Regulatory Impact Analysis: Development of Social Cost of Carbon Estimates
Published: 2014-07-24T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Executive Order 12866 directs federal agencies to assess the economic effects of their proposed significant regulatory actions, including a determination that a regulation's benefits justify the costs. In 2008, a federal appeals court directed DOT to update a regulatory impact analysis with an estimate of the social cost of carbon—the dollar value of the net effects (damages and benefits) of an increase in emissions of carbon dioxide, a greenhouse gas.
In 2009, the Interagency Working Group on Social Cost of Carbon was convened to develop estimates for use governmentwide, and it issued final estimates in its 2010 Technical Support Document. In 2013, the group issued revised estimates that were about 50 percent higher than the 2010 estimates, which raised public interest.
GAO was asked to review the working group's development of social cost of carbon estimates. This report describes the participating entities and processes and methods they used to develop the 2010 and 2013 estimates. GAO reviewed executive orders, OMB guidance, the Technical Support Document, its 2013 update, and other key documents. GAO interviewed officials who participated in the working group on behalf of the EOP offices and agencies involved. GAO did not evaluate the quality of the working group's approach.
GAO is making no recommendations in this report. Of seven agencies, OMB and Treasury provided written or oral comments and generally agreed with the findings in this report. Other agencies provided technical comments only or had no comments.
section_title: What GAO Found
paragraphs: To develop the 2010 and 2013 social cost of carbon estimates, the Office of Management and Budget (OMB) and Council of Economic Advisers convened and led an informal interagency working group in which four other offices from the Executive Office of the President (EOP) and six federal agencies participated. Participating agencies were the Environmental Protection Agency (EPA) and the Departments of Agriculture, Commerce, Energy, Transportation (DOT), and the Treasury. According to several working group participants, the working group included relevant subject-matter experts and the agencies likely to use the estimates in future rulemakings. According to OMB staff, there is no single approach for convening informal interagency working groups and no requirement that this type of working group should document its activities or proceedings. However, OMB and EPA participants stated that the working group documented all major issues discussed in the Technical Support Document, which is consistent with federal standards for internal control. According to the Technical Support Document and participants GAO interviewed, the working group's processes and methods reflected the following three principles:
Used consensus-based decision making. The working group used a consensus-based approach for making key decisions in developing the 2010 and 2013 estimates. Participants generally stated that they were satisfied that the Technical Support Document addressed individual comments on draft versions and reflected the overall consensus of the working group.
Relied on existing academic literature and models. The working group relied largely on existing academic literature and models to develop its estimates. Specifically, the working group used three prevalent academic models that integrate climate and economic data to estimate future economic effects from climate change. The group agreed on three modeling inputs reflecting the wide uncertainty in the academic literature, including discount rates. Once the group reached agreement, EPA officials—sometimes with the assistance of the model developers—calculated the estimates. All other model assumptions and features were unchanged by the working group, which weighted each model equally to calculate estimates. After the academic models were updated to reflect new scientific information, such as in sea level rise and associated damages, the working group used the updated models to revise its estimates in 2013, resulting in higher estimates.
Took steps to disclose limitations and incorporate new information. The Technical Support Document discloses several limitations of the estimates and areas that the working group identified as being in need of additional research. It also sets a goal of revisiting the estimates when substantially updated models become available. Since 2008, agencies have published dozens of regulatory actions for public comment that use various social cost of carbon estimates in regulatory analyses and, according to working group participants, agencies received many comments on the estimates throughout this process. Several participants told GAO that the working group decided to revise the estimates in 2013 after a number of public comments encouraged revisions because the models used to develop the 2010 estimates had been updated and used in peer-reviewed academic literature.

section_title: Letter
paragraphs: To encourage a regulatory system that protects and improves health,  safety, the environment, and the economy, without imposing  unreasonable costs on society, federal agencies are required to assess  the economic effects of proposed significant regulatory actions. Agencies  can use regulatory impact analysis to assess whether a proposed  regulation’s benefits justify the costs. For example, regulations aimed at  benefiting society by decreasing health risks associated with air pollution  may require regulated entities, such as power plants, to incur costs for  installing pollution control technologies. According to Environmental  Protection Agency (EPA) officials, beginning in 2008, some agencies’  regulatory impact analyses incorporated estimates of the social cost of  carbon, which agencies use to value the net effects of reducing or  increasing carbon dioxide emissions. In 2009, in part because agencies  used varying estimates of the social cost of carbon, the Executive Office  of the President’s (EOP) Office of Management and Budget (OMB) and  Council of Economic Advisers convened an interagency working group to  develop social cost of carbon estimates for federal agencies to use in  their regulatory impact analyses. The working group finalized its  estimates in 2010 and included them in a document—called the Technical  Support Document—that also provides guidance for agencies on using  the estimates. In May 2013, the working group issued an update to the  Technical Support Document that included revised estimates of the social  cost of carbon. These 2013 estimates of the social cost of carbon were  approximately 50 percent higher than the 2010 estimates, which raised  public interest.
You asked us to review the interagency working group’s development of  social cost of carbon estimates. This report describes the approach used,  including participating entities and processes and methods, to develop  the 2010 and 2013 social cost of carbon estimates for regulatory impact  analysis.
To address this objective, we reviewed pertinent requirements and  guidance, including executive orders and OMB guidance; the Technical  Support Document and its 2013 update; published materials and  presentations by working group participants on the development of the  social cost of carbon estimates; and related GAO reports. We interviewed  current and former federal officials or staff who participated in the working  group on behalf of the EOP offices and agencies named in the Technical  Support Document. We identified these participants by contacting all of  the agencies and OMB and then following up with additional individuals  identified during our discussions with them. Through this process, we  interviewed over 20 individuals who participated in the working group to  develop the estimates in the Technical Support Document or its 2013  update, or both. We also corresponded with researchers who developed  key academic materials the working group used. Our review describes  the approach the working group used to develop estimates of the social  cost of carbon; evaluating the quality of the approach is outside the scope  of this review.
We conducted this performance audit from November 2013 to July 2014  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Executive Order 12866 directs federal agencies to assess the potential  costs and benefits of their significant regulatory actions, consisting of  several categories of regulatory actions, including those likely to result in  a rule that may have an annual effect on the economy of $100 million or  more or that have a material adverse effect on the economy; a sector of  the economy; productivity; competition; jobs; the environment; public  health or safety; or state, local, or tribal governments or communities.  Under the executive order, for regulatory actions expected to meet this  threshold, or economically significant regulatory actions, agencies must  also assess costs and benefits of reasonably feasible alternatives and  explain why the planned regulatory action is preferable to the identified  alternatives. For each significant regulatory action, the agency is to  develop the proposed regulation and associated regulatory impact  analysis and submit them to OMB for formal review. After OMB concludes  its review, the agency is to publish the proposed rule in the Federal  Register for public comment. The agency is to issue a document  summarizing its consideration of the public comments and, if appropriate,  modify the proposed rule in response to the comments. This phase of  regulatory development may also include further internal and external  review. For significant regulatory actions, the agency is to submit the final  regulatory impact analysis and regulation to OMB for review before it  publishes the final rule.
In 2003, OMB issued Circular A-4 to provide guidance to federal agencies  on the development of regulatory analysis as directed by Executive Order  12866. Circular A-4 states that it is designed to assist agencies by  defining good regulatory analysis and standardizing the way benefits and  costs of federal regulatory actions are measured and reported. In  particular, the guidance provides for systematic evaluation of qualitative  and quantitative benefits and costs, including their monetization. Circular  A-4 also provides guidance on the selection of discount rates to adjust the  estimated benefits and costs for differences in timing. According to  Circular A-4, a regulatory impact analysis should include an evaluation of  the benefits and costs of the proposed action and any reasonable  alternatives, as well as a description of assumptions and uncertainty. It  acknowledges that agencies cannot analyze all regulations according to a  formula, and that different regulations may call for different emphases in  the analysis. Executive Order 13563, which reaffirmed and supplemented  Executive Order 12866 in 2011, generally directs federal agencies to  conduct regulatory actions based on the best available science. It also  directs agencies to use the best available techniques to quantify benefits  and costs accurately.
Federal agencies began including estimates of the social cost of carbon  in regulatory impact analyses following a decision by the U.S. Court of  Appeals for the Ninth Circuit. Specifically, in 2006, the Department of  Transportation’s National Highway Traffic Safety Administration (NHTSA)  issued a final rule on fuel economy standards for certain vehicles which,  like other regulations at the time, did not include estimates of the social  cost of carbon. The final rule stated that the agency had identified a  benefit from a significant reduction in carbon dioxide emissions but stated  that the dollar value of the benefit could not be determined because of the  wide variation in published estimates of the social cost of carbon. In 2008,  in response to a challenge from 11 states and several other  organizations, the Ninth Circuit held that NHTSA had acted arbitrarily and  capriciously by failing to monetize the value of carbon emissions  reduction and directed NHTSA to include such a monetized value in an  updated regulatory impact analysis for the regulation. The court stated  that, “hile the record shows that there is a range of values, the value of  carbon emissions reduction is certainly not zero.” Following the court’s  decision, the Department of Energy, the Department of Transportation,  and EPA incorporated a variety of individually developed estimates of the  social cost of carbon into their regulatory analyses. These estimates were  derived from academic literature and ranged, in general, from $0 to $159  (in 2006, 2007, or 2008 dollars) per metric ton of carbon dioxide emitted  in 2007. They also varied in whether they reflected domestic or global  measures of the social cost of carbon.
In early 2009, in part to improve consistency in agencies’ use of social  cost of carbon estimates for regulatory impact analysis, OMB’s Office of  Information and Regulatory Affairs and the Council of Economic Advisers  convened the Interagency Working Group on Social Cost of Carbon. The  working group developed interim governmentwide social cost of carbon  estimates based on an average of selected estimates published in  academic literature. The interim estimates first appeared—and, thus,  were first available for public review—in August 2009 in the Department  of Energy’s final rule on energy standards for vending machines.  Agencies subsequently incorporated the interim estimates into several  published regulatory actions that sought public comments to inform the  development of final estimates for future use. The middle or “central”  value for the range of interim estimates was $19 (in 2006 dollars) per  metric ton of carbon dioxide emitted in 2007.
In October 2009, after developing the interim estimates, the working  group reassembled to begin developing the final social cost of carbon  estimates issued in the Technical Support Document. While the Technical  Support Document is dated February 2010, it was first released publicly in  March 2010 as an appendix to the Department of Energy’s final rule on  energy standards for small electric motors. Subsequently, dozens of  published regulatory actions incorporated the estimates. The Technical  Support Document states that the working group agreed to regularly  update the social cost of carbon estimates as the research underlying the  estimates evolves. In June 2013, after using the 2010 estimates in an  earlier proposal of the rule, the Department of Energy’s final rule on  energy standards for microwaves was the first regulatory action to  incorporate the revised estimates developed by the working group in the  2013 update to the Technical Support Document. Table 1 shows the  central values for the range of 2010 and 2013 social cost of carbon  estimates for carbon emissions occurring in selected years.
Appendix I lists regulatory actions from 2008 to 2014 and the type of  social cost of carbon estimates (i.e., individually developed, interim, 2010,  or 2013) incorporated in the actions’ regulatory analyses.
section_title: Approach Used to Develop Estimates of the Social Cost of Carbon
paragraphs: According to the Technical Support Document and participants we  interviewed, the working group consisted of participants representing six  EOP offices and six federal agencies and was convened under Executive  Order 12866. The working group’s processes and methods for developing  the estimates reflected three key principles. Specifically, according to  participants, the working group (1) used consensus-based decision  making; (2) relied largely on existing academic literature and models,  including technical assistance from outside resources; and (3) took steps  to disclose limitations and incorporate new information by considering  public comments and revising the estimates as updated research became  available.
subsections: section_title: Participating Entities
paragraphs: According to the Technical Support Document and participants we spoke  with, OMB and the Council of Economic Advisers convened and led the  working group, and four other EOP offices and six federal agencies  actively participated in the group. According to several participants, the  participating EOP offices included the relevant subject-matter experts to  best contribute on behalf of the EOP, and the other participating  agencies were those likely to conduct rulemakings affecting carbon  emissions and, therefore, use the social cost of carbon estimates in the  future. For example, EPA and the Department of Energy have issued  numerous rules using the social cost of carbon estimates (see app. I).
OMB staff and EPA officials told us that OMB and the Council of  Economic Advisers decided which EOP offices and federal agencies to  invite to participate in the working group and, according to participants we  interviewed from several agencies, each agency that chose to participate  decided which of its internal offices would send representatives. OMB  staff stated that any federal agency was welcome to participate in the  working group, and EPA officials told us that at least two invited agencies  declined to participate. OMB staff recalled that the working group  generally included up to several participants from each participating office  and agency and numbered approximately two dozen participants in total.
Table 2 lists the 12 participating offices and agencies, along with the  internal offices they sent to represent them on the working group.
In establishing the working group, several participants told us that OMB  and the Council of Economic Advisers made efforts to ensure that the  group’s members, collectively, brought the necessary technical expertise  for developing social cost of carbon estimates. For example, according to  these participants and EPA documentation, participants from the EOP  offices included individuals with expertise in pertinent topics, such as  economics and climate science. The former Deputy Assistant Secretary  for Environment and Energy at the Department of the Treasury stated that  he was invited to participate in the working group because of his prior  experience researching ways to discount costs and benefits across  generations. In addition, the former Administrator of the Energy  Information Administration told us that he was asked to participate, in  part, based on his previous experience evaluating climate models while  conducting research with the National Academy of Sciences. According to  an OMB staff member, the six participating federal agencies were also  responsible for ensuring that they provided adequate technical expertise  to the working group. Agency representatives included environmental  economists and climate scientists, among other key professionals.  According to EPA documentation, participants from EPA also provided  technical expertise in climate science, economics, and academic  modeling to the broader group, as needed.
When the working group reconvened in 2013 to update the estimates, the  same EOP offices and agencies generally participated, although some of  the individuals participating on behalf of offices or agencies changed, in  part due to individuals changing positions or leaving the government  altogether. Also, some participants who previously had been serving  details at other participating agencies had returned to their home  agencies. For example, certain participants who were on detail to the  Council of Economic Advisers during the development of the 2010  Technical Support Document instead represented EPA on the working  group during the development of the 2013 update.
According to the Technical Support Document, the working group was  convened under the broad direction of Executive Order 12866 for  agencies to assess the costs and benefits of intended regulations. In  addition, participants from several agencies told us that the executive  order was the key requirement driving the working group’s effort to  develop social cost of carbon estimates. OMB staff stated that, while  there is no single requirement or other approach for convening  interagency working groups, it is appropriate for OMB to form interagency  working groups to collaborate on policy or analytic needs identified under  Executive Order 12866. These OMB staff members said that, instead of  being organized under a written agreement or other requirements, the  working group was an informal interagency working group with no charter  or other convening document. According to OMB staff, there was no  requirement that the informal working group should document its activities  or proceedings, including the meetings held or specific discussions that  occurred at each. However, OMB staff and EPA officials stated that all  major issues discussed during working group meetings are documented  in the Technical Support Document and its 2013 update, which is  consistent with the control activities standard in the federal standards for  internal control. We have also reported that interagency working groups  use a variety of mechanisms to implement interagency collaborative  efforts, including temporary working groups, and that not all  collaborative arrangements, particularly those that are informal, need to  be documented through written guidance and agreements.
section_title: Processes and Methods
paragraphs: Participants told us that the working group’s processes and methods  reflected three key principles. First, the group used consensus-based  decision making. Second, the group relied largely on existing academic  literature and models, including technical assistance from outside  resources. Third, the group took steps to disclose limitations and  incorporate new information by considering public comments and revising  the estimates as updated research became available.
subsections: section_title: Used Consensus-Based Decision Making
paragraphs: All of the participants we spoke with said that the working group used a  consensus-based approach for making key decisions on developing the  social cost of carbon estimates. Most participants said that the working  group’s overall approach was open and collegial, and that participants  had many opportunities to make contributions and raise issues for  discussion that were important to them.
OMB staff stated that the working group did not assign roles or  responsibilities, and many participants told us that different working group  participants and agencies volunteered to take responsibility for various  aspects of the development of the estimates that fell within their particular  areas of expertise. For example, OMB staff stated that, while OMB and  the Council of Economic Advisers were the official leaders of the working  group meetings, all EOP offices that participated played a large role  during the meetings, and discussions were informal. According to these  staff and other officials we spoke with, participants could generally  choose the extent of their involvement, and all participants’ contributions  were considered equally.
According to many participants, the Council of Economic Advisers  coordinated drafting the Technical Support Document, including gathering  feedback from working group members. Specifically, they told us that,  following the meetings, officials from the Council of Economic Advisers  summarized the group discussions to include in the latest draft of the  Technical Support Document and circulated draft sections of the  Technical Support Document for the working group to review. For  example, a participant told us that he raised concerns about whether the  Technical Support Document provided adequate information on domestic  measures of the social cost of carbon. The participant said that, in  response to this feedback, the working group decided to include a  separate discussion in the Technical Support Document on estimating  domestic benefits and costs. The Technical Support Document states that  reported domestic effects should be calculated using a range of values  from 7 to 23 percent of the global measure of the social cost of carbon,  although it cautions that these values are approximate, provisional, and  highly speculative due to limited evidence. None of the participants we  spoke with expressed concerns about how their contributions were  incorporated into the final Technical Support Document. The participants  generally stated that they were satisfied that the final Technical Support  Document successfully addressed individual comments on the draft  version and the overall consensus of the working group and its  participating offices and agencies.
section_title: Relied on Existing Academic Literature and Models
paragraphs: The Technical Support Document states that the main objective of the  working group was to develop a range of estimates of the social cost of  carbon using a defensible set of modeling inputs based on existing  academic literature. Many participants confirmed that the working group  relied largely on existing academic literature and models to develop its  estimates. According to the Technical Support Document and many  participants we spoke with, the working group calculated its estimates  using three models that integrate climate and economic data into a single  modeling framework for estimating future economic effects resulting from  climate change. In general, each model translates carbon dioxide  emissions scenarios into changes in greenhouse gas concentrations in  the atmosphere, greenhouse gas concentrations in the atmosphere into  temperature changes, and temperature changes into net economic  effects (i.e., damages and benefits). However, each model uses its own  methods to estimate these effects. The Technical Support Document  states that the three models are frequently cited in peer-reviewed  literature. They have also been used in climate assessments by the  Intergovernmental Panel on Climate Change—an organization within the  United Nations that assesses scientific, technical, and economic  information on the effects of climate change. In addition, the National  Research Council of the National Academies recognized these three  models as three of the most widely used models of their kind.
Many participants told us that the working group spent most of its meeting  time reviewing and discussing academic literature to help decide on  values for three key modeling inputs to run in each model. The key  modeling inputs the working group selected were based on data from  prevalent research organizations, such as the Stanford Energy Modeling  Forum, and reflected the wide uncertainty in the academic literature,  according to the Technical Support Document. These inputs were as  follows:  scenarios for future population and economic growth (i.e., gross  domestic product) and carbon dioxide emissions, a measure of the climate’s responsiveness to increased  concentrations of greenhouse gases in the atmosphere—known as  equilibrium climate sensitivity, and discount rates.
Several participants told us that different meetings focused on different  modeling inputs and included technical presentations by participants with  expertise in each technical area. For example, due to their previous  experience working with the models, EPA officials made presentations on  how each model works. OMB staff stated that the technical presentations  focused on the academic materials cited in the Technical Support  Document, including dozens of peer-reviewed journal articles. They also  said that all technical decisions discussed in the Technical Support  Document were arrived at by consensus through this process. Several  participants said that a significant amount of the group’s discussions  focused on selecting discount rates that best reflect the most current  academic literature, while also comporting with OMB’s guidance in  Circular A-4. The Technical Support Document cites guidance from  Circular A-4 in its discussion of many technical topics, including its  selection of discount rates. It states that the discount rate (i.e., 3 percent)  used to calculate the central value of the social cost of carbon estimates  is consistent with Circular A-4 guidance. Some working group participants  told us that they recognized the importance of using OMB guidance,  including Circular A-4, in developing the Technical Support Document.  The Technical Support Document states that the working group decided  to calculate estimates for several discount rates (2.5, 3, and 5 percent)  because the academic literature shows that the social cost of carbon is  highly sensitive to the discount rate chosen, and because no consensus  exists on the appropriate rate. It further states that, in light of such  uncertainties, the working group determined that these three discount  rates reflect reasonable judgments about the appropriate rate to use.  Several participants stated that the working group chose this approach to  capture varied concerns and interests, including participants’ respective  knowledge of the academic literature, on selecting the discount rate.
Once the working group agreed on these modeling inputs, EPA officials  supervised their use in running the models to calculate the social cost of  carbon estimates. All other model assumptions and features were  unchanged by the working group, which weighted each model equally to  calculate the final estimates. Several participants stated that an important  principle for the leaders of the working group was that the working group  reach consensus on the modeling inputs before running the models and  agree, in advance, to accept the results based on the inputs selected,  whatever the outcome. Through this approach, the working group  developed a set of four social cost of carbon estimates for use in  regulatory impact analyses. The first three values are based on the  average of the estimates produced by all three models and selected  modeling inputs at the three discount rates chosen. The fourth value was  included to represent higher-than-expected economic impacts from  climate change, and it is based on an average of certain values produced  by each model at a 3 percent discount rate. To capture uncertainties  involved in regulatory impact analysis, the Technical Support Document  emphasizes the importance of agencies considering all four estimates  when conducting analyses.
According to EPA documentation and several participants, groups from  outside the federal government did not participate in the working group,  but the working group used some outside resources, specifically technical  assistance. As noted in the Technical Support Document, the working  group explored technical literature in relevant fields for developing the  social cost of carbon estimates. Members of the working group  sometimes contacted researchers or developers of key data in an effort to  ensure that the working group had a clear understanding of the  information and how to use it. For example, according to several  participants, members of the working group consulted with lead authors of  a chapter on climate sensitivity that appears in the Fourth Assessment  Report of the Intergovernmental Panel on Climate Change. According to  the Technical Support Document, after consulting with the chapter  authors, the working group was able to make some decisions to assist  with statistical analyses needed to develop the social cost of carbon  estimates. Many participants stated that the working group also consulted  with the developers of the models used by the group to develop the  estimates. For example, EPA officials told us that, while they conducted  runs for one model that was readily available to the public, they spent a  few days training with the developer of a second model before using it to  conduct runs. They also contracted with the developer of a third model to  run the model according to the decisions reached by the working group.  They stated that they ran all of the 2013 estimates themselves, but that  they continued to consult with the model developers to do so.
According to many participants and the 2013 update to the Technical  Support Document, the only changes made to the models used for the  2013 revisions were those that the model developers incorporated into  the latest versions of the models and that were subsequently used in  peer-reviewed academic literature. Specifically, the developers updated  the academic models to reflect new scientific information, such as in sea  level rise and associated damages, resulting in higher estimates. The  working group did not make changes in the modeling inputs that it used  for the 2010 estimates. Several participants said that, while the original  working group included frequent, hours-long meetings over several  months, the working group assembled to discuss the 2013 revisions only  met a few times. According to the 2010 Technical Support Document, the  working group is committed to updating its estimates as the science and  economic understanding of climate change and its impacts on society  improve over time.
section_title: Took Steps to Disclose Limitations and Incorporate New Information
paragraphs: According to several participants and the Technical Support Document,  the working group’s processes and methods took steps to disclose  limitations and incorporate new information by considering public  comments and revising the estimates as updated economic and scientific  research became available. The Technical Support Document discusses  several limitations of its estimates and areas that the working group  identified as being in particular need of additional exploration and  research. For example, it points out that none of the three models  accounts for damages from wildlife loss or ocean acidification caused by  carbon dioxide emissions. Also, the models cannot completely predict  how technology may adapt to warmer temperatures. In addition,  according to the Technical Support Document, the models may not fully  consider the effects of damages due to potential catastrophic events,  such as the melting of Antarctic ice sheets. As a result of such limitations,  the models may underestimate damages from increased carbon  emissions, according to the Technical Support Document. The Technical  Support Document states that, as a result of these limitations, the social  cost of carbon estimates should continue to evolve as knowledge is  gained, and available models improve. Some of the participating agencies  have incorporated discussions of these limitations into regulatory impact  analyses using social cost of carbon estimates. For example, in a 2012  rule setting pollution standards for certain power plants, EPA noted that  the social cost of carbon estimates are subject to limitations and  uncertainties.
Over the years, there have been opportunities for public comment on the  various individually developed and working group estimates of the social  cost of carbon for regulatory impact analysis, and several participants  stated that these estimates were developed with input from the public.  Since 2008, agencies have published over three dozen regulatory actions  for public comment in the Federal Register that use various social cost of  carbon estimates in regulatory impact analyses. While some of them  specifically sought comments on the development of the social cost of  carbon estimates used, and others did not, these regulatory actions were  open to public comment, in general, for approximately 60 days and,  according to OMB staff and other participants, agencies received many  comments on the estimates through this process. Several participants  stated that, while they discussed such public comments during working  group meetings, individual agencies typically do not coordinate formally  with other agencies on their reviews of comments received. According to  the Technical Support Document, the working group convened, in part, to  consider public comments on issues related to the social cost of carbon.  After considering public comments on the interim values that agencies  used in several rules, the working group developed the Technical Support  Document, according to these participants and to the Technical Support  Document. Several participants told us that the working group decided to  revise the estimates for the first time in 2013 after agencies received a  number of public comments encouraging revisions because the models  used to develop the 2010 estimates had been subsequently updated and  used in peer-reviewed academic literature. OMB staff stated that this  theme was reflected in several public comments on regulations using the  2010 estimates.
In November 2013, OMB published a request in the Federal Register for  public comments on all aspects of the Technical Support Document and  its use of the models to develop estimates of the social cost of carbon.  The notice stated that OMB is particularly interested in comments on the  selection of the models for use in developing the estimates, how the  distribution of estimates should be represented in regulatory impact  analyses, and the strengths and limitations of the overall approach. OMB  staff told us that they decided to issue the request in response to calls for  additional transparency, and that they received over 100 unique  comments and thousands of identical form-letter comments in response  to the request. They said that, since they were still reviewing the  comments received, they had not yet decided on steps for responding to  them, but that they expect to review them with the working group to  determine whether they could inform future updates to the Technical  Support Document. OMB staff stated that they have already made most  of the comments publicly available online at http://www.regulations.gov/  and that all of the comments would be made available soon.
The Technical Support Document states that the working group would  regularly revisit the social cost of carbon estimates as new information  becomes available due to improved scientific and economic research.  The Technical Support Document set a goal of revisiting the estimates  within 2 years, or when substantially updated models become available.  Many participants told us that, to revise the estimates in 2013, the  working group met only a few times and mostly for participants from EPA  to present information about updates made to the models since the group  last met in 2010. The updates touched on a variety of issues, including  how some models represent damages from sea level rise. The 2013  update to the Technical Support Document states that it acknowledges  the continued limitations described in the original Technical Support  Document, and that it updates the estimates based on new versions of  the underlying models without revisiting the working group’s decisions on  modeling inputs. Several participants stated that they reviewed drafts of  the 2013 update to the Technical Support Document, but that there was  little new information to review because only the models had been  updated. In addition to stating that the working group would regularly  revisit its estimates, the Technical Support Document states that the  working group will continue to support research to improve the estimates  and hopes to develop methods to value other greenhouse gases as part  of its ongoing work.
section_title: Agency Comments
paragraphs: We provided a draft of this report for review and comment to the  Departments of Agriculture, Commerce, Energy, Transportation, and the  Treasury; EPA; and OMB. Only the Department of the Treasury provided  written comments, which we received on July 14, 2014, and are  reproduced in appendix II; in its written comments, the Department of the  Treasury stated that the draft report does a good job of capturing the  interagency process through which the estimates of the social cost of  carbon were developed. In oral comments provided on July 15, 2014,  OMB staff confirmed that OMB generally agreed with the report findings.  OMB staff also provided technical comments, which we incorporated into  the report, as appropriate. The Department of Energy and EPA provided  technical comments only, which we incorporated into the report, as  appropriate. In e-mails received on July 1, July 9, and July 14, 2014,  respectively, the liaisons from the Departments of Agriculture, Commerce,  and Transportation stated that the departments did not have any  comments on the draft report.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees; the Secretaries of Agriculture, Commerce,  Energy, Transportation, and the Treasury; the Administrator of EPA; the  Director of OMB; and other interested parties. In addition, the report will  be available at no charge on the GAO website at http://www.gao.gov.
If you or your staff members have any questions about this report, please  contact me at (202) 512-3841 or gomezj@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. Key contributors to this report are listed in  appendix III.
section_title: Appendix I: Regulatory Actions, by Agency and Type of Social Cost of Carbon Estimates Used, 2008-2014
paragraphs: This appendix lists regulatory actions from 2008 to 2014 and the type of  social cost of carbon estimates used (i.e., individually developed, interim,  2010, or 2013) in the actions’ regulatory impact analyses. For each  regulatory action, table 3 lists the date published in the Federal Register,  the agency conducting the action, the name and status of the rule  associated with the action, and the action’s citation in the Federal  Register.
section_title: Appendix II: Comments from the Department of the Treasury
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Janet Frisch (Assistant  Director), Elizabeth Beardsley, Stephanie Gaines, Cindy Gilbert, Chad M.  Gorman, Tim Guinane, Patricia Moye, Susan Offutt, Alison O’Neill, and  Kiki Theodoropoulos made key contributions to this report.