165 (1st ed. Oct. 

2020 Update) (‘‘One of the most firmly 

established principles in administrative 

law is that an agency must obey its own 

rules.’’). See also, e.g., United States v. 

Nixon, 418 U.S. 683, 696 (1974) (‘‘So 

long as this regulation remains in force 

the Executive Branch is bound by it, and 

indeed the United States as sovereign 

composed of the three branches is 

bound to respect and to enforce it.’’); 

Vitarelli v. Seaton, 359 U.S. 535, 540 

(1959); United States ex rel. Accardi v. 

Shaughnessy, 347 U.S. 260, 266–67 

(1954). Indeed, many courts have 

enforced non-legislative procedural 

rules against the agency. See, e.g., 

Morton v. Ruiz, 415 U.S. 199, 235 (1974) 

(enforcing an agency manual even 

though the manual was not a 

‘‘legislative rule’’ but ‘‘solely an 

internal-operations brochure intended 

to cover policies that do not relate to the 

public,’’ because ‘‘[b]efore the BIA may 

extinguish the entitlement of these 

otherwise eligible beneficiaries, it must 

comply, at a minimum, with its own 

internal procedures.’’); NRDC v. Perry, 

940 F.3d 1072, 1077 (9th Cir. 2019). 

Thus, the Agency believes that this 

Final Rule is binding upon the Agency 

for significant CAA regulations, and that 

EPA’s compliance with these procedural 

requirements is subject to judicial 

review in challenges to such 

rulemakings. 

Finally, the EPA received comments 

that the proposed rule was a procedural 

rule and comments, to the contrary, that 

the proposed rule was non-procedural 

because it altered the rights and 

interests of parties beyond EPA. The 

EPA disagrees with commenters 

asserting that the proposed rule was 

non-procedural because it altered the 

rights and interests of parties beyond 

EPA. The D.C. Circuit has explained 

that ‘‘the critical feature of a rule that 

satisfies the so-called procedural 

exception [to the APA’s notice and 

comment requirements] is that it covers 

agency actions that do not themselves 

alter the rights or interests of parties, 

although it may alter the manner in 

which the parties present themselves or 

their viewpoints to the agency.’’ James 

A. Hurson Assocs. v. Glickman, 229 

F.3d 277, 280 (D.C. Cir. 2000); National 

Mining Association v. McCarthy, 758 

F.3d 243 (D.C. Cir. 2014) (holding that 

EPA’s interagency plan for enhanced 

consultation and coordination is a 

procedural rule because it does not alter 

the rights or interests of parties); 

Batterton v. Marshall, 648 F.2d 708 

(D.C. Cir. 1980) (‘‘The critical question 

is whether the agency action jeopardizes 

the rights and interests of parties.’’). In 

addition, the Supreme Court explained 

in Chrysler Corp. v. Brown, that rules of 

internal agency management are 

considered procedural rules as opposed 

to substantive rules under the APA. 441 

U.S. 281, 301–02 (1979). As the 

Supreme Court explained in Chrysler 

Corp., ‘‘the central distinction among 

agency regulations found in the APA is 

that between ‘substantive rules’ on the 

one hand and ‘interpretive rules, general 

statements of policy, or rules of agency 

organization, procedure, or practice on 

the other.’ ’’ 441 U.S. at 301. The 

Supreme Court further clarified that 

unlike procedural rules, substantive 

rules have legal force and effect on 

individual rights and obligations, and 

noted that whether a rule affects 

individual rights and obligations is an 

‘‘important touchstone’’ for 

distinguishing substantive rules from 

other types of rules. Chrysler Corp., 441 

U.S. 281 at 302. 

Because this rule covers requirements 

that apply to the agency’s rulemaking 

procedure and does not impose any 

obligations or grant any rights to third 

parties, it is procedural. 

In this Final Rule, the EPA does not 

interpret or apply other provisions of 

the CAA. Subsequent substantive CAA 

rulemakings applying this rule will be 

subject to judicial review. By contrast, 

in this action, the EPA finalizes a rule 

governing internal agency procedures. 

This rule does not require any outside 

entity to take any action. Further, this 

rule would not regulate the conduct or 

determine the rights of any entity 

outside the federal government in the 

manner described above. Several 

comments noted that the rule would 

potentially create an enforcement 

mechanism were the Agency to fail to 

follow its own internal procedures. The 

Agency, as discussed above, believes 

that this Final Rule is binding upon the 

Agency for significant CAA regulations, 

and EPA’s compliance with these 

procedural requirements is subject to 

judicial review in challenges to such 

rulemakings. However, this does not 

render a rule non-procedural. As 

discussed above, courts have generally 

enforced non-legislative procedural 

rules against agencies. Commenters 

assert that such enforcement in turn 

renders the rule non-procedural. If 

enforcement of a procedural rule 

rendered the rule substantive, there 

could be no history of enforcement of 

procedural rules; all such rules would 

simply be substantive. Clearly this 

cannot be the standard. The rule itself 

must alter the rights and interests of 

parties beyond EPA, rather than simply 

be binding upon the Agency, and this 

final rule does not regulate any party 


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23https://www.epa.gov/osa/strengtheningtransparency-regulatory-science. 

outside of the EPA, but, rather, 

exclusively governs the EPA’s internal 

procedure. 

C. Definitions 

Several commenters and the SAB 

provided specific recommendations for 

changes to some of the definitions in the 

proposed rule. Examples of terms that 

commenters or the SAB provided 

specific definitions for include, but are 

not limited to, ‘‘Benefit-cost analysis 

(BCA)’’, ‘‘Opportunity cost,’’ ‘‘Social 

benefits,’’ ‘‘Compliance cost,’’ 

‘‘Regulatory Options’’, and ‘‘Significant’’ 

regulation. These commenters provided 

references for their suggested 

definitions, which included guidance 

published by OMB, the EPA’s 

Guidelines, and published economic 

journal articles, and they recommended 

that the EPA finalize the rule with these 

definitions. Discussed below are the 

definitions that we are revising or 

finalizing as proposed based on the 

comments received. Complete responses 

to other specific suggestions for 

additional terms to be defined are 

provided in Chapter 10 of the Response 

to Comments document, and in some of 

the remaining sections in this preamble 

where relevant. 

Baseline. The EPA did not receive 

specific suggestions in the public 

comments on the definition of baseline. 

However, based on feedback from the 

EPA SAB on the EPA Guidelines 

update, the EPA has decided to adopt a 

minor revision to the definition to 

clarify that it provides the 

counterfactual situation against which a 

policy should be assessed. The revision 

does not change the substantive 

meaning of the term. In the final rule, 

the definition of baseline is as follows: 

‘‘Baseline means the best assessment of 

the way the world would evolve absent 

the regulation. It is the primary point of 

comparison for assessing the effects of 

the regulatory options under 

consideration.’’ 

Benefit-cost analysis (BCA). Some 

commenters recommended that EPA 

provide a more detailed definition of 

benefit-cost analysis. For example, one 

commenter claimed that as written, 

‘‘benefit-cost analysis’’ lacks clarity, 

because a key term ‘‘favorable effects of 

a policy action’’ is undefined. The 

commenter further argued that 

evaluation of a benefits-cost analysis is 

incomplete without concise, clear 

directive to the EPA on what favorable 

effects may balance opportunity costs. 

In their review of the proposed rule, 

the SAB recommended that the 

definition for BCA be revised to more 

closely align with the definition 

provided in OMB’s Circular A–4. 

Specifically, the SAB recommended 

revising the definition to clearly state 

that BCA provides decision makers with 

a clear indication of the most efficient 

alternative, that is, the alternative that 

generates the largest net benefits 

(benefits minus costs) to society 

(ignoring distributional effects) (OMB, 

2003). The SAB also recommended that 

the definition should indicate that costs 

should be opportunity costs and 

benefits represent the willingness-to-pay 

for a policy outcome valued by United 

States individuals. 

The EPA agrees with the SAB and 

public comments that it would be 

helpful to provide a more 

comprehensive definition of BCA, 

drawing language more explicitly from 

OMB’s Circular A–4 and avoiding 

undefined phrases such as ‘‘favorable 

effects’’. Thus, in this final rule the 

definition of BCA is revised to eliminate 

the phrase ‘‘favorable effects.’’ The 

definition is also expanded to clarify 

that the social benefits of a policy are 

measured by society’s willingness-topay for the policy outcome, and the 

social costs are measured by the 

opportunity costs of adopting the 

policy. Finally, the definition explains 

that where all benefits and costs can be 

quantified and expressed in monetary 

units, BCA provides decision makers 

with a clear indication of the most 

economically efficient alternative, that 

is, the alternative that generates the 

largest net benefits to society (ignoring 

distributional effects). 

The EPA does not agree with the 

SAB’s recommendation to add ‘‘valued 

by United States individuals’’ because 

limiting the geographic scope of a BCA 

does not belong in a general definition 

of BCA. OMB Circular A–4 allows 

impacts accruing to non-U.S. 

populations to be estimated and 

reported separately: ‘‘Where you choose 

to evaluate a regulation that is likely to 

have effects beyond the borders of the 

United States, these effects should be 

reported separately’’ (OMB 2003). The 

EPA is including in this final rule a 

presentational requirement consistent 

with this guidance. See Section V.F of 

this Preamble. 

Compliance cost. One commenter 

stated that the definition provided in 

the proposed rule fails to include all 

necessary costs of compliance, because 

costs of professional service and 

interrelated effects appear to be 

excluded. While the EPA believes that 

the definition provided in the proposed 

rule was broad enough to cover all 

private costs associated with 

compliance, the final rule revises the 

definition to explain that this could 

include, for instance, costs incurred 

through planning, design, installation 

and operation of pollution abatement 

equipment. 

Data. The EPA received limited 

specific suggestions in the public 

comments on the definition of data. 

Some commenters expressed concern 

that this language could be interpreted 

to exclude anonymized medical data 

from the definition of ‘‘data’’ and 

therefore preclude use of studies relying 

on such medical data in the EPA’s 

BCAs. The EPA notes that the proposed 

definition for ‘‘data’’ is consistent with 

the EPA’s ‘‘Strengthening Transparency 

in Pivotal Science Underlying Final 

Significant Regulatory Actions and 

Influential Scientific Information’’ 

rulemaking.23 Therefore, the EPA is 

finalizing this definition as proposed to 

maintain consistency with related EPA 

actions. 

Expected value. The EPA did not 

receive specific suggestions in the 

public comments on the definition of 

expected value. However, based on 

feedback from the EPA SAB on the EPA 

Guidelines update, the EPA has decided 

to expand the definition for clarity. The 

revision does not change the substantive 

meaning of the term. In the final rule, 

the definition of expected value is as 

follows: ‘‘Expected value means the 

probabilistically weighted outcome that 

defines a statistical mean and a measure 

of the central tendency of a set of data. 

For a variable with a discrete number of 

outcomes, the expected value is 

calculated by multiplying each of the 

possible outcomes by the likelihood that 

each outcome will occur and then 

summing all of those values.’’ 

Model. The EPA did not receive 

specific suggestions in the public 

comments on the definition of model. 

Therefore, the EPA is finalizing the 

definition as proposed. 

Opportunity cost. One commenter 

recommended that the EPA expand the 

definition of opportunity cost to explain 

how other concepts like willingness to 

pay capture the notion of opportunity 

cost. Further discussion of opportunity 

cost and how to measure it is provided 

in section V.E.5 of this Preamble. The 

EPA disagrees that an expanded 

definition of this term is needed in the 

regulatory text. Therefore, the EPA is 

finalizing this definition as proposed. 

Publicly available. The EPA did not 

receive specific suggestions in the 

public comments on the definition of 

publicly available. Therefore, the EPA is 

finalizing this definition as proposed. 

Regulatory options. One commenter 

criticized the proposed definition of 


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24Separate from and independent of the 

requirements in this rulemaking, E.O. 12866 

establishes broadly applicable conditions for 

regulatory analysis. More specifically, section 6 of 

E.O. 12866 establishes the analytic requirements for 

those actions OIRA determines to be a ‘‘significant 

regulatory action’’ and ‘‘significant regulatory 

actions within the scope of section 3(f)(1).’’ Sec. 

6(a)(3)(B)–(C). 

‘‘regulatory options’’ for bracketing the 

selected proposed or final option with 

one more stringent alternative and one 

less stringent alternative. In the 

commenter’s view, this bracketing 

results in biasing the EPA in favor of 

ultimately choosing central options 

rather than a more environmentally 

protective one that is more consistent 

with statutory guidance or 

requirements. In their review of the 

proposed rule, the SAB recommended 

that the definitions for regulatory 

options be revised to make clearer that 

for BCA, as opposed to costeffectiveness analysis, the regulatory 

options should only help to solve a 

problem, not accomplish a goal or 

objective. For example, a less stringent 

option might accomplish less, but at 

lower cost. 

The EPA disagrees with the comment 

that analyzing one more stringent and 

one less stringent alternative than the 

selected option biases the Agency’s 

decision. The analysis of these 

alternative options provides the public 

and decision makers information about 

the consequences of options that are 

more or less stringent than the selected 

option. The EPA agrees with the SAB’s 

comment and is adopting the SAB 

recommended revisions to the 

definition to improve clarity. 

Specifically, the EPA is revising parts of 

the definition of regulatory options to 

clarify that the options should only help 

to solve a problem, not accomplish a 

goal or objective. For example, the 

definition describes a more stringent 

option as one that ‘‘contributes to’’ the 

stated objectives of the Clean Art Act 

and achieves additional benefits (and 

presumably costs more) beyond those 

realized by the proposed or finalized 

option. 

Sensitivity Analysis. The EPA did not 

receive specific suggestions in the 

public comments on the definition of 

sensitivity analysis. Therefore, the EPA 

is finalizing this definition as proposed. 

Significant regulation. Several 

commenters were broadly supportive of 

the proposed definition of ‘‘significant 

regulation’’. Additionally, several 

commenters supported the concept that 

the definition of a ‘‘significant 

regulation’’ should include ‘‘those that 

would disproportionately affect an 

industry, group or area’’ or ‘‘those that 

are novel or relevant for other policy 

reasons,’’ with one commenter arguing 

that such inclusion is important to 

avoid adverse impacts on small 

businesses. One commenter stated that 

the E.O. 12866 language should be 

inserted into the BCA rather than 

referencing E.O. 12866, because 

executive orders can be changed or 

withdrawn in the future. 

Some commenters advocated using 

the definition of ‘‘significant’’ from the 

Congressional Review Act (CRA). The 

commenters argued that adopting a 

definition from U.S. law is preferable to 

one from an executive order. 

Furthermore, the commenters also 

argued that the CRA is not limited to a 

narrow economic impact analysis that 

ignores the indirect impacts of a 

regulation on the broader economy. The 

commenters further stated that the 

EPA’s economic impact statements for 

any significant proposal should be 

consistent with the CRA and give 

approximate quantitative estimates of 

the potential economic impacts, the 

expected timing of these impacts, and 

the sectors of the economy that will 

experience the impact. 

Several commenters objected to giving 

the Administrator the discretion to 

decide what constitutes a significant 

regulation, because with no specific 

decision criteria specified in the rule, 

the decisions would be arbitrary and 

contrary to the stated goals of the BCA 

rule for consistency and transparency. 

And some commenters expressed 

opposition to expanding rules requiring 

a BCA because it would deplete the 

EPA’s analytic, financial, and expertise 

resources without providing any benefit 

to public health or the environment. 

As discussed in more detail below, 

after reviewing the comments on 

applicability, in this final rule, EPA 

maintains the same definition of 

significant regulation as in the proposal 

and concludes it represents an 

appropriate scope for the rule. 

Specifically, EPA requires that all future 

significant proposed and final 

regulations promulgated under the CAA 

be accompanied by a BCA using the 

definition that a significant regulation is 

a proposed or final regulation that is 

determined to be a ‘‘significant 

regulatory action’’ pursuant to E.O. 

12866 Section 3(f) 24 or is otherwise 

designated as significant by the 

Administrator. Regulations meeting 

either of these factors are generally 

those that the EPA anticipates would 

have the largest annual impact on the 

economy (i.e., greater than $100 million) 

or are important to analyze for other 

policy reasons. For example, a rule 

projected to have less than a $100 

million annual effect on the economy 

could disproportionately affect a single 

industry, population subgroup, or 

geographic area. Such rules, or ones that 

are notably novel or significant for other 

policy reasons, will benefit from 

rigorous analysis to inform the public 

and decision makers about the 

magnitude and disposition of both their 

benefits and costs on affected entities. 

Social benefits, or benefits. One 

commenter argued that the definition of 

‘‘social benefit or benefits’’ is overly 

broad and vague. Another 

recommended an expanded definition 

that included discussion of how to 

measure benefits. Another said the 

EPA’s definition is arbitrary and 

capricious and potentially unlawful 

because the proposed definition of 

‘‘social costs’’ included the ‘‘sum’’ of all 

costs, but the proposed definition of 

social benefits, did not. The commenter 

contended that this apparent direction 

to include all costs but not necessarily 

all benefits would be inconsistent with 

the general principles of BCA and 

would bias any such analyses. The EPA 

did not intend to create a disparity 

between the calculations of costs and 

benefits, so the Agency is adjusting the 

definition of social benefits to be 

consistent with the phrasing of the 

definition of social costs to avoid any 

confusion. In this final rule, social 

benefits, or benefits, means ‘‘the sum of 

all positive changes in societal wellbeing experienced as a result of the 

regulation or policy action.’’ Additional 

discussion of how benefits can be 

measured is provided in section V.E.5 of 

this Preamble. 

Social costs, or costs. One commenter 

recommended an expanded definition 

of social cost to elaborate on how costs 

are measured. In this final rule, the EPA 

is adding a second sentence to the 

definition of social costs to further 

clarify what is included in opportunity 

costs. Additional discussion of how 

these costs can be measured is provided 

in section V.E.5 of this Preamble. 

D. Preparation and Consideration of 

BCA in Rulemaking 

In the proposed rule, the EPA 

proposed to require that all future 

significant proposed and final 

regulations promulgated under the CAA 

be accompanied by a BCA. Commenters 

supportive of the proposal were 

generally supportive of conducting BCA 

for all significant regulatory actions, 

though some commenters argued for a 

less expansive approach and others 

argued for broader application than the 

proposal. For example, as discussed 

above, some commenters argued that the 


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EPA should use the definition of 

significant from the CRA. Other 

commenters recommended expanding 

the scope, for example, to (1) apply not 

only to BCA, but also to any related risk 

assessment to estimate both baseline 

risk and the risk-reduction benefits 

estimated in the BCA, and (2) clarify 

that its information quality standards 

apply to BCA, risk assessments, and 

related risk analyses (e.g., IRIS 

assessments). Commenters opposed to 

the proposal found the scope too 

expansive and questioned the resource 

burden of the requirements. 

After considering these comments, the 

EPA is finalizing the requirement that 

all future significant proposed and final 

regulations promulgated under the CAA 

be accompanied by a BCA. The EPA 

believes that in keeping with OMB’s 

Circular A–4 and Executive Order 12866 

that this requirement would create 

consistency with well-understood and 

established processes and 

determinations for what constitutes a 

‘‘significant’’ rulemaking. Therefore, in 

this final rule, a significant regulation 

will include any proposed or final 

regulation that is determined to be a 

‘‘significant regulatory action’’ pursuant 

to Section 3(f) E.O. 12866 or is 

otherwise designated as significant by 

the Administrator. 

At proposal, in addition to proposing 

the preparation of a BCA for all 

significant regulation, the EPA also 

solicited comment on how or whether 

the results of the BCA should inform 

significant CAA regulatory decisions. 

The EPA requested comment on how 

the Agency ‘‘could take into 

consideration the results of a BCA in 

future rulemakings under specific 

provisions of the CAA.’’ 85 FR 35624. 

The EPA received numerous comments 

including recommendations that the 

Agency formulate a mandatory test that 

the benefits justify the costs of future 

significant rulemakings subject to this 

final rule, recommendations that the 

Agency not address how BCAs would be 

taken into consideration in future rules, 

and recommendations that no final rule 

be promulgated. Several commenters 

noted the importance of BCA and how 

it can inform decision makers. 

Commenters emphasized that 

consideration of benefits and costs is 

part of long held requirements imposed 

by executive order. As one commenter 

summarized, ‘‘the clear direction of 

every president over the last four 

decades [is] that, to the extent permitted 

by law, executive agencies ‘shall . . . 

propose or adopt a regulation only upon 

a reasoned determination that the 

benefits of the intended regulation 

justify its costs.’ ’’ In addition, the 

proposal highlighted the historical use 

of BCA by courts to inform their view 

of the appropriateness of agency actions 

and that ‘‘[c]onsideration of cost reflects 

the understanding that reasonable 

regulation ordinarily requires paying 

attention to the advantages and the 

disadvantages of agency decisions.’’ 

Michigan v. EPA, 135 U.S. 2699, 2707 

(2015), see 85 FR 35615–617. 

Based on the comments received, 

executive orders, and judicial decisions, 

the EPA has determined that, when 

permitted for consideration under the 

specific provision of the CAA under 

which a future regulation is 

promulgated, the Agency should 

consider in the decision-making process 

the BCA developed pursuant to this 

Final Rule, which would be part of the 

record of such a future rulemaking. See 

42 U.S.C. 7607(d)(9); 5 U.S.C. 706(2); 

see also Motor Vehicles Mfrs. Ass’n v. 

State Farm Mut. Auto. Ins. Co., 463 U.S. 

29, 43 (1983) (‘‘Normally, an agency rule 

would be arbitrary and capricious if the 

agency has relied on factors which 

Congress has not intended it to 

consider, entirely failed to consider an 

important aspect of the problem, offered 

an explanation for its decision that runs 

counter to the evidence before the 

agency, or is so implausible that it could 

not be ascribed to a difference in view 

or the product of agency expertise.’’). 

The benefits and costs of a potential 

regulation, when permitted to be 

considered under the specific provision 

of the CAA under which a future 

regulation is promulgated, are of clear 

importance to decision-making and can 

provide justification for whether and 

how the Agency decides to regulate. 

Consideration of the results of BCA in 

regulatory decision-making is also 

consistent with the requirements of E.O. 

12866. However, the EPA declines to 

formulate a specific test or mandate of 

how to consider the BCA or what weight 

it should be given in such a future 

rulemaking. The precise details of what 

test would be appropriate could differ 

from one CAA provision to another, and 

the EPA has not proposed or requested 

comment on how such tests would be 

formulated under those specific 

provisions. Some commenters also 

expressed concern that the rule as 

proposed would limit or prohibit the 

Agency from considering other metrics 

or analyses, either generated by the 

Agency or submitted by commenters 

into the record of a future rulemaking 

proceeding. There is nothing in this 

final rule that would create such an 

outcome, as consideration of one metric 

does not bar consideration of another; 

commenters will retain the ability to 

provide the Agency with information, 

and the Agency will be required to 

consider such information and respond 

to comment as is dictated by the process 

governing the future CAA rulemaking. 

To provide the public with as much 

information and transparency as 

possible, the EPA is finalizing a 

requirement to identify when the CAA 

provision or provisions under which the 

future rule is promulgated permit 

consideration of the BCA, and if so, the 

Agency is required to provide a 

description in the preamble of how the 

Agency considered the results of the 

BCA. If the provision or provisions 

under which the rule is promulgated 

prohibit the consideration of the BCA, 

the final rule requires the Agency to 

identify the specific provision that bars 

such consideration. 

E. Best Practices for the Development of 

BCA 

The EPA received a wide range of 

comments on the proposed 

requirements to codify best practices for 

the development of the BCA into a 

procedural regulation. In its review of 

the proposed rule, the SAB sought to 

limit its review to requirements in the 

proposed rule that would not be 

addressed by the SAB’s review of the 

forthcoming update to the EPA’s 

Guidelines. Therefore, the SAB did not 

advise on the details of each BCA best 

practice that the EPA proposed to 

codify. However, the SAB did 

emphasize that the EPA should consider 

carefully which aspects of BCA should 

be included in the final rule versus 

which aspects should be addressed in 

guidance, given the case-by-case nature 

of BCA. The EPA appreciates all the 

comments received and agrees with the 

SAB that it is important to think 

carefully about which best practices 

should be made enforceable and which 

best practices (or details thereof) should 

be addressed in guidance. The best 

practices codified in this final rule 

include the high-level best practices in 

conducting regulatory BCA. The EPA’s 

Guidelines will continue to provide 

detailed guidance on how to implement 

these best practices. The EPA does not 

expect the forthcoming update of the 

EPA’s Guidelines to include any 

changes to these high-level elements. 

We respond to some of the major 

comments in the discussions in the 

subsections below and to the rest in 

Chapter 7 of the Response to Comments 

Document. 

After reviewing the comments, the 

EPA has included in this final rule the 

requirements outlined in the following 

subsections, which are the high-level 

best practices outlined in existing peerVerDate Sep<11>2014 22:21 Dec 22, 2020 Jkt 253001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 E:\FR\FM\23DER2.SGM 23DER2

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25Office of Management and Budget, U.S., 2003. 

Circular A-4: Regulatory Analysis. Office of 

Management and Budget, U.S., 2010. Agency 

Checklist: Regulatory Impact Analysis. Office of 

Management and Budget, U.S., 2011a. Circular A– 

4, ‘‘Regulatory Analysis’’ Frequently Asked 

Questions (FAQs). Office of Management and 

Budget, U.S., 2011b. Circular A–4, ‘‘Regulatory 

Impact Analysis: A Primer’’. 

26Farrow, S. ed., 2018. Teaching Benefit-Cost 

Analysis: Tools of the Trade. Edward Elgar 

Publishing. Brent, R.J. ed., 2004. Applied CostBenefit Analysis. Edward Elgar Publishing. Mishan, 

E.J. and Quah, E., 2007. Cost-benefit analysis. 

Routledge. Hanley, N. and Spash, C., 1996. Cost 

benefit analysis and the environment. 

27Phaneuf, D.J. and Requate, T., 2016. A course 

in environmental economics: Theory, policy, and 

practice. Cambridge University Press. Perman, R., 

Ma, Y., McGilvray, J. and Common, M., 2003. 

Natural resource and environmental economics. 

Pearson Education. Krutilla, K., 2005. Using the 

Kaldor-Hicks tableau format for cost-benefit 

analysis and policy evaluation. Journal of Policy 

Analysis and Management: The Journal of the 

Association for Public Policy Analysis and 

Management, 24(4), pp.864–875. 

28Robinson, L.A. and Hammitt, J.K., 2013. Skills 

of the trade: Valuing health risk reductions in 

benefit-cost analysis. Journal of Benefit-Cost 

Analysis, 4(1), pp.107–130. Sunstein, C.R., 2014. 

The real world of cost-benefit analysis: Thirty-six 

questions (and almost as many answers). Columbia 

Law Review, pp.167–211. Farrow, S., 2013. How 

(not) to lie with benefit-cost analysis. The 

Economists’ Voice, 10(1), pp.45–50. Farrow, S. and 

Viscusi, W.K., 2011. Towards principles and 

standards for the benefit-cost analysis of safety. 

Journal of Benefit-Cost Analysis, 2(3), pp.1–25. 

29See EPA, Guidelines for Ensuring and 

Maximizing the Quality, Objectivity, Utility and 

Integrity of Information Disseminated by the 

Environmental Protection Agency (https://

www.epa.gov/sites/production/files/2019-08/ 

documents/epa-info-quality-guidelines_1.pdf). 30https://www.whitehouse.gov/sites/ 

whitehouse.gov/files/omb/memoranda/2007/m07- 

24.pdf. 31https://www.epa.gov/risk/risk-characterizationhandbook (EPA 100–B–00–002, December 2000). 

reviewed OMB and EPA guidance 

documents developed in response to 

longstanding presidential orders 

discussed above, OMB’s Circular A–4 

(2003) and its associated guidance 

(2010, 2011a, 2011b),25 EPA’s 

Guidelines (2010). These guidance 

documents are grounded in the 

economics literature pertaining to the 

conduct of BCA. Benefit-cost analysis as 

a discipline is a branch of applied 

microeconomic welfare economics and 

is summarized in numerous textbooks 

such as Boardman et al. (2018), Farrow 

(2018), Brent (2006), Mishan and Quah 

(2007), and Hanley and Spash (1996).26

This discipline is applied routinely to 

environmental economics issues and the 

theory of BCA and its application can be 

found in standard environmental 

economic textbooks such as Phaneuf 

and Requate (2016) and Perman et al. 

(2012).27 Specific lists of best practices 

and guidance for practitioners can also 

be found in articles by Robinson and 

Hammit (2016), Sunstein (2014), Farrow 

(2013), Farrow and Viscusi (2011), 

Krutilla (2005), and notably in an article 

on the principles and standards by 

Nobel laureate Kenneth Arrow and a 

number of prominent economists 

(Arrow et al., 1996).28

Since best practices for the conduct of 

BCA inherently require that the inputs 

to the analysis reflect the best available 

information,29 the EPA is also finalizing 

the requirement that the EPA follow 

certain best practices regarding the 

incorporation of information as an input 

to BCA for significant CAA regulations. 

In particular, risk assessments often 

provide key inputs to the development 

of the EPA’s health benefit estimates in 

a BCA, and several commenters 

recommended that additional 

consistency and transparency be 

applied in the assessment of risks 

leading to the estimation of benefits. 

Through this rulemaking, the EPA 

requires a consistent and transparent 

use of risk assessments in BCA of CAA 

regulations. These requirements include 

elements that are responsive to 

recommendations from the National 

Academies of Science, Engineering and 

Medicine (hereafter, ‘‘National 

Academies’’) and the EPA’s SAB to 

improve the utility of risk assessment 

for use in BCAs for CAA regulations, as 

well as recommendations offered by the 

SAB in their review of the proposed 

rule. As an example, the National 

Academies has previously provided 

advice to the Agency regarding best 

practices for selecting concentrationresponse parameters, when it is 

appropriate to pool (or, combine) risk 

estimates and how to characterize 

uncertainty in those estimates. This rule 

is also consistent with the 2007 OMB 

and Office of Science and Technology 

Policy’s Updated Principles for Risk 

Analysis,30 which also builds off the 

National Academies and SAB 

recommendations as well as the EPA’s 

Risk Characterization Handbook.31

1. Key elements of a BCA. The EPA 

did not receive comments on the 

proposed requirement that a BCA 

should include three key elements. The 

specific comments received on each 

element are provided in the 

corresponding subsections below. 

Therefore, EPA is finalizing the key 

elements of a BCA as proposed. The key 

elements of a rigorous regulatory BCA 

include: (1) A statement of need; (2) an 

examination of regulatory options; and 

(3) to the extent feasible, an assessment 

of all benefits and costs of these 

regulatory options relative to the 

baseline (no action) scenario. 

2. Statement of Need. Some 

commenters supported the EPA 

requiring a statement of need in the 

BCA stating that the requirement is 

consistent with agency guidance 

detailed in OMB’s Circular A–4 and 

Executive Order 12866. These 

commenters argued that a concise and 

coherent statement of need helps to set 

the foundation for developing the 

subsequent analysis of benefits and 

costs, particularly as it relates to 

assessing environmental or public 

health improvements targeted by the 

relevant statutory provision from which 

the rule derives its authority. 

Some commenters opposed the EPA 

requiring a statement of need in the 

BCA. These commenters argued a 

statement of need would be in conflict 

with many, if not most, of the EPA’s 

rulemaking responsibilities under the 

CAA. Commenters further asserted that 

a citation to the provision of the CAA 

that requires the rulemaking should be 

sufficient for any statement of need. 

Furthermore, one commenter also 

argued that the EPA cannot apply the 

‘‘statement of need’’ requirement to 

rulemakings subject to CAA section 

307(d) requirements, because CAA 

section 307(d)(2) already includes a 

requirement that the notice of 

rulemaking shall be accompanied by ‘‘a 

statement of its basis and purpose.’’ 

None of the comments received have 

led the EPA to materially change its 

views from the proposal regarding the 

requirement for a statement of need. The 

EPA disagrees with the comment that a 

statement of need would conflict with 

the EPA’s rulemaking responsibilities 

under the CAA. There is nothing in this 

final rule that would create such an 

outcome, since an articulation of the 

statement of need does not bar the 

Agency from complying with any 

requirements of the CAA, including 

those of CAA section 307(d)(2). The 

EPA is codifying into regulation a 

procedure that is already prescribed as 

a best practice in OMB’s Circular A–4 

(OMB, 1993) and EPA’s Guidelines 

(EPA, 2010), which are the existing peer 

reviewed guidance documents 

implementing E.O. 12866. Therefore, 

the EPA is finalizing the requirement 

that each regulatory BCA should 

include a statement of need that 

provides (1) a clear description of the 

problem being addressed, (2) the 

reasons for and significance of any 

failure of private markets or public 

institutions causing this problem, and 

(3) the compelling need for federal 

government intervention in the market 

to correct the problem. This statement 

sets the stage for the subsequent 

analysis of benefits and costs and allows 

one to judge whether the problem is 

being adequately addressed by the 


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policy. Additional discussion of the 

regulatory statement of need can be 

found in OMB’s Circular A–4 (1993, B. 

Introduction, The Need for Federal 

Regulatory Action) and the EPA’s 

Guidelines (2010, Chapter 3). 

3. Regulatory Options. Commenters 

supporting the requirement to analyze 

the benefits and costs of at least three 

regulatory options argued that the 

proposed requirement provides decision 

makers and the public with important 

perspective on not only the various 

options’ relative impact on net social 

benefits, but also the sensitivity of 

stringency options on other individual 

factors that comprise the overall 

forecasts. One commenter further 

suggested that the Agency also consider 

including a fourth option, the 

implementation of voluntary programs 

if appropriate to the circumstances. 

Some commenters opposed the 

requirement to analyze the benefits and 

costs of at least three regulatory options. 

These comments provided various 

reasons including, but not limited to: 

The EPA incorrectly assumes that a 

continuum of options is possible; 

requiring three regulatory options may 

lead to patently inappropriate or 

otherwise unacceptable options; 

requiring three regulatory options may 

lead the agency to put forward 

intentionally poor choices; and 

requiring three regulatory options may 

lead to unintended consequences such 

as leading the agency to evaluate 

options that are infeasible and 

impractical. 

None of the comments received have 

led the EPA to materially change its 

views from the proposal. The EPA is 

codifying into regulation a procedure 

that is already prescribed as a best 

practice in OMB’s Circular A–4 (OMB, 

1993) and EPA’s Guidelines (EPA, 

2010), which are the existing peer 

reviewed guidance documents 

implementing E.O. 12866. These 

guidance documents provide additional 

details for how to select appropriate 

regulatory options for evaluation. 

OMB’s Circular A–4 also allows for the 

possibility of evaluating an option 

whose selection would be prohibited 

under the specific statutory provision 

under which the rule is being 

promulgated because the identification 

of these statutory constraints and an 

estimate of their opportunity costs may 

provide useful information to Congress 

under the Regulatory Right-to-Know 

Act. The requirement to analyze at least 

three regulatory options also provides 

for cases where a continuum of options 

is not possible, which is further clarified 

below. Finally, there is nothing in this 

final rule that would prevent an 

additional evaluation of a voluntary 

program to address the problem 

articulated in the statement of need if 

appropriate to the circumstances. 

Therefore, the EPA is finalizing the 

requirement that the BCA analyze the 

benefits and costs of regulatory options. 

The final rule requires the BCA to 

analyze at least three options that 

contribute to the stated objectives of the 

CAA (unless the BCA explains the 

rationale for analyzing fewer than three 

options, as further described below) and 

to explain why they were selected. 

Where there is a continuum of options 

(such as options that vary in stringency), 

the three options are required to include 

at a minimum: The proposed or 

finalized option; a more stringent option 

that achieves additional benefits (and 

presumably costs more) beyond those 

realized by the proposed or finalized 

option; and a less stringent option that 

costs less (and presumably generates 

fewer benefits) than the proposed or 

finalized option. When a continuum of 

options is not applicable, an analysis of 

three regulatory options provides an 

opportunity to analyze a variety of 

parameters including different 

compliance dates, enforcement 

methods, standards by size or location 

of facilities, and regulatory designs (e.g., 

performance vs. technology standards). 

If fewer than three options are analyzed 

relative to the baseline, or if there is a 

continuum of options and the options 

analyzed do not include at least one 

more stringent (or otherwise more 

costly) and one less stringent (or 

otherwise less costly) option than the 

proposed or finalized option, then the 

final rule requires the BCA to explain 

why it is not appropriate to consider 

more alternatives. For further 

discussion, see OMB’s Circular A–4 

(specifically, see section E. Identifying 

and Measuring Benefits and Costs, 

General Issues, 3. Evaluation of 

Alternatives). 

4. Baseline. Many commenters 

supported the proposed requirement 

regarding the development of a baseline 

as consistent with best practices for 

BCA. Several commenters noted that 

defining the baseline scenario is one of 

the most important elements of a 

regulatory impact analysis, and multiple 

commenters supported the proposed 

requirements to develop a baseline that 

appropriately considers relevant factors 

based on transparent and reasonable 

assumptions. Additionally, some 

commenters supported the explicit use 

of more than one baseline: ‘‘one baseline 

based solely on current standards and 

another based on the agency’s reasoned 

assumptions regarding the effect of all 

related pending regulations’’; and stated 

that this is consistent with OMB’s 

Circular A–4. 

Several commenters stated that the 

proposed requirements for developing a 

baseline will prevent ‘‘doublecounting.’’ The commenters added that 

the issue of double counting of benefits 

has been a particular concern with past 

EPA BCAs under the CAA. Commenters 

referenced a report that found that the 

simultaneous advancement of multiple 

CAA-related rulemakings resulted in 

changes between proposed and final 

BCAs’ baseline assumptions about 

implementation of other regulations that 

created inconsistencies in BCA 

estimates between the proposed and 

final stages and revealed examples of 

double-counting. One commenter 

suggested that where ancillary benefits 

exist and have not been counted before 

by the EPA, the EPA must determine the 

most cost-effective regulatory means of 

achieving them. The commenter argued 

that this should ensure that the EPA 

properly and efficiently utilizes its 

regulatory authorities to achieve optimal 

results to enhance societal well-being. 

Some commenters opposed the 

requirements for developing a baseline 

in a BCA in the proposed rule as they 

argued OMB and EPA policies already 

establish the process for establishing a 

baseline, for assuring that benefits will 

not be double-counted, and for being 

transparent in those explanations. 

Creating a new rule for the purpose of 

preventing an oversight in a pre-existing 

mechanism for assessing BCA is 

unnecessarily ‘‘reinventing the wheel.’’ 

The commenters further argued the 

proposed requirements for developing a 

baseline bias the analyses against 

regulations that otherwise meet 

statutory requirements and provide 

important environmental benefits, in 

contravention of the CAA’s publichealth protective mandate. 

Other commenters opposing the 

proposed requirements contended that 

the EPA provides no specific cases to 

support its assertion that there is a risk 

of ‘‘double-counting.’’ Some of the 

commenters contended that recent 

research indicates some claimed 

mechanisms of ‘‘double-counting’’ are 

either inaccurate or can be addressed by 

the EPA following its own guidelines on 

BCA baselines assuming full 

compliance with existing rules. The 

commenters added that the proposed 

rule provides no evidence that there is 

a gap that needs to be filled in this 

regard beyond its existing guidance, 

and, in fact, adds no additional insight 

into these issues. 

None of the comments received have 

led the EPA to materially change its 


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32Opportunity cost need not be assessed in 

monetary terms. It can be assessed in terms of 

anything that is of value to the person or persons 

doing the assessing. For example, a grove of trees 

used to produce paper may have a next-bestalternative use as habitat for spotted owls. 

Assessing opportunity costs is fundamental to 

assessing the true cost of any course of action. In 

the case where there is no explicit accounting or 

monetary cost (price) attached to a course of action, 

ignoring opportunity costs could produce the 

illusion that the action’s benefits cost nothing at all. 

The unseen opportunity costs then become the 

implicit hidden costs of that course of action. 

views from the proposal. The EPA is 

codifying into regulation a procedure 

that is already prescribed as a best 

practice in OMB’s Circular A–4 (OMB 

1993) and EPA’s Guidelines (EPA 2010), 

which are the existing peer reviewed 

guidance documents implementing E.O. 

12866. Nothing in the public comments 

have suggested specific additional 

factors that should be codified into the 

final rule as factors to be considered 

when developing the baseline in a BCA. 

Therefore, the EPA is finalizing the 

requirement to develop a suitable 

baseline as proposed, as described 

below. 

The baseline in a BCA serves as a 

basis of comparison with the regulatory 

options considered. It is the best 

assessment of the way the world would 

look absent the regulatory action. The 

choice of a baseline requires 

consideration of a wide range of 

potential factors, including exogenous 

changes in the economy that may affect 

relevant benefits and costs (e.g., changes 

over time in demographics, economic 

activity, consumer preferences, and 

technology); impacts of regulations that 

have been promulgated by the agency or 

other government entities; and the 

degree of compliance by regulated 

entities with other regulations. 

Accounting for other existing 

regulations in the baseline is especially 

important in order to avoid double 

counting of the incremental benefits and 

costs from other existing regulatory 

actions affecting the same 

environmental condition (e.g., ambient 

air quality). When the EPA determines 

that it is appropriate to consider more 

than one baseline (e.g., one that 

accounts for another EPA regulation 

being developed at the same time that 

would affect the same environmental 

condition), the final rule requires the 

BCA to provide a reasoned explanation 

for the baselines used and to identify 

the key uncertainties in the forecast(s). 

These requirements for developing a 

baseline are consistent with best 

practices as outlined in OMB’s Circular 

A–4 (1993) and EPA’s Guidelines (2010). 

5. Measuring Benefits and Costs. 

Some commenters contended that the 

proposal identifies the willingness to 

pay (WTP) metric as the ‘‘correct 

measure’’ of changes from the baseline, 

but the proposal fails to acknowledge 

the existence of other metrics and does 

not justify their exclusion in favor of 

WTP. One commenter further argued 

the proposal also fails to acknowledge 

or consider the greater difficulty in 

estimating willingness-to-pay for nonmarket goods, such as air quality and 

associated health risk. Another 

commenter further added that WTP 

studies are helpful, but not the only 

source of information for monetizing 

benefit and WTP studies are particularly 

helpful in estimating the value of 

mortality risk reduction, which 

typically comprise the bulk of 

monetized benefits in CAA rules. 

Several commenters opposed 

including the WTP concept in the 

proposed rule. The commenters 

expressed concern that the proposed 

rule will continue practices to propagate 

the understatement of CAA benefits, to 

the detriment of all, but particularly to 

low-income and minority communities. 

Several commenters stated that WTP is 

strongly affected by factors such as 

ability to pay and by the awareness of 

the respondent of the harms being 

inflicted or avoided. A commenter then 

asserted that a WTP analysis will lead 

to higher measured monetary benefits 

for wealthier communities than for 

poorer communities for the same level 

of health and wellbeing benefit. At least 

two commenters focused on particular 

methods used for estimating WTP. 

These commenters advised EPA against 

using survey approaches to estimate 

WTP because they contend that such 

studies often overstate WTP that does 

not align with reality. 

None of the comments received have 

led the EPA to materially change its 

views from the proposal on the 

appropriate measure of benefits and 

costs in a BCA. The EPA is codifying 

into regulation a procedure that is 

already prescribed as a best practice in 

OMB’s Circular A–4 (OMB, 1993) and 

EPA’s Guidelines (EPA, 2010), which 

are the existing peer reviewed guidance 

documents implementing E.O. 12866. 

As discussed in Section V.B of this 

Preamble, the EPA agrees with the 

SAB’s recommendation, per their 

review of the proposed rule, to provide 

more clarity in the definition of BenefitCost analysis and the measurement of 

benefits and costs. Therefore, in this 

final rule EPA has provided a more 

fulsome definition of BCA to clarify that 

it is consistent with OMB Circular A–4. 

The EPA disagrees with commenters 

who stated that the proposed rule did 

not acknowledge the existence of 

metrics other than willingness-to-pay, as 

discussed below. In addition, the EPA 

disagrees with commenters who advised 

to include more discussion in the rule 

about particular methods for estimating 

WTP. The EPA’s Guidelines and OMB’s 

Circular A–4 include discussion of 

particular methods for estimating WTP, 

which can generally be broadly 

categorized as either revealed preference 

or stated preference methods. As 

described in these guidance documents 

and standard textbooks on BCA, some 

methods will be more suitable than 

others in a given scenario for a variety 

of reasons, and some will be better able 

to capture certain types of benefits than 

others. Since research on all of these 

methods is ongoing, the limitations and 

qualifications of each method is best 

described in guidance and the EPA has 

decided not to include any requirements 

related to particular valuation methods 

in this final rule. 

A BCA evaluates the social benefits 

and social costs of a policy action. The 

social benefits of a policy are measured 

by society’s willingness-to-pay for the 

policy outcome. The social costs are 

measured by the opportunity costs of 

adopting the policy. Opportunity cost is 

the value of the next best alternative to 

a particular activity or resource.32 A 

BCA addresses the question of whether 

the benefits from the policy action are 

sufficient for those who gain to 

theoretically compensate those 

burdened such that everyone would be 

at least as well off as before the policy. 

In other words, many regulations can be 

thought of as a requirement to divert 

resources from activities with a higher 

net return in private markets alone to 

those with a higher net return when all 

impacts are counted, thus the 

calculation of net benefits (benefits 

minus costs) helps ascertain the 

economic efficiency of a regulation. 

Where all benefits and costs can be 

quantified and expressed in monetary 

units, BCA provides decision makers 

with a clear indication of the most 

economically efficient alternative, that 

is, the alternative that generates the 

largest net benefits to society (ignoring 

distributional effects). 

In keeping with best practices, the 

appropriate measures of benefits and 

costs to use in a regulatory BCA are 

social benefits and social costs. When 

assessing a regulation, the social 

benefits are the society-wide positive 

changes in well-being, and social costs 

are the society-wide opportunity costs, 

or reductions in well-being. WTP is the 

correct measure of these changes in 

BCA. 

Willingness to pay means the largest 

amount of money that an individual or 


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Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Rules and Regulations 84145 

group would pay to receive the benefits 

(or avoid the damages) resulting from a 

policy change, without being made 

worse off. The principle of WTP 

captures the notion of opportunity cost 

by measuring what individuals are 

willing to forgo to enjoy a particular 

benefit. In general, economists tend to 

view WTP as the most appropriate 

measure of opportunity cost, but an 

individual’s ‘‘willingness-to-accept’’ 

(WTA) compensation for not receiving 

the improvement can also provide a 

valid measure of opportunity cost. WTP 

is generally considered to be more 

readily measurable. Market prices 

provide rich data for estimating benefits 

and costs based on WTP if the goods 

and services affected by the regulation 

are traded in well-functioning 

competitive markets. See Hanley and 

Spash (1993), Freeman (2003), Just et al. 

(2005), and Appendix A of the EPA’s 

Guidelines (2010). 

WTP provides a full accounting of an 

individual’s preference for an outcome 

by identifying what the individual 

would give up to attain that outcome. 

WTP is measured in monetary terms to 

allow a comparison of benefits to costs 

in the net benefit calculation. If the BCA 

departs from these best practices (e.g., 

where WTP is hard to measure), this 

final rule requires a robust explanation 

for doing so. For further discussion, see 

OMB’s Circular A–4 (specifically, see 

section E. Identifying and Measuring 

Benefits and Costs, General Issues, 2. 

Developing a Baseline and Guidelines 

(2010), Chapter 5. Baseline). 

While based on the same underlying 

conceptual framework, social benefits 

and social costs are often evaluated 

separately due to practical 

considerations. The social benefits of 

reduced pollution are often attributable 

to changes in outcomes not exchanged 

in markets, such as improvements in 

public health or ecosystems. In contrast, 

the social costs generally are measured 

through changes in outcomes that are 

exchanged in markets. As a result, 

different techniques are used to estimate 

social benefits and social costs however, 

in both cases the goal is to estimate 

measures of WTP to provide 

consistency. 

6. Methods for Estimating Benefits 

and Costs. The EPA received a range of 

comments on the proposed 

requirements regarding the methods for 

estimating benefits and costs. Comments 

were divided on the idea of codifying 

best practices, with many commenters 

supporting codification in a procedural 

regulation, but others noting possible 

inconsistency when practices are 

updated in the future. 

Many comments pertained to whether 

more specific or additional best 

practices should be codified as 

requirements in the final rule. For 

example, when estimating costs, some 

recommended that the final rule be 

expanded to include procedural 

requirements for determining whether 

an engineering base cost estimation, 

partial-equilibrium model, general 

equilibrium model, or a combination of 

these models should be used. One 

commenter argued that when a 

regulation will affect a sector that 

supplies a wide swath of the economy, 

then the final rule should specify that 

the presumptive cost evaluation method 

be a general equilibrium model, and if 

a general equilibrium model is not used, 

then the BCA should be accompanied 

by a detailed explanation of why small 

price effects in the affected sector’s 

outputs would not be expected to have 

economy-wide effects. Others pointed 

out that systems are so large and 

complex that evaluative tools are not 

adequate for these types of analyses to 

be accurate and useful for decisionmaking. Another of these commenters 

said that although the EPA is correct to 

highlight the potential value added to be 

gained by using general equilibrium 

models, there still are a number of 

reasons why general equilibrium models 

may not yet be ready to be used as a 

principal analytic framework for 

undertaking cost-benefit analysis of 

environmental regulations. The 

commenter argued that general 

equilibrium models provide insights 

rather than answers about the economic 

effects of policies; for example, general 

equilibrium models are calibrated using 

parameter estimates to ‘‘fit’’ 

predetermined values providing a 

certain degree of ‘‘realism’’ but only up 

to a point. 

Finally, some commenters argued that 

the proposed rule provided an 

unbalanced treatment of benefits and 

costs by setting more stringent standards 

for benefit estimation than cost 

estimation, and therefore, aside from 

being unnecessary and unjustified, they 

stated the proposed requirements were 

also biased and arbitrary. These 

commenters’ recommended solution to 

the proposed rule’s problem of treating 

costs and benefits differently is simply 

to withdraw the proposed rule and 

revert to relying on existing guidance, 

like OMB’s Circular A–4 and the EPA’s 

Guidelines, which already offer a more 

balanced treatment to both costs and 

benefits. Other commenters stated the 

proposed rule arbitrarily fails to address 

the likelihood that compliance costs 

will be overestimated and benefits will 

be underestimated. 

None of the public comments 

received have led the EPA to materially 

change its views from the proposal. The 

EPA disagrees with the comments that 

more specific procedures should be 

codified into regulation pertaining to 

the use of particular estimation methods 

or models. The EPA also disagrees with 

commenters stating that the rule 

imposes uneven requirements. The EPA 

is codifying into regulation procedures 

that are consistent with best practices 

for estimating both benefits and costs as 

discussed at length in OMB’s Circular 

A–4 (OMB 1993) and the EPA’s 

Guidelines (EPA 2010), which are the 

existing peer reviewed guidance 

documents implementing E.O. 12866. In 

this final rule, the EPA is codifying 

these best practices as proposed, as 

described below. 

Although the most appropriate 

methods for estimating social costs and 

social benefits can often be regulationspecific, there are best practices for 

selecting these methods. With this final 

rule, the EPA requires that all BCAs will 

rely on such best practices and will 

provide reasoned explanations for 

methods selected. These best practices 

include the use of a framework that is 

appropriate for the characteristics of the 

regulation being evaluated. As 

discussed in OMB Circular A–4, a good 

regulatory analysis cannot be developed 

according to a formula. Conducting 

high-quality analysis requires 

competent professional judgment. 

Different regulations may call for 

different emphases in the analysis, 

depending on the nature and 

complexity of the regulatory issues and 

the sensitivity of the benefit and cost 

estimates to the key assumptions. For 

example, the extent to which 

compliance cost is a sufficient measure 

of social costs will depend on whether 

a regulation is expected to result in 

changes in prices and quantities within 

and across markets. Other 

considerations when selecting an 

estimation method include the ability of 

an estimation approach to capture 

certain types of costs, to adequately 

reflect the geographic and sectoral detail 

and scope of the rule, and to reflect how 

costs may change over time, among 

other considerations. 

During the estimation process, the 

final rule requires analysts to consider 

how social cost and benefit endpoints 

may be affected by behaviors in the 

baseline and potential behavioral 

changes from the policy. For example, 

three broad frameworks for estimating 

social cost—compliance cost, partial 

equilibrium, and general equilibrium— 


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33As a practical matter, the value of any adverse 

public health or welfare outcomes (sometimes 

referred to as ‘‘disbenefits’’) resulting from the 

regulatory requirements are usually also included 

on the benefits side of the ledger in regulatory 

BCAs, although it is theoretically appropriate to 

include them on the cost side. Such adverse 

outcomes could include adverse economic, health, 

safety, or environmental consequences that occur 

due to a rule (e.g., adverse safety impacts from 

vehicle emission standards) and are not already 

accounted for in the direct cost of the rule. 

34OMB’s M–19–15 refers back to OMB’s 2002 

Guidelines, which characterize a subset of agency 

information as ‘‘influential scientific, financial, or 

statistical information’’ that is held to higher 

quality standards. This is scientific, financial, or 

statistical information that ‘‘the agency can 

reasonably determine . . . will have or does have 

a clear and substantial impact on important public 

policies or important private sector decisions.’’ 

offer different scopes in terms of the 

degree to which behavioral response 

and other market imperfections are 

included. In general, analysts can 

improve the accuracy of cost estimates 

by reducing known biases due to the 

omission of potentially important 

behavioral responses or missing 

opportunity costs. However, adopting 

more complex approaches can reduce 

the precision of estimates due to data 

and modeling limitations. A compliance 

cost approach typically identifies the 

private expenditures associated with 

compliance in the regulated sector(s). 

Compliance cost estimates typically 

exclude behavioral responses outside of 

the choice of compliance activity and 

may, therefore, not capture some 

opportunity costs associated with 

regulations. However, with adequate 

data, this approach can generate highly 

detailed and relatively precise 

information on compliance options and 

costs, reflecting the heterogeneity of 

regulated entities. This can provide a 

reasonable estimate of the social cost of 

a regulation when changes in the 

regulated sector’s outputs and input mix 

are expected to be minimal and no large 

market effects are anticipated. A partial 

equilibrium analysis captures supply 

and demand responses in the regulated 

sector due to compliance activities and 

may, therefore, provide a more complete 

estimate of compliance costs in addition 

to any lost profits and consumer welfare 

due to reductions in output. In other 

words, behavioral responses can have 

important impacts on both the size and 

distribution of benefits and costs, and 

therefore can provide a fuller picture of 

the social impact of a particular 

regulation. Partial equilibrium analyses 

may be extended to consider a small 

number of related sectors in addition to 

those directly regulated (e.g., upstream 

markets that supply intermediate goods 

to the regulated sector, or markets for 

substitute or complementary products). 

A partial equilibrium approach is 

preferred for estimating social cost 

when the regulation will result in 

appreciable behavioral change, but the 

effects will be confined primarily to a 

single market or a small number of 

markets. When broader economy-wide 

impacts are expected as a result of the 

regulation, a partial equilibrium 

approach will miss these effects. In this 

case, a general equilibrium approach 

may be more appropriate to more 

adequately estimate social cost. 

A general equilibrium approach, 

which captures linkages between 

markets across the entire economy, is 

most likely to add value when both 

relevant relationships among sectors 

and pre-existing market distortions are 

expected to be significant. Market 

distortions are factors such as preexisting taxes, externalities, regulations, 

or imperfectly competitive markets that 

move consumers or firms away from 

what would occur in the absence of 

such distortions. For example, when an 

environmental regulation affects the real 

wage such that individuals opt to work 

fewer hours, it can exacerbate preexisting inefficiencies in the labor 

market due to taxes, regulatory barriers, 

or other market imperfections. This 

represents a welfare cost not captured 

by compliance cost estimates. The 

impacts of a regulation also may interact 

with pre-existing distortions in other 

markets, which may cause additional 

impacts on welfare either positively or 

negatively. In cases such as these, a 

general equilibrium approach may be 

capable of identifying how the costs of 

complying with a regulation flow 

through the economy, such as through 

changes in substitution among factors of 

production, trade patterns, and demand 

for goods and services. These effects are 

partially or wholly missed by 

compliance cost and partial equilibrium 

approaches. For further discussion, see 

EPA’s Guidelines (2010), Chapter 8, 

Analyzing Costs, 8.1. The Economics of 

Social Cost. 

The estimated social benefits reported 

in a BCA should link regulatory 

requirements to the value that 

individuals place on the beneficial 

outcomes,33 or benefit endpoints, that 

can be meaningfully expected as a result 

of those requirements. Benefits 

assessment is, therefore, typically a 

multi-step process. The starting point is 

identifying the changes in 

environmental contaminants or stressors 

that are likely to result from policy 

options relative to the baseline. These 

changes are often characterized through 

air quality modeling. The next step is to 

identify the benefit endpoints that may 

be affected by changes in environmental 

quality, such as human health 

improvements, ecological 

improvements, aesthetic improvements, 

and reduced materials damages. The 

EPA recognizes that the strength of 

scientific evidence for different health 

or environmental endpoints varies, and 

that strength of scientific evidence 

should be strongest when the benefits 

are estimated. As further discussed in 

OMB’s M 19–15, this concept is referred 

to as ‘‘fitness for purpose,’’ whereby 

information anticipated to have a higher 

impact must be held to higher standards 

of quality.34

Once benefit endpoints are identified, 

analysts need to decide whether and 

how to quantify changes in each 

endpoint. From among the endpoints 

identified above, the EPA will quantify 

effects for endpoints which scientific 

evidence is robust enough to support 

such quantification. If the Agency 

determines that some benefits should be 

discussed only qualitatively, for 

example, due to limited scientific 

evidence or limited resources for 

developing concentration response 

functions, the final rule requires the 

Agency to provide a reasoned 

explanation for that decision. 

Additional requirements for choosing 

and quantifying health endpoints are 

described further below. 

Quantification is then followed by 

valuation of these endpoints when data 

and methods allow. There are welldefined economic principles and wellestablished economic methods for 

valuation as detailed in OMB and 

Agency guidance, including OMB’s 

Circular A–4 and the EPA’s Guidelines. 

It will not always be possible to express 

in monetary units all of the important 

benefits and costs. When it is not, the 

most efficient alternative will not 

necessarily be the one with the largest 

quantified and monetized net-benefit 

estimate. In such cases, the EPA will 

exercise its subject matter expertise in 

determining how important the nonquantified benefits or costs may be in 

the context of the overall analysis. Even 

when a benefit or cost cannot be 

expressed in monetary units, the EPA 

will try to measure it in terms of its 

physical units. If it is not possible to 

measure the physical units, the EPA 

will describe material benefits or costs 

qualitatively. 

Finally, the valued endpoints should 

be aggregated to the extent possible and 

supported by scientific and economic 

practice to provide the basis for 

characterizing the benefits of each 

policy option. 


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35For more information about the development of 

the Consolidated Human Toxicity Assessment 

Guidelines, see: https://yosemite.epa.gov/sab/ 

sabproduct.nsf//LookupWebProjects

CurrentBOARD/ 

DF0F42C34645448685258570005ADFFF?

OpenDocument. 

In some instances, it may be possible 

to value bundles of attributes or 

endpoints using reduced-form 

techniques, such as the hedonic 

property method. Care and professional 

judgment are necessary in determining 

the appropriateness of bundling of 

several endpoints versus modeling 

separate endpoints. Even if bundling is 

thought to be appropriate, it can be 

useful to think through the multi-step 

process above conceptually to: (a) 

Assess whether there are benefit 

endpoints not reflected in the reduced 

form valuation estimate that should be 

included through additional analysis, or 

(b) compare the magnitudes of multistep and reduced-form, revealedpreference benefits estimates so that 

each can provide a check on the 

reliability of the other. 

In summary, this final rule requires 

that, to the extent supported by the 

scientific criteria, as discussed above, as 

well as practicable in a given 

rulemaking, (1) BCAs will quantify all 

benefits; (2) BCAs will monetize all the 

benefits by following well-defined 

economic principles using wellestablished economic methods, 

appropriate data and/or studies; and (3) 

BCAs will qualitatively characterize 

benefits that cannot be quantified or 

monetized. In addition, the final rule 

requires the Agency to explain any 

departure from the best practices for the 

BCA described in Circular A–4; this 

includes discussing the likely effect of 

the departures on the size of the benefits 

estimate. More discussion of these best 

practices and estimation methods is 

provided in OMB’s Circular A–4 and the 

EPA’s Guidelines, and the literature 

cited therein. 

7. Selecting and Quantifying Health 

Endpoints in a BCA. The EPA received 

numerous comments on the proposed 

requirements for selecting and 

quantifying health endpoints in a BCA. 

Many public commenters were critical 

of the lack of definitions for key terms 

in this section, especially ‘‘causal’’ and 

‘‘likely causal’’ though some of these 

commenters supported the proposed 

requirements while providing more 

specific definitions that could improve 

the terms. Other commenters were 

generally critical of the proposed 

requirements that any linkage between 

regulatory requirements and benefits be 

based on ‘‘a clear causal or likely causal 

relationship’’ and argued such 

requirements will restrict the 

assessment of the health benefits of 

proposed CAA regulations. With respect 

to determining what concentrationresponse functions to use to quantify 

changes in the selected endpoints, some 

commenters argued that the proposed 

criteria for selecting studies from the 

literature are too restrictive. Others 

recommended that the EPA consider 

different criteria entirely or require a 

more systematic review approach for 

evaluating the scientific literature to 

quantify health impacts. For example, 

one commenter noted that while the list 

of proposed criteria referred to study 

features that should be evaluated under 

a systematic review framework, it was 

not exhaustive or complete and does not 

provide a systematic approach for the 

integration of this evidence to prioritize 

studies that provide the accurate 

characterization of health impacts. 

Some commenters stated that the rule 

would contradict advice the EPA has 

received from the National Academies 

and SAB and/or questioned why, in 

their view, the EPA is re-inventing the 

wheel. Some commenters emphasized 

that best practices for characterizing 

uncertainty should reflect more 

probabilistic techniques and that EPA 

should also use a risk of bias approach 

when selecting among studies. 

In their review of the proposed rule, 

the SAB also provided 

recommendations related to the 

selection and quantification of health 

endpoints. First, the SAB recommended 

that the EPA clarify the requirements for 

estimation of benefits to incorporate 

systematic review approaches, better 

define causality, and include effects for 

which causal or likely causal 

relationships may be less certain. In 

particular, the SAB advised that no ‘‘one 

size fits all’’ approach to causality 

should be mandated because a variety of 

approaches may need to be taken (some 

data driven, some based on systematic 

review of the biology, toxicology and 

epidemiology). Instead, the SAB 

recommended that the EPA should 

include reference to and support for 

relevant guidance from current best 

Agency practices for evaluating 

causality. The SAB also advised that the 

EPA modify the proposed requirement 

to include in the benefits analyses the 

effects for which causal or likely causal 

relationships may be less certain, but 

the impact would be substantial. 

Second, the SAB provided 

recommendations for how the EPA 

could adjust the proposed requirements 

for selection of health endpoints to 

provide greater clarity and transparency, 

especially with regard to the selection of 

concentration response functions. The 

SAB recommended that the final rule 

should clarify the specific scientific 

rationale for endpoint selection and 

promote transparency by defining 

specific terms used in the requirements, 

or the Agency should replace all of the 

specific criteria on the selection of 

health endpoints with ‘‘an overall 

framework outline of the systematic 

review principles it would follow for 

the evaluation of human health hazard 

data for the purposes of concentrationresponse selection and quantification of 

benefits.’’ The SAB also advised the 

Agency to discuss how relevant advice 

from the National Academies and the 

SAB on systematic review as well as the 

approaches under development by the 

EPA in the Consolidated Human 

Toxicity Assessment Guidelines 35 will 

be evaluated and incorporated. The EPA 

agrees with the recommendations from 

the SAB and commenters on the 

importance of using a systematic review 

process to evaluate the scientific 

literature for the purposes of 

determining which health endpoints to 

include in a BCA and what 

concentration-response functions to use 

to quantify changes in these endpoints. 

Therefore, the EPA is revising the 

requirements in this section of the rule 

as described below. 

It is essential for analyses to 

characterize health effects for which the 

science indicates the likelihood that 

changes in exposure would provide 

positive benefits. The EPA requires that 

BCAs performed under this final rule 

will include benefit endpoints for which 

the scientific evidence indicates there is 

(a) a causal or likely causal relationship 

between pollutant exposure and effect, 

and subsequently, (b) sufficient data and 

understanding to allow the agency to 

reasonably model the anticipated 

change in that effect in response to 

changes in environmental quality or 

exposures expected as a result of the 

regulation under analysis. 

As stated in the proposal, decisions 

about whether and which changes in the 

health endpoints should be quantified 

should be informed by an evaluation of 

the relevant scientific literature 

studying the strength of the association 

between exposure to a pollutant and the 

health endpoint and the nature of the 

concentration-response function (i.e., 

the amount of change in the frequency 

or severity of the health endpoint 

expected as the distribution of air 

quality changes). Benefits may be 

quantified for associations that meet the 

criteria for causality, considering, for 

example, the biologic plausibility, 

consistency, temporality, strength, and 

specificity of the effect. 


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36The EPA prepares ISAs to provide the scientific 

foundation for setting standards for the 6 criteria air 

pollutants under the National Ambient Air Quality 

Standards program. This assessment is a 

comprehensive review, synthesis, and evaluation of 

the most policy-relevant science, including key 

science judgments that are important to inform the 

development of the risk and exposure assessments, 

as well as other aspects of the NAAQS review. The 

preamble to the ISAs describes the five-level causal 

framework for evaluating weight of evidence and 

drawing scientific conclusions and causal 

judgments. See https://www.epa.gov/isa. 37https://www.epa.gov/benmap. 

In this final rule, the EPA is clarifying 

that for human health endpoints, a 

systematic review process must be used 

to evaluate the hazard data for the 

purposes of determining which 

endpoints to include in a BCA and what 

concentration-response functions to use 

to quantify changes in these endpoints. 

As described by Institute of Medicine 

(IOM), ‘‘systematic review is a scientific 

investigation that focuses on a specific 

question and uses explicit, pre-specified 

scientific methods to identify, select, 

assess, and summarize the findings of 

similar but separate studies. The goal of 

systematic review methods is to ensure 

that the review is complete, unbiased, 

reproducible, and transparent’’ (IOM, 

2011). 

The systematic review process, at a 

minimum, consists of: Problem 

formulation and protocol development, 

evidence identification, evidence 

evaluation, and evidence integration 

(National Research Council, 2014). 

Problem formulation should identify the 

specific question to be addressed in the 

review and the protocol should specify 

the methods used to address the 

question, making these methods and the 

review process transparent. Evidence 

identification should follow a search 

strategy written into the protocol that 

explicitly states the inclusion and 

exclusion criteria for studies. 

Importantly, a study’s inclusion in the 

review should not depend upon that 

study’s findings. When feasible, the 

evidence evaluation should include a 

risk of bias assessment to determine 

how confidently conclusions can be 

drawn from the data. For example, the 

EPA began incorporating a risk of bias 

assessment into its Integrated Science 

Assessments (ISAs), starting with the 

recently published ozone ISA (EPA, 

2020).36 Finally, evidence integration 

should provide a structured approach to 

drawing conclusions considering all 

appropriate and available lines of 

scientific evidence, including 

epidemiologic, toxicologic, and 

mechanistic lines of evidence. 

Applying the systematic review 

process described above, the final rule 

requires the EPA to identify 

concentration-response relationships 

from the scientific literature that take 

into account the breadth and quality of 

the available evidence regarding the 

nature and magnitude of the risk to the 

populations affected by the regulation. 

More weight should be given to higher 

quality studies or analyses that have 

been peer reviewed. To the extent 

possible, the studies or analyses should: 

(1) Be based upon human data when 

available; (2) specify the exposure route, 

duration, and levels, with preference 

given to those studies assessing 

exposure similar to those experienced 

by the general population; (3) employ a 

design or analysis that adequately 

addresses relevant sources of potential 

critical confounding; (4) consider how 

exposure is measured, particularly those 

that provide measurements at the level 

of the individual and that provide actual 

measurements of exposure; and (5) be 

able to reliably distinguish the presence 

or absence (or degree of severity) of 

health outcomes. Studies demonstrating 

more of the attributes listed above, and 

those which demonstrate the 

considerations to a greater extent, are 

expected to provide more accurate 

concentration-response relationships 

and associated risk estimates. Consistent 

with the general process of systematic 

review, the evaluation should 

emphasize transparency and 

replicability in the evaluation process. 

When utilizing multiple 

concentration-response functions to 

estimate impacts on a single health 

outcome, the BCA must quantify risks in 

such a way that the heterogeneity in the 

estimated health impacts is clearly 

characterized. The EPA will present 

results in a manner that promotes 

transparency in the assessment process 

by selecting and clearly identifying 

concentration-response functions best 

characterizing risk for affected 

populations, as well as evidence 

necessary to demonstrate the sensitivity 

of the choice of the concentrationresponse function on the magnitude and 

the uncertainty associated with air 

pollution-attributable effects. Evidence 

from epidemiologic, experimental, and 

controlled human exposure studies may 

suggest that certain demographic 

subgroups are subject to risks that differ 

from the general population; in these 

instances, it may be appropriate to 

select concentration-response 

relationships that quantify risks among 

these specific subgroups, abiding by the 

overall framework of the systematic 

review process. 

In cases where existing Agency 

documents (e.g., ISA for criteria 

pollutants) provide the review and 

synthesis consistent with the process 

described above, the final rule allows a 

BCA to reference this synthesis. 

Conceptually, BCA requires a 

comparison of expected costs and 

expected benefits, so BCA for CAA 

regulations should include the 

determination of expected benefits. 

When sufficient data exist, a probability 

distribution of risk is appropriate to use 

when determining the expected benefits 

for CAA regulations. When it is 

infeasible to estimate a probability 

distribution, measures of the central 

tendency of risk may be used. Upperbound risk estimates must not be used 

without also presenting lower bound 

and central tendency estimates. 

8. Uncertainty Analysis. Many public 

commenters supported the proposed 

rule’s codification of best practices for 

uncertainty analysis and further 

contended that the EPA’s past 

uncertainty analyses in CAA BCA vary 

in their quality, scope, and rigor. Some 

of these commenters provided 

additional recommendations for 

uncertainty analyses in the BCA 

including using probability 

distributions of risk when calculating 

benefits. For example, one commenter 

recommended that the EPA analyze 

assumptions embedded in the EPA’s 

environmental Benefits Mapping and 

Analysis Program (BenMAP) tool 37 in 

its uncertainty assessment as well as 

further aligning with numerous EPA 

recommendations from the SAB and the 

National Academies. Some commenters 

recommended that the EPA should also 

quantify the effect of the major sources 

of uncertainty and variability on the risk 

estimates, benefit estimates, and cost 

estimates as well as transparently 

documenting key assumptions that 

drive uncertainty analyses. 

Some commenters opposed the EPA’s 

proposed requirements for an 

uncertainty analysis in the BCA, stating 

that these proposed provisions are 

arbitrary, capricious and not 

appropriate. One of these commenters 

said that the EPA unjustifiably weights 

the burden of uncertainty assessment on 

benefits rather than costs by placing 

more prescriptive requirements on the 

analysis of the uncertainty of benefits, 

thus skewing the assessment of 

uncertainty towards benefits more than 

costs, and by depicting benefits as more 

uncertain than costs. Additional 

commenters opposed to the EPA’s 

proposal argued that the proposed 

requirements add seemingly endless 

layers of analyses and potentially 

import substantive constraints and 

judgments under the guise of 

characterizing uncertainty. 


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The SAB also made several 

recommendations related to the 

proposed requirements for uncertainty 

analysis. First, the SAB recommended 

that the preamble of the final rule 

discuss the broader purposes of 

uncertainty analysis beyond simple 

transparency. Second, the SAB 

explained that because best practices 

require that the analysis be appropriate 

for the policy context, uncertainty 

analysis should only be required to the 

extent feasible ‘‘and appropriate.’’ 

Third, the SAB advised that the 

discussion in the final rule be 

broadened to reflect the fact that 

outcomes other than the expected value 

may be very important for policies 

involving low-probability, high 

consequence hazards. Also, when 

presenting quantitative results, the SAB 

recommended that the final rule require 

the EPA to clearly note when there are 

unquantified benefits or costs that could 

be significant. Finally, the SAB 

recommended that the EPA 

acknowledge in the final rule that 

uncertainty analysis will not correct 

errors resulting from the inclusion of 

‘‘poor science’’, which arguably has a 

greater impact on policy choices than 

the lack of uncertainty analysis. 

None of the public comments 

received have led the EPA to materially 

change its views from the proposal. The 

EPA disagrees with the comment that 

the requirement to conduct uncertainty 

analysis is arbitrary, capricious and not 

appropriate. The EPA is codifying into 

regulation procedures that are 

consistent with the principle of 

transparency discussed at length in 

OMB’s Circular A–4 (OMB, 1993) and 

the EPA’s Guidelines (EPA, 2010), 

which are the existing peer reviewed 

guidance documents implementing E.O. 

12866. The EPA agrees with the 

principles emphasized in the SAB’s 

comments on the proposed rule. The 

Agency has reviewed the discussion of 

uncertainty analysis below to ensure it 

is consistent with these principles and 

has made clarifying revisions in this 

preamble and final regulatory text 

where helpful. The final rule includes 

requirements pertaining to uncertainty 

analysis as provided below. 

For various reasons, including the 

reason that the future is unpredictable, 

the benefits and costs of future 

regulatory options are not known with 

certainty. The EPA is finalizing 

requirements for BCAs to identify 

uncertainties underlying the estimation 

of both benefits and costs and, to the 

extent feasible and appropriate, 

quantitatively analyze those that are 

most influential. Specifically, the final 

rule requires the EPA to characterize, 

preferably quantitatively, sources of 

uncertainty in the assessment of costs, 

changes in air quality, assessment of 

likely changes in health and welfare 

endpoints, and the valuation of those 

changes. The EPA will be required to 

also present benefit and cost estimates 

in ways that convey their uncertainty, 

including acknowledging unquantified 

benefits and costs, where appropriate. 

Because information on the range of 

outcomes from policy may be an 

important consideration in decisionmaking, the final rule requires EPA to 

also characterize the range of likely 

outcomes. BCAs will be required to 

include a reasoned explanation for the 

scope of the uncertainty analysis and to 

specify specific quantitative or 

qualitative methods chosen to analyze 

uncertainties. Quantitative uncertainty 

analyses may consider both statistical 

and model uncertainty where the data 

are sufficient to do so. Furthermore, 

where data are sufficient to do so, the 

rule requires BCAs to consider sources 

of uncertainty both independently and 

jointly. The BCA should also discuss the 

extent to which qualitatively assessed 

costs or benefits are characterized by 

uncertainty. 

Probabilistic uncertainty analysis 

involves greater effort than other 

quantitative characterizations of 

uncertainty but can add insights into the 

role of uncertainty in a BCA. When 

simpler quantitative analysis may not 

sufficiently describe uncertainty, and 

where probability distributions for 

relevant input assumptions are available 

and can be feasibly and credibly 

combined, BCAs should characterize 

how the probability distributions of the 

relevant input assumption uncertainty 

would impact the resulting distribution 

of benefit and cost estimates. The EPA 

should report probability distributions 

for each health benefit whenever 

feasible. In addition to characterizing 

these distributions of outcomes, it is 

useful to emphasize summary statistics 

or figures that can be readily understood 

and compared to achieve the broadest 

public understanding of the findings. In 

instances when calculating expected 

values is not feasible or appropriate due 

to data or other limitations, the EPA 

should strive to present a range of 

benefits and costs. Additional 

discussion of these best practices related 

to uncertainty analysis is provided in 

OMB’s Circular A–4, Treatment of 

Uncertainty, and throughout the EPA’s 

Guidelines. 

9. Principle of Transparency. Several 

commenters supported the general 

concept of transparency in conducting 

BCA, because transparency improves 

the quality of regulatory decisionmaking. Some commenters further 

stated that providing information on the 

data, models, assumptions, and 

uncertainties will increase public 

participation by improving the dialog 

between the EPA and stakeholders and 

creating a better-informed public. 

Several commenters objected to the 

transparency provisions of the rule with 

one commenter stating that it is unclear 

what is meant by the statement that the 

EPA’s presentation of BCA results 

should be ‘‘reproducible to the extent 

reasonably possible.’’ Commenters 

argued that the preamble offers no basis 

for concluding that the EPA in the past 

has not been transparent in presenting 

the results of their analysis of regulatory 

options. Other commenters further 

contended that the proposed 

requirements would obscure the basis 

for the EPA’s decisions and the proposal 

is inappropriate to require ‘‘consistency 

across the Clean Air Act’’ given the 

differences in statutory obligations for 

different pollutants. Several of these 

commenters claimed that the EPA’s 

regulatory assessments already are 

transparent, and the proposed rule 

would lead to confusion on the 

regulatory analysis and not increase 

transparency. One of these commenters 

further claimed that BCA does not 

increase transparency because it can 

distract from the statutory basis of 

regulations, since most CAA standards 

are health-based or technology-based 

standards, which involve a unique set of 

factors to consider. 

None of the comments received have 

led the EPA to materially change its 

views from the proposal. The EPA 

disagrees with the comment that it is 

inappropriate to impose consistent 

requirements related to transparency 

across the CAA given the differences in 

statutory obligation for different 

pollutants in various provisions of the 

Act. The requirements in this final rule 

aimed at providing transparency do not 

bar the Agency from complying with 

any requirements of the Act. The EPA 

is codifying into regulation procedures 

that are consistent with the principle of 

transparency discussed at length in 

OMB’s Circular A–4 (OMB, 1993) and 

the EPA’s Guidelines (EPA, 2010), 

which are the existing peer reviewed 

guidance documents implementing E.O. 

12866. For example, the practice of 

ensuring that results are reproducible is 

taken directly from OMB’s Circular A– 

4. Therefore, after reviewing public 

comments, the EPA is finalizing the 

transparency requirements as proposed. 

This final rule provides that BCA of 

significant CAA regulations will 

include, at a minimum, a detailed and 

clear explanation of: 


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• The overall results of the BCA. The 

benefits, costs, and net benefits of each 

regulatory option evaluated in the BCA 

will be presented in a manner designed 

to be objective, comprehensive, and 

easily understood by the public. 

• How the benefits and costs were 

estimated, including the assumptions 

made for the analysis. BCAs must 

include a clear explanation of the 

models, data, and assumptions used to 

estimate benefits and costs, and the 

evaluation and selection process for 

these analytical decisions. This 

explanation must also include an 

explanation of procedures used to select 

among input parameters for the benefit 

and cost models. Such an explanation 

could include methods used to quantify 

risk and to model the fate and transport 

of pollutants. 

• A description, consistent with the 

best available scientific information, of 

the non-monetized and non-quantified 

benefits and costs of the action. The 

description must include available 

evidence on all non-monetized and nonquantified benefits and costs, including 

explanations as to why they are not 

being monetized or quantified and what 

the potential impact of those benefits 

and costs might be on the overall results 

of the BCA. 

• The primary sources and potential 

effects of uncertainty. The BCA must 

present the results of the assessment of 

the sources of uncertainty that are likely 

to have a substantial effect on the 

results. Any data and models used to 

analyze uncertainty must be fully 

identified, and the quality of the 

available data must be discussed. 

Finally, to the extent permitted by 

law, the Agency must ensure that all 

information (including data and models) 

used in the development of the BCA is 

publicly available while consistent with 

protections for privacy, confidentiality, 

confidential business information (CBI), 

and national and homeland security. If 

data and models are proprietary, the 

Agency must make available, to the 

extent practicable, the underlying 

inputs and assumptions, equations, and 

methodologies used by EPA. 

Additional discussion of these best 

practices related to transparency is 

provided in OMB’s Circular A–4, 

Transparency and Reproducibility of 

Results, and throughout the EPA’s 

Guidelines (2010). 

F. Requirements for the Presentation of 

BCA Results 

In the proposed rule, the EPA 

proposed to codify a standardized 

presentation of the results of the BCA in 

the preamble of significant regulations. 

Regarding these presentational 

requirements, many commenters 

supported providing additional details 

and disaggregated data with a focus on 

the specific objective of the CAA 

provision or provisions under which the 

rule is promulgated. These commenters 

supported the increased transparency 

that this presentation of BCA results in 

the preamble will provide to the public 

on an EPA rulemaking action. Some 

commenters were supportive of adding 

even more requirements to enhance 

transparency (e.g., to include a 

disaggregation of impacts on small 

entities). 

Other commenters opposed the 

proposal’s presentational requirements, 

especially the requirement to provide an 

additional reporting in the preamble of 

the public health and welfare benefits 

that pertain to the specific objective of 

the CAA provision under which the rule 

is promulgated. Commenters interpreted 

this proposed requirement as barring 

consideration of all benefits that do not 

stem directly from the statutory 

objective and they argued that such 

ancillary benefits developed for a BCA 

are important for the EPA to take into 

consideration. Some commenters stated 

that distinguishing between benefits 

‘‘targeted by the statutory provision’’ 

versus ‘‘other welfare effects’’ can be a 

complex, controversial, and ultimately 

fruitless endeavor, and that analysts 

should not assume, absent explicit 

statutory language, that any statute has 

the objective of barring consideration of 

important indirect effects. For example, 

any broad statutory language, like 

‘‘reasonable’’ or ‘‘appropriate,’’ should 

be read broadly to authorize 

consideration of all important effects, 

whether direct or indirect. The SAB did 

not comment on this element of the 

proposed rule. 

The proposed rule also solicited 

comment as to whether non-domestic 

benefits and costs of regulations, when 

examined, should be reported separately 

from domestic benefits and costs of such 

regulations, analogous to the proposed 

requirement for a separate presentation 

of benefits limited to those targeted by 

the relevant statutory provision or 

provisions. The EPA received wide 

ranging comments on this issue. Many 

commenters voiced support for 

separately reporting, or only reporting, 

domestic benefits and costs. These 

commenters stated that separate 

reporting of domestic and non-domestic 

benefits and costs would allow 

stakeholders to better understand who 

would experience the costs and benefits 

before regulatory action is taken. Several 

commenters also stated that a 

disaggregated reporting would be 

consistent with guidance in OMB 

Circular A–4 that states that the ‘‘. . . . 

analysis should focus on benefits and 

costs that accrue to citizens and 

residents of the United States;’’ and in 

the case where a regulation is evaluated 

that ‘‘is likely to have effects beyond the 

borders of the United States, these 

effects should be reported separately.’’ 

One commenter stated that separate 

reporting of domestic impacts would 

assist EPA in transparently fulfilling the 

CAA’s primary purpose ‘‘to protect and 

enhance the quality of the Nation’s air 

resources.’’ Many other commenters 

were opposed to disaggregated reporting 

of domestic and non-domestic benefits 

and costs. Some stated that separate 

reporting is unnecessary and 

counterproductive. For example, one 

commenter stated that identification 

and communication of subcategories of 

benefits (such as benefits accruing 

outside the United States), where 

practical, is already accommodated and 

frequently done under existing 

procedures. Others stated that a policy 

of breaking out non-domestic benefits 

only ‘‘when examined’’ de-values nondomestic benefits and ignores the 

impacts that occur outside of the United 

States but that harm individuals in and 

outside of the United States directly and 

indirectly. Others emphasized that 

certain classes of effects cannot be 

meaningfully disaggregated. Some 

argued that a BCA which does not allow 

for benefits and costs to be calculated 

outside of the United States fails to 

include the ‘‘best available science’’. 

These commenters stated that EPA’s 

request for comment on separate 

presentation of domestic benefits and 

costs vs. non-domestic benefits 

presumes, wrongly, that ‘‘nondomestic’’ benefits and costs can be 

accounted separately while meeting the 

agency’s obligations to use the ‘‘best 

available science’’ and reasoned 

decision-making. One commenter 

pointed to recent National Academies 

findings that the calculation of a 

domestic benefit in the case of 

greenhouse gas emissions reductions 

cannot be credibly done using current 

models, as they ignore important 

spillover effects given the global nature 

of climate change (National Academies 

2017). 

None of the comments received 

pertaining to the proposed additional 

presentation of benefits limited to those 

targeted by the relevant statutory 

provision have led the EPA to materially 

change its views from the proposal. The 

EPA disagrees with the comment that 

distinguishing the benefits pertaining to 

the CAA statutory objective means that 

other benefits (or disbenefits) are not to 


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be considered. The proposed 

presentational requirements do not bar 

consideration of any part of the BCA. As 

described in Section V.D of this 

preamble, the final rule requires that the 

Agency consider the BCA in the 

decision-making process when 

permitted to do so. However, the EPA 

declines to formulate a specific test or 

mandate of how to consider the BCA or 

what weight the BCA, or particular 

elements of it, should be given in such 

a future rulemaking. The precise details 

of what test would be appropriate could 

differ from one CAA provision to 

another, and the EPA has not proposed 

or requested comment on how such 

tests would be formulated under those 

specific provisions. 

On the issue of separate reporting of 

domestic and non-domestic benefits and 

costs, the EPA agrees with commenters 

who stated that this disaggregation 

would enhance transparency. Separate 

reporting is consistent with both 

guidance in OMB’s Circular A–4 and 

with the CAA which is concerned with 

‘‘enhanc[ing] the quality of the Nation’s 

air resources so as to promote the public 

health and welfare and the productive 

capacity of its population’’ (CAA 

101(b)). The EPA disagrees with 

commenters who stated that a 

disaggregation would de-value nondomestic benefits and ignore the 

impacts that occur outside of the United 

States but that harm individuals in and 

outside of the United States directly and 

indirectly. A separate reporting does not 

prohibit calculating or considering nondomestic benefits, but rather helps to 

allow costs and benefits to be compared 

in an apples-to-apples manner, whether 

domestic or not. 

Aside from separate reporting of 

domestic impacts, the EPA disagrees 

with commenters who stated that 

additional disaggregation of benefit and 

cost results in the preamble presentation 

are needed to enhance transparency. For 

example, CAA rules will continue to 

comply with the requirements of the 

Regulatory Flexibility Act so it is 

unclear why an additional requirement 

to discuss or present impacts to small 

entities is needed in this final rule. 

Therefore, the EPA is finalizing the 

presentational requirements as 

proposed, as described in detail below, 

along with two additional requirements. 

First, the final rule requires that any 

benefits and costs accruing to non-U.S. 

populations be reported separately to 

the extent possible in the summary of 

BCA results in the preamble. Second, 

the final rule requires that the BCA 

include a description in the preamble of 

how the Agency considered the results 

of the BCA. 

Following the principle of 

transparency, the EPA agrees with 

commenters that when presenting the 

results of a BCA, it is important to 

clearly distinguish between the social 

benefits attributable to the specific 

pollution reductions or other 

environmental quality goals that are 

targeted by the statutory provisions that 

give rise to the regulation, and other 

welfare effects. The disaggregation of 

welfare effects will be important to 

ensure that the BCA may provide, to the 

maximum extent feasible, transparency 

in decision-making. These other welfare 

effects could include both favorable and 

adverse impacts on societal welfare. 

Analogous to how a regulation’s 

interactions with existing imperfections 

or distortions in other markets (e.g., due 

to pre-existing taxes) could lead to 

additional social costs, a regulation 

could ameliorate or exacerbate other 

pre-existing externalities. For example, 

more stringent vehicle emissions 

standards could affect upstream refinery 

emissions or reduce the marginal cost of 

driving due to greater fuel efficiency 

and could lead to an increase in vehicle 

miles traveled that affects road safety, 

congestion, and other transport-related 

externalities. 

Other welfare effects could also occur 

as a direct or indirect result of the 

compliance approaches used by 

regulated entities. For example, changes 

in other environmental contaminants 

may arise from the regulated sources. 

Likewise, the use of an abatement 

technology that reduces the emissions of 

hazardous air pollutants into one 

medium (e.g., air) may change the 

emissions of another pollutant into the 

same medium (e.g., coming out of the 

same smokestack) or cause changes in 

emissions of pollutants into another 

medium (e.g., water) by the regulated 

sources. Changes in other 

environmental contaminants may also 

occur as a result of market interactions 

induced by the regulation. For example, 

a regulation may cause consumers or 

firms to substitute away from one 

commodity towards another, whose 

increased production may be associated 

with changes in various environmental 

contaminants or other externalities. 

The welfare effects associated with 

these changes should be accounted for 

in a BCA to the extent feasible, as it is 

the total willingness to pay for all 

changes induced by a regulation that 

determines their relative importance in 

evaluating economic efficiency. 

Disaggregating benefits into those 

targeted and ancillary to the statutory 

objective of the regulation may cause 

the EPA to explore whether there may 

be more efficient, lawful and defensible, 

or otherwise appropriate ways of 

obtaining ancillary benefits, as they may 

be the primary target of an alternative 

regulation that may more efficiently 

address such pollutants, through a more 

flexible regulatory mechanism, better 

geographic focus, or other factors. This 

may be relevant when certain benefits 

are the result of changes in pollutants 

that the EPA regulates under a different 

section of the CAA or under another 

statute. 

In this final rule, the EPA is codifying 

into regulation several presentational 

requirements for the preamble of all 

future significant CAA regulations. 

First, in order to ensure standardized 

presentation of the summary of the BCA 

results consistent with E.O. 12866 in 

CAA rulemakings, the EPA is codifying 

into regulation the requirement to 

present a summary in the preamble of 

the overall BCA results, including total 

benefits, costs, and net benefits. Within 

this summary presentation, if any 

benefits and costs accrue to non-U.S. 

populations they must be reported 

separately to the extent possible. 

Second, to enhance transparency 

about the extent to which a rule is 

achieving its statutory objectives, the 

EPA is required to provide, in addition 

to a clear reporting of the overall results 

of the BCA, an additional presentation 

in the preamble of the public health and 

welfare benefits that pertain to the 

specific objective (or objectives, as the 

case may be) of the CAA provision or 

provisions under which the rule is 

promulgated. This second presentation 

would include a listing of the benefit 

categories arising from the 

environmental improvement that is 

targeted by the relevant statutory 

provision, or provisions and would 

report the monetized value to society of 

these benefits. If these benefit categories 

cannot be monetized, the final rule 

requires the EPA to report the quantified 

estimates of these benefits to the extent 

practicable and to provide a qualitative 

characterization if they cannot be 

quantified. Similarly, if the statute 

directs or allows the Agency to consider 

costs, the EPA should also provide a 

disaggregation of all relevant cost 

categories to the extent feasible in this 

section. This requirement would serve 

as a supplement to the BCA that is 

developed and presented according to 

best practices as outlined in Section V.E 

of this preamble. It does not replace or 

change any part of the RIA or the 

section of the preamble that summarizes 

the BCA results consistent with E.O. 

12866. 

Finally, as described in Section V.D of 

this Preamble, to provide the public 

with as much information and 


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transparency as possible, the EPA will 

be required per the final rule to identify 

when the CAA provision or provisions 

under which the future rule is 

promulgated permit consideration of the 

BCA, and if so, the Agency is required 

to provide a description in the preamble 

of how the results of the BCA were 

considered. If the provision or 

provisions under which the rule is 

promulgated prohibit the consideration 

of the BCA, the final rule requires the 

Agency to identify the specific 

provision which bars such 

consideration. The presentational 

requirements described above should be 

provided in the same section of the 

preamble of future CAA significant 

rulemakings. 

G. Additional Comment Responses 

1. Planning for Retrospective 

Analysis. As discussed in the ANPRM, 

a lack of data, and a lack of a regularized 

process for ongoing or retrospective 

review after rules have been 

implemented, inhibits the EPA’s ability 

to gain insights about the realized costs 

and benefits of actions that may help 

inform how the Agency designs future 

regulations and conducts prospective 

BCA of future rules. Many previous 

administrations have periodically 

undertaken programs of retrospective 

review or issued executive orders urging 

or requiring agencies to reassess existing 

regulations and to eliminate, modify, or 

strengthen those regulations that have 

become outmoded in light of changed 

circumstances. But for the most part, 

retrospective review has not become 

institutionalized practice within the 

EPA. When they occur, these reviews 

rarely involve ex post BCA of the 

original EPA regulations. The EPA 

received many comment letters on the 

ANPRM voicing support for increased 

retrospective analysis of Agency rules or 

programs to evaluate the effectiveness of 

regulations, to design future 

improvements to increase efficiency, 

and to improve methods of ex ante 

analysis. In the proposed rule, the EPA 

requested comments on this issue, 

including whether EPA should include 

a requirement for conducting 

retrospective analysis of significant 

CAA rulemakings and how the Agency 

can overcome the challenges for 

conducting retrospective analysis in 

cases where the EPA’s ability to collect 

information about the costs of 

compliance is limited or otherwise 

influenced by other statutes. 

The EPA received comments from a 

variety of stakeholders supporting the 

idea of conducting more retrospective 

analysis. Many commenters emphasized 

that retrospective analyses could 

provide useful data to help the EPA 

improve environmental outcomes while 

minimizing regulatory burdens, 

promulgate better regulations, and 

improve the analytical framework the 

Agency uses to make regulatory 

decisions. However, some questioned 

the need and appropriateness of a rulebased approach to institutionalizing the 

practice of retrospective analysis of 

existing regulations. Some commenters 

stated that the Agency should not 

compel companies to provide 

information necessary to conduct high 

quality retrospective analysis unless the 

impacted industry is interested and 

willing to participate in a retrospective 

review prior to beginning the 

information collection process. Others 

recommended that the EPA adopt 

specific guidance establishing a 

retrospective analytic process within its 

rulemaking procedures. One commenter 

specified that this guidance should 

include criteria for selecting the set of 

rules to be studied and establishing at 

the outset a rule design that facilitates 

such analyses; that the plan for ex post 

review should identify at the time of 

rulemaking the measurable outcomes to 

be chosen for retrospective analysis, the 

data needs, the time period for 

evaluation, and set out and justify a 

specific plan for data collection. Others 

stated that any potential requirements 

regarding retrospective analysis should 

be concretely proposed in a separate 

notice that fully explains the need for a 

rule-based solution to this issue and that 

allows a new and adequate opportunity 

for public comment. Finally, some 

commenters voiced concern that 

retrospective economic analyses have 

always been problematic and have many 

practical challenges. These commenters 

noted the difficulty in obtaining 

updated, accurate data for use in 

retrospective analyses and believe the 

EPA should focus its efforts to invest in 

high-quality, robust economic analyses 

using best-available science and 

following best economic practices in 

BCAs prepared for current rulemakings. 

Additionally, some commenters argued 

that retrospective analyses could lead to 

unacceptable regulatory and legal 

uncertainty especially should 

previously implemented regulations be 

undone and past investments based on 

those regulatory decisions be 

undermined or reversed. 

The EPA agrees with commenters that 

conducting retrospective analyses of an 

implemented regulation can provide 

valuable information that, if considered, 

can more fully inform public decisionmaking. In many cases, retrospective 

analysis provides an opportunity to 

understand whether a regulation 

achieved its objectives—for example, 

whether the regulation, once 

implemented, promoted economic 

efficiency as expected compared to a 

baseline without the regulation. 

Retrospective analyses may also lead to 

improved methods for prospective 

analysis and ultimately improvements 

in regulatory design. The Agency also 

agrees with those commenters that said 

guidance was a more appropriate way to 

better institutionalize best practices 

when planning for and conducting 

retrospective analysis. This approach is 

also consistent with recent 

recommendations the EPA received 

from the SAB during the course of their 

review of the forthcoming update of the 

EPA’s Guidelines. In that review, the 

SAB recommends that the EPA should 

consider expanding discussion in the 

Guidelines of how regulatory 

approaches can be designed to promote 

effective retrospective analysis and, in 

the future, possibly devote a chapter to 

best practices for conducting such 

analysis. 

Given this advice, the EPA is not 

including a requirement in this final 

rule that retrospective analysis be 

undertaken for all significant 

regulations. Instead, EPA is committing 

to taking additional steps to better 

institutionalize the practice of 

conducting high quality retrospective 

review and analysis, which could be 

accomplished through the development 

of guidance on best practices for 

conducting retrospective analysis and 

how to plan for different types of 

retrospective analysis within its 

rulemaking procedures including how 

to address data needs. This guidance 

could, for example, include criteria for 

identifying rules that might be most 

amenable to retrospective analysis and 

direction on how to identify analytic 

requirements for such analysis at the 

outset when a regulation is 

promulgated. Data needs could be 

identified and avenues for ex post data 

collection integrated into the regulation 

(while also accounting for the cost and 

time needed for firms to collect such 

information). In this way, the EPA could 

learn from past experience and improve 

both policy designs and analytic 

approaches to prospective benefit and 

cost estimation. Regardless of the 

specific administrative procedure 

pursued for institutionalizing 

retrospective analysis at the EPA, it is 

the intention of the Agency to engage 

experts, including academics and 

practitioners, and to ultimately peer 

review any guidance that is developed. 

2. Comments pertaining to Executive 

Order 12898. Numerous commenters 


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contended that the EPA’s proposed rule 

did not consider E.O. 12898 (Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations) and 

commenters stated that the proposal 

language incorrectly asserts that ‘‘this 

proposed action is not subject to 

Executive Order 12898 . . . because it 

does not establish an environmental 

health or safety standard.’’ Commenters 

further stated that air pollution 

disproportionately impacts minority 

communities and the proposed rule 

would obstruct efforts to address this 

disparity. Commenters further argued 

the proposed rule was unclear on how 

the proposal’s BCA analysis 

requirements would ascribe benefits to 

communities of color that frequently 

bear the brunt of environmental risks. 

One of these commenters contended 

that, although the list of elements to 

consider in the BCA includes vulnerable 

and highly impacted communities, the 

proposal failed to describe how these 

communities are to be ‘‘considered.’’ 

The EPA considered these comments 

but reiterates that this rule, as a 

procedural rule, is focused on best 

practices for conducting BCA analysis 

for CAA rulemaking with an aim to 

increase consistency and transparency 

for these BCA analyses. As such, it does 

not establish an environmental health or 

safety standard and is not subject to E.O. 

12898. However, the EPA asserts that 

with the focus on increased 

transparency and providing access to 

the underlying data as provided in this 

final rule’s provisions, the requirements 

will increase the consistency and 

transparency of E.O. 12898 analyses. 

The additional information available as 

a result of compliance with this final 

rule’s requirements will provide a better 

foundation for upcoming E.O. 12898 

analyses of future CAA rulemakings and 

will improve the understanding of the 

underlying issues highlighted by the 

commenters. 

VI. References 

The following is a listing of the 

documents that are specifically 

referenced in this document. The docket 

includes these documents and other 

information considered by the EPA, 

including documents referenced within 

the documents that are included in the 

docket, even if a referenced document is 

not physically located in the docket. For 

assistance in locating these other 

documents, please consult the person 

listed under the ‘‘For Further 

Information Contact’’ section above. 

1. U.S. EPA (U.S. Environmental Protection 

Agency). Increasing Consistency and 

Transparency in Considering Costs and 

Benefits in the Rulemaking Process; Advance 

notice of proposed rulemaking. (83 FR 27524, 

June 13, 2018). 

2. OMB (Office of Management and 

Budget). (1996). Economic Analysis of 

Federal Regulations Under Executive Order 

12866. 

3. OMB (Office of Management and 

Budget). (2003). Circular A–4, ‘‘Regulatory 

Analysis.’’ 

4. U.S. EPA (U.S. Environmental Protection 

Agency). (2010). Guidelines for Preparing 

Economic Analyses. 

5. Arrow, K., M. Cropper, G. Eads, R. Hahn, 

L. Lave, R. Noll, P. Portney, M. Russell, R. 

Schmalensee, V. Smith, and R. Stavins. 

1996a. Benefit-Cost Analysis in 

Environmental, Health, and Safety 

Regulation: A Statement of Principles. 

Washington, DC: American Enterprise 

Institute, The Annapolis Center, and 

Resources for the Future. 

6. Arrow et al. 1996b. Is There a Role for 

Benefit-Cost Analysis in Environmental, 

Health, and Safety Regulation? Science 272: 

221–222. 

7. Institute of Medicine (IOM). 2011. 

Finding What Works in Health Care: 

Standards for Systematic Reviews. 

Washington, DC: The National Academies 

Press. https://www.nap.edu/catalog/13059/ 

finding-what-works-in-health-care-standardsfor-systematic-reviews. 

8. National Research Council. 2014. 

Review of EPA’s Integrated Risk Information 

System (IRIS) Process. 

VII. Statutory and Executive Order 

Reviews 

Additional information about these 

statutes and Executive Orders can be 

found at https://www.epa.gov/lawsregulations/laws-and-executive-orders. 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

This action is a significant regulatory 

action that was submitted to the OMB 

for review. Any changes made in 

response to OMB recommendations 

have been documented in the docket. 

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. 

B. Executive Order 13771: Reducing 

Regulations and Controlling Regulatory 

Costs 

This action is not subject to Executive 

Order 13771 because this final rule is a 

rulemaking of agency organization, 

procedure, or practice. 

C. 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. 

D. Regulatory Flexibility Act (RFA) 

I certify that this action would 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. 

E. 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. 

F. Executive Order 13132: Federalism 

This action does not have federalism 

implications. It would 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. 

G. 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. 

H. 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. 

I. 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. 


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J. National Technology Transfer and 

Advancement Act (NTTAA) 

This rulemaking does not involve 

technical standards. 

K. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

The EPA believes that this action is 

not subject to Executive Order 12898 (59 

FR 7629, February 16, 1994) because it 

does not establish an environmental 

health or safety standard. 

L. 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 procedure, 

Reporting and recordkeeping 

requirements. 

Andrew Wheeler, 

Administrator. 

For the reasons set forth in the 

preamble, the EPA amends title 40, 

chapter I of the Code of Federal 

Regulations by adding part 83 to read as 

follows: 

PART 83—INCREASING 

CONSISTENCY AND TRANSPARENCY 

IN CONSIDERING BENEFITS AND 

COSTS IN CLEAN AIR ACT 

RULEMAKING PROCESS 

Sec. 

Subpart A—Analysis of Air Regulations 

83.1 What definitions apply to this subpart? 

83.2 How do the provisions of this subpart 

apply? 

83.3 What requirements apply to EPA’s 

preparations of Benefit-Cost Analyses 

(BCAs) under the Clean Air Act? 

83.4 What additional requirements apply to 

EPA’s presentation of BCA results for all 

significant rules promulgated under the 

Clean Air Act? 

Authority: 42 U.S.C. 7601(a)(1). 

Subpart A—Analysis of Air 

Regulations 

§ 83.1 What definitions apply to this 

subpart? 

Baseline means the best assessment of 

the way the world would evolve absent 

the regulation. It is the primary point of 

comparison for assessing the effects of 

the regulatory options under 

consideration. 

Benefit-cost analysis (BCA) means an 

evaluation of the social benefits and 

social costs of a policy action and other 

policy alternatives. The social benefits 

of a policy are measured by society’s 

willingness-to-pay for the policy 

outcome. The social costs are measured 

by the opportunity costs of adopting the 

policy. BCA addresses the question of 

whether the benefits for those who gain 

from the action are sufficient to, in 

principle, compensate those burdened 

by costs such that everyone would be at 

least as well off as before the policy. The 

calculation of net benefits (benefits 

minus costs) answers this question and 

helps ascertain the economic efficiency 

of the policy. Where all regulation 

attributable benefits and costs can be 

quantified and expressed in monetary 

units, BCA provides decision makers 

with a clear indication of the most 

economically efficient alternative, that 

is, the alternative that generates the 

largest net benefits to society (ignoring 

distributional effects). 

Compliance cost means the private 

cost that a regulated entity incurs to 

comply with a regulation, such as 

through planning, design, installation, 

and operation of pollution abatement 

equipment. 

Data means the set of recorded factual 

material commonly accepted in the 

scientific community as necessary to 

validate research findings in which 

obvious errors, such as keystroke or 

coding errors, have been removed and 

that is capable of being analyzed by both 

the original researcher and an 

independent party. 

Endpoint is the specific manifestation 

of the documented effect that is to be 

quantified for the benefits analysis. It is 

a metric (e.g., number of hospital 

admissions) that acts as a surrogate for 

some aspect of a health or public 

welfare effect (e.g., respiratory system 

effects). 

Expected value is the probabilistically 

weighted outcome that defines a 

statistical mean and a measure of the 

central tendency of a set of data. For a 

variable with a discrete number of 

outcomes, the expected value is 

calculated by multiplying each of the 

possible outcomes by the likelihood that 

each outcome will occur and then 

summing all of those values. 

Model means a simplification of 

reality that is constructed to gain 

insights into select attributes of a 

physical, biological, economic, or social 

system. A formal representation of the 

behavior of system processes, often in 

mathematical or statistical terms. The 

basis can also be physical or conceptual. 

Opportunity cost means the value of 

the next best alternative to a particular 

activity or resource. 

Publicly available means lawfully 

available to the general public from 

federal, state, or local government 

records; the internet; widely distributed 

media; or disclosures to the general 

public that are required to be made by 

federal, state, or local law. 

Regulatory options means: 

(1) The proposed or finalized option, 

and at a minimum the following; 

(2) A more stringent option which 

contributes to the stated objectives of 

the Clean Air Act and that achieves 

additional benefits (and presumably 

costs more) beyond those realized by the 

proposed or finalized option; and 

(3) A less stringent option which 

contributes to the stated objectives of 

the Clean Air Act and that costs less 

(and presumably generates fewer 

benefits) than the proposed or finalized 

option. 

Sensitivity Analysis means an analysis 

that is used to assess how the final 

results or other aspects of an analysis 

change as input parameters change, 

particularly when only point estimates 

of parameters are available. Typically, a 

sensitivity analysis measures how a 

model’s output changes as one of the 

input parameters change. Joint 

sensitivity analysis (varying more than 

one parameter at a time) is sometimes 

useful as well. 

Significant regulation means a 

proposed or final regulation issued 

pursuant to authority provided by the 

Clean Air Act that is determined to be 

a ‘‘significant regulatory action’’ 

pursuant to Section 3(f) of E.O. 12866 or 

is otherwise designated as significant by 

the Administrator. 

Social benefits, or benefits, means the 

sum of all positive changes in societal 

well-being experienced as a result of the 

regulation or policy action. 

Social costs, or costs, means the sum 

of all opportunity costs, or reductions in 

societal well-being, incurred as a result 

of the regulation or policy action. These 

opportunity costs consist of the value 

lost to society of all the goods and 

services that will not be produced and 

consumed as regulated entities 

reallocate resources to comply with the 

regulation. 

Systematic Review Process is the 

process for evaluating the scientific 

literature that includes: 

(1) Identification of the specific 

question to be addressed in the review; 

(2) Pre-specified methods used to 

address the question, making these 

methods and the review process 

transparent); 

(3) A search strategy written into the 

protocol that explicitly states the 

inclusion and exclusion criteria for 

studies; and 

(4) A description of the structured 

approach used to draw conclusions 


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Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Rules and Regulations 84155 

considering all appropriate and 

available lines of evidence, including 

epidemiologic, toxicologic, and 

mechanistic lines of evidence. 

§ 83.2 How do the provisions of this 

subpart apply? 

(a) After December 23, 2020, the 

Agency must prepare a benefit-cost 

analysis (BCA) for all significant 

proposed and final regulations, except 

that the requirement to prepare a BCA 

for significant final regulations does not 

apply to final regulations proposed on 

or before December 23, 2020. Except 

where explicitly stated otherwise, the 

provisions of this subpart do not apply 

to any other type of agency action, 

including individual party 

adjudications, enforcement activities, or 

actions taken in permit proceedings. 

(b) Except where the provision or 

provisions under which a significant 

regulation is promulgated prohibit the 

consideration of the BCA, the Agency 

must consider the BCA in promulgating 

the regulation. 

§ 83.3 What requirements apply to EPA’s 

preparations of Benefit-Cost Analyses 

(BCAs) under the Clean Air Act? 

(a) A BCA prepared pursuant to this 

subpart must be developed by the 

Agency in accordance with best 

available scientific information and best 

practices from the economic, 

engineering, physical, and biological 

sciences according to paragraphs (a)(1) 

through (12) of this section. 

(1) The BCA must include the 

following information: 

(i) A statement of need as defined in 

paragraph (a)(2) of this section; 

(ii) An examination of regulatory 

options as defined in paragraph (a)(3) of 

this section; and 

(iii) To the extent feasible, an 

assessment of all benefits and costs of 

these regulatory options relative to the 

baseline scenario. 

(2) The BCA must include a statement 

of need that provides a clear description 

of the problem being addressed, the 

reasons for and significance of any 

failure of private markets or public 

institutions causing this problem, and 

the compelling need for federal 

government intervention in the market 

to correct the problem. 

(3) The BCA must include an analysis 

of the benefits and costs of regulatory 

options, which would contribute to the 

stated objectives of the Clean Air Act 

and an explanation as to why these 

regulatory options were selected. Where 

there is a continuum of options (such as 

options that vary in stringency), the 

regulatory options must include at a 

minimum (as provided in § 83.1): The 

proposed or finalized option; a more 

stringent option that achieves additional 

benefits (and presumably costs more) 

beyond those realized by the proposed 

or finalized option; and a less stringent 

option that costs less (and presumably 

generates fewer benefits) than the 

proposed or finalized option. When a 

continuum of options is not applicable, 

the regulatory options can include 

variation of key parameters, such as 

different compliance dates, enforcement 

methods, standards by size or location 

of facilities, and regulatory designs. If 

fewer than three options are analyzed 

relative to the baseline, or if there is a 

continuum of options and the options 

analyzed do not include at least one 

more stringent (or otherwise more 

costly) and one less stringent (or 

otherwise less costly) option than the 

proposed or finalized option, then the 

Agency must provide an explanation of 

why it is not appropriate to analyze 

more options. 

(4) The BCA must include a baseline 

that appropriately considers relevant 

factors and relies on transparent and 

reasonable assumptions. The baseline 

must account for, but is not limited to, 

the following factors: 

(i) Exogenous changes in the economy 

that may affect benefits and costs (e.g., 

changes in demographics, economic 

activity, consumer preferences, or 

technology); 

(ii) Regulations promulgated by the 

Agency or other government entities; 

and 

(iii) The degree of compliance by 

regulated entities with other regulations. 

In rulemaking actions where the 

Agency determines it is appropriate to 

consider more than one baseline (e.g., 

one that accounts for another EPA 

regulation being developed at the same 

time that affects the same environmental 

condition), the BCA must include a 

reasoned explanation for the selection of 

the baselines used and must identify the 

key uncertainties in the forecast(s). 

(5) In preparing the BCA, the Agency 

must rely on the use of a framework that 

is appropriate for the characteristics of 

the regulation being evaluated and must 

provide an explanation for the approach 

adopted. 

(6) The Agency must consider how 

costs and benefits may be affected by 

consumer and producer behavior in the 

baseline and potential behavioral 

changes from the policy scenarios. 

(7) The BCA must include an 

estimation of benefits that links 

regulatory requirements to the value 

that individuals place on the change in 

benefit endpoints that can be 

meaningfully attributed to those 

requirements. 

(8) The BCA must include, to the 

extent supported by scientific literature 

as well as practicable in a given 

rulemaking: 

(i) A quantification of all benefits; 

(ii) A monetization of all the benefits 

that follows well-defined economic 

principles using well-established 

economic methods, appropriate data 

and/or studies; and 

(iii) A qualitative characterization of 

benefits that cannot be quantified or 

monetized. 

(9) The process of selecting and 

quantifying human health benefit 

endpoints in the BCA must be 

conducted according to paragraphs 

(a)(9)(i) through (vii) of this section: 

(i) The process of selecting human 

health benefit endpoints will be based 

upon scientific evidence that indicates 

there is: 

(A) A clear causal or likely causal 

relationship between pollutant exposure 

and effect, and 

(B) Sufficient data and understanding 

to allow the agency to reasonably model 

the anticipated change in that effect in 

response to changes in environmental 

quality or exposures expected as a result 

of the regulation under analysis. 

(ii) For human health endpoints, a 

systematic review process must be used 

to evaluate the hazard data for the 

purposes of determining which 

endpoints to include in a BCA and what 

concentration-response functions to use 

to quantify changes in these endpoints. 

A study’s inclusion in the review must 

not depend upon that study’s findings. 

More weight should be given to higher 

quality studies or analyses that have 

been peer reviewed. 

(iii) The studies or analyses used to 

quantify the concentration-response 

relationships should take into account 

the breadth and quality of the available 

evidence regarding the nature and 

magnitude of the risk to the populations 

affected by the regulation. To the extent 

possible, the studies or analyses should 

be: 

(A) Based upon human data when 

available; 

(B) Specific to the exposure route, 

duration, and levels, with preference 

given to those studies assessing 

exposure similar to those experienced 

by the general population; 

(C) Employ a design or analysis that 

adequately addresses relevant sources of 

potential critical confounding; 

(D) Consider how exposure is 

measured, particularly those that 

provide measurements at the level of the 

individual and that provide actual 

measurements of exposure; and 


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84156 Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Rules and Regulations 

(E) Reliably distinguish the presence 

or absence (or degree of severity) of 

health outcomes. 

(iv) When utilizing multiple 

concentration-response functions to 

estimate impacts on a single health 

endpoint, the BCA must quantify risks 

in such a way that the heterogeneity in 

the estimated health impacts is clearly 

characterized. 

(v) The presentation of results should 

characterize the sensitivity of the choice 

of the concentration-response function 

on the magnitude and the uncertainty 

associated with estimated benefits. 

(vi) When sufficient data exist, a 

probability distribution of risk is 

appropriate to use when determining 

the expected benefits for CAA 

regulations. When it is infeasible to 

estimate a probability distribution, 

measures of the central tendency of risk 

may be used. Upper-bound risk 

estimates must not be used without also 

presenting lower bound and central 

tendency estimates. 

(vii) Consistent with the general 

systematic review process, the 

evaluation and model specification 

processes conducted under all 

subsections of (9) must emphasize 

transparency and replicability. This 

includes: 

(A) An explanation of the basis for 

significant judgments, assumptions, 

data, models, and inferences used or 

relied upon in the assessment and 

decisions regarding the selection and 

quantification of health endpoints; and 

(B) A description of the sources, 

extent and magnitude of significant 

uncertainties associated with the 

assessment. 

(10) The BCA must include an 

identification of uncertainties 

underlying the estimation of both 

benefits and costs and, to the extent 

feasible and appropriate, quantitatively 

analyze those that are most influential; 

and must present benefits and cost 

estimates in ways that convey their 

uncertainty, including acknowledging 

unquantified benefits and costs, where 

appropriate. The BCA must include a 

reasoned explanation for the scope and 

specific quantitative or qualitative 

methods chosen to analyze 

uncertainties. Specifically, the 

explanation must include the following: 

(i) To the extent feasible and 

appropriate, the BCA must apply 

quantitative methods to analyze 

uncertainties that have the largest 

potential effect on benefits or cost 

estimates and include a description of 

such methods. 

(ii) The BCA must characterize, 

preferably quantitatively, sources of 

uncertainty in the assessment of costs, 

changes in air quality, assessment of 

likely changes in health and welfare 

endpoints, and the valuation of those 

changes. For example, the BCA could 

characterize statistical, model or 

parameter uncertainty. 

(iii) Where data are sufficient to do so, 

the BCA must include a consideration of 

sources of uncertainty both 

independently and jointly. 

(iv) To the extent feasible and 

appropriate, the BCA must also include 

a consideration, and transparent 

acknowledgement of, the extent to 

which qualitatively-assessed costs or 

benefits are characterized by 

uncertainty. 

(v) When simpler quantitative 

analysis may not sufficiently describe 

uncertainty, and where probability 

distributions for relevant input 

assumptions are available and can be 

feasibly and credibly combined, the 

BCA must include a characterization of 

how the probability distributions of the 

relevant input assumption uncertainty 

would impact the resulting distribution 

of benefit and cost estimates. 

(vi) Except as provided in this 

paragraph, the BCA must include a 

characterization of the range of likely 

outcomes, including expected value 

estimates of benefits and costs as well 

as distributions about each of the 

estimates. In cases where estimates 

based on expected values are not 

feasible or appropriate, the BCA must 

present a range of benefits and costs. 

(11) The BCA must include a 

presentation that includes the following 

elements: 

(i) A presentation of the overall 

results of the BCA (benefits, costs, and 

net benefits of each regulatory option 

evaluated in the BCA) in a manner 

designed to be objective, 

comprehensive, reproducible to the 

extent reasonably possible, and easily 

understood by the public. 

(ii) A description of how the benefits 

and costs were estimated in the BCA, 

including the assumptions made for the 

analysis. The description must include 

the models, data, and assumptions used 

to estimate benefits and costs, and the 

evaluation and selection process for 

these analytical decisions. The 

description must also include an 

explanation of procedures used to select 

among input parameters to the benefit 

and cost models, and any methods used 

to quantify risk and to model fate and 

transport of pollutants. 

(iii) A description, consistent with the 

best available scientific information, of 

the non-monetized and non-quantified 

benefits and costs of the action. The 

description must include available 

evidence on non-monetized and nonquantified benefits and costs, including 

explanations as to why they are not 

being monetized or quantified and 

discussions of what the potential impact 

of those benefits and costs might be on 

the overall results of the BCA. 

(iv) A presentation of the results of an 

assessment of the sources of uncertainty 

that are likely to have a substantial 

effect on the results of the BCA and 

present the results of this assessment. 

The presentation must identify any data 

and models used to analyze uncertainty 

in the BCA, and the quality of the 

available data shall be discussed. 

(v) 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. 

(12) To the extent permitted by law, 

the Agency must ensure that all 

information (including data and models) 

used in the development of the BCA is 

publicly available while consistent with 

protections for privacy, confidentiality, 

confidential business information (CBI), 

and national and homeland security. If 

data and models are proprietary, the 

Agency must make available, to the 

extent practicable, the underlying 

inputs and assumptions used, 

equations, and methodologies used by 

EPA. 

(b) [Reserved] 

§ 83.4 What additional requirements apply 

to EPA’s presentation of BCA results for all 

significant regulations promulgated under 

the Clean Air Act? 

(a) The Agency must provide a 

summary in the preamble of each 

significant regulation of the overall BCA 

results, including total benefits, costs, 

and net benefits. Within this summary, 

if any benefits and costs accrue to nonU.S. populations they must be reported 

separately to the extent possible. 

(b) The Agency must provide an 

additional presentation in the preamble 

of each significant regulation of the 

public health and welfare 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. 

(1) This presentation must list the 

benefit categories arising from the 

environmental improvement that is 

targeted by the relevant statutory 

provision and report the monetized 

value to society of these benefits. 

(2) If these benefit categories cannot 

be monetized, the Agency must report 

the quantified estimates of these 

benefits to the extent possible and 

provide a qualitative characterization if 

they cannot be quantified. 


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Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Rules and Regulations 84157 

(c) When the CAA provision or 

provisions under which the significant 

regulation is promulgated require the 

consideration of specific costs, the 

Agency must provide a transparent 

presentation of how those specific costs 

relate to total costs, to the extent 

possible. 

(d) When the CAA statutory provision 

or provisions under which the 

significant regulation is promulgated 

does not prohibit the consideration of 

the BCA, the Agency must provide a 

description in the preamble of how the 

Agency considered the BCA. If the 

provision or provisions under which the 

significant regulation is promulgated 

prohibit the consideration of the BCA, 

the Agency must identify the specific 

provision which bars such 

consideration. 

(e) The summary, description and 

presentations specified in paragraphs 

(a), (b), (c), and (d) of this section must 

be placed in the same section in the 

preamble of the regulation. 

[FR Doc. 2020–27368 Filed 12–22–20; 8:45 am] 

BILLING CODE 6560–50–P 


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