[Federal Register Volume 88, Number 133 (Thursday, July 13, 2023)]
[Rules and Regulations]
[Pages 44710-44721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-14707]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 83

[EPA-HQ-OAR-2020-0044; FRL-6530.8-02-OAR]
RIN 2060-AV18


Rescinding the Rule on Increasing Consistency and Transparency in 
Considering Benefits and Costs in the Clean Air Act Rulemaking Process

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is finalizing the 
rescission of the rule entitled, ``Increasing Consistency and 
Transparency in Considering Benefits and Costs in the Clean Air Act 
Rulemaking Process'' (hereinafter, the ``Benefit-Cost Rule''). The EPA 
is rescinding the rule because the changes advanced by the rule were 
inadvisable, untethered to the Clean Air Act (CAA), and not necessary 
to effectuate the purposes of the Act.

DATES: This final rule is effective on August 14, 2023.

ADDRESSES: The EPA has established a docket for this rulemaking under 
Docket ID No. EPA-HQ-OAR-2020-0044. All documents in the docket are 
listed on the https://www.regulations.gov/ website. Although listed in 
the index, some information is not publicly available, e.g., 
Confidential Business Information or other information whose disclosure 
is restricted by statute. Certain other material, such as copyrighted 
material, is not placed on the internet and will be publicly available 
only in hard copy form. Publicly available docket materials are 
available electronically through https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Leif Hockstad, Office of Air Policy 
and Program Support, Office of Air and Radiation, U.S. EPA, Mail Code 
6103A, 1200 Pennsylvania Avenue NW, Washington, DC 20460; telephone 
number: (202) 343-9432; email address: [email protected].

SUPPLEMENTARY INFORMATION:

Preamble Acronyms and Abbreviations

    The EPA uses multiple acronyms and terms in this preamble. While 
this list may not be exhaustive, to ease the reading of this preamble 
and for reference purposes, the EPA defines the following terms and 
acronyms here:

APA Administrative Procedure Act
BCA Benefit-Cost Analysis
CAA Clean Air Act
CBI Confidential Business Information
CDC Centers for Disease Control and Prevention
CFR Code of Federal Regulations
CRA Congressional Review Act
E.O. Executive Order
EPA Environmental Protection Agency
FR Federal Register
HAP Hazardous Air Pollutants
MACT Maximum Achievable Control Technology
NAAQS National Ambient Air Quality Standards
NRDC National Resources Defense Council
NTTAA National Technology Transfer and Advancement Act
OIRA Office of Information and Regulatory Affairs
OMB Office of Management and Budget
RIA Regulatory Impact Analysis
RFA Regulatory Flexibility Act
SAB Science Advisory Board
UMRA Unfunded Mandates Reform Act
U.S. United States
U.S.C. United States Code

    Organization of this document. The information in this preamble is 
organized as follows:

I. General Information
    A. Does this action apply to me?
    B. What is the Agency's authority for taking this action?
II. Background
III. Summary of the Final Rescission Rule
IV. Responses to Significant Comments
V. Judicial Review
VI. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 14094: Modernizing Regulatory Review
    B. Paperwork Reduction Act (PRA)
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act (UMRA)
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act (NTTAA) and 
1 CFR Part 51
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act (CRA)

I. General Information

A. Does this action apply to me?

    This rule does not regulate the conduct or determine the rights of 
any entity or individual outside the Agency, as this action pertains 
only to internal EPA practices. However, the Agency recognizes that any 
entity or individual interested in the EPA's regulations promulgated 
under the CAA may be interested in this rule. In addition, this rule 
may be of particular interest to entities and individuals interested in 
how the EPA conducts and considers benefit-cost analyses (BCA).

B. What is the Agency's authority for taking this action?

    The Agency is taking this action pursuant to CAA section 
301(a)(1).\1\ Section 301(a)(1) provides authority to the Administrator 
``to prescribe such regulations as are necessary to carry out his 
functions'' under the CAA. As discussed in section III of this 
preamble, the EPA has determined that the Benefit-Cost Rule was not 
``necessary''

[[Page 44711]]

and lacked a rational basis under CAA section 301(a), and therefore the 
EPA lacked authority to issue it; we are accordingly rescinding the 
Rule.
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    \1\ 42 U.S.C. 7601(a)(1).
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II. Background

    On December 23, 2020, the EPA finalized the Benefit-Cost Rule.\2\ 
The Benefit-Cost Rule was a procedural rule establishing requirements 
related to the development and consideration of BCA that the EPA would 
have been required to undertake when promulgating certain proposed and 
final regulations under the CAA. Specifically, the Benefit-Cost Rule 
(1) required a BCA for all significant proposed and final regulations 
under the CAA; (2) codified specific practices for developing the BCA; 
(3) required certain presentations of the BCA results in the preamble; 
and (4) required the EPA to consider the BCA in promulgating the 
regulation except where prohibited. The final Benefit-Cost Rule was 
effective upon publication in the Federal Register based on the 
procedural-rule exemption from delayed-effective-date requirements in 
the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(A). After 
publication, several parties filed petitions for review of the Benefit-
Cost Rule in the U.S. Court of Appeals for the District of Columbia, 
and these consolidated cases are currently in abeyance.\3\
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    \2\ 85 FR 84130.
    \3\ State of New York v. EPA, No. 21-1026 (D.C. Cir.); Cal. 
Cmtys. Against Toxics v. EPA, No. 21-1041 (D.C. Cir.); Envt'l Def. 
Fund v. EPA, No. 21-1069 (D.C. Cir.). State of New York v. EPA, No. 
21-1026 (D.C. Cir.), Doc. No. 1886762 (Feb. 23, 2021) (abeyance 
order).
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    On January 20, 2021, President Biden signed Executive Order (E.O.) 
13990, ``Protecting Public Health and the Environment and Restoring 
Science To Tackle the Climate Crisis,'' \4\ which, among other things, 
directed the EPA to immediately review and consider suspending, 
revising, or rescinding the Benefit-Cost Rule. Accordingly, the EPA 
conducted a comprehensive review of both the legal and factual 
predicates for the Benefit-Cost Rule and, in particular, the need for 
the regulations that the Agency promulgated in the Benefit-Cost Rule. 
Based on this review, the EPA determined that the changes to Agency 
practice required by the Benefit-Cost Rule were inadvisable, not 
needed, and untethered to the CAA. Therefore, in May 2021, the EPA 
published an interim final rule rescinding the Benefit-Cost Rule 
(hereinafter, the ``Interim Final Rule'').\5\ The Interim Final Rule 
became effective on June 14, 2021, which was 30 days after its 
publication in the Federal Register.
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    \4\ 86 FR 7037 (January 25, 2021).
    \5\ 86 FR 26406 (May 14, 2021).
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    While procedural rules are exempt from the notice-and-public-
comment requirements in the APA, the EPA nonetheless decided to 
voluntarily seek post-promulgation public comment on the Interim Final 
Rule.\6\ This final action considers and responds to the public 
comments the EPA received on the Interim Final Rule. The EPA's process 
is consistent with Administrative Conference of the United States 
Recommendation 95-4, which recommends that agencies consider providing 
post-promulgation notice and comment even where an exemption is 
justified, be it a substantive rule relying on the ``good cause'' 
exception to notice and comment, 5 U.S.C. 553(b)(B), or a procedural 
rule such as this one.\7\
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    \6\ Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, 
Inc., 435 U.S. 519, 524 (1978) (``Agencies are free to grant 
additional procedural rights in the exercise of their 
discretion.'').
    \7\ See ACUS Recommendation 95-4, Procedures for 
Noncontroversial and Expedited Rulemaking (1995).
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III. Summary of the Final Rescission Rule

    In the Interim Final Rule, the EPA concluded that the Benefit-Cost 
Rule should be rescinded in its entirety. The EPA has reviewed and 
considered comments received on the Interim Final Rule, as discussed in 
section IV, but none of the comments received have led the EPA to 
materially change our view, as explained in the Interim Final Rule, 
that the Benefit-Cost Rule is not needed and does not further the CAA's 
goals. As such, the EPA is finalizing the rescission of the Benefit-
Cost Rule with this action. Consistent with and as discussed further in 
the Interim Final Rule, the rationales for rescission are summarized 
below.
    In the Benefit-Cost Rule, the Agency stated that it had authority 
to promulgate the Rule under CAA section 301(a) because the Rule's 
additional procedures were necessary to ensure consistency and 
transparency in CAA rulemakings. However, as discussed in the Interim 
Final Rule, the Agency failed to articulate a rational basis for the 
Benefit-Cost Rule and did not explain how the existing CAA rulemaking 
process had created or was likely to create inconsistent or non-
transparent outcomes, i.e., that an actual or even theoretical problem 
existed. After reviewing each element of the Benefit-Cost Rule, we have 
determined that the additional procedures required were not needed, 
useful, or advisable policy changes. In some cases, the new procedures 
established by the Benefit-Cost Rule could have hindered the EPA's 
compliance with the CAA and may not have even furthered the Rule's 
stated purposes of consistency and transparency. Our rationale for 
rescinding each of the four independent elements of the Benefit-Cost 
Rule is severable and discussed in the Interim Final Rule and 
summarized below. In addition, as noted in the Interim Final Rule, the 
existing public process provides ample ability for the public to 
participate in the EPA's CAA rulemakings.
    First, the EPA has determined that the Agency failed to provide a 
rational basis to support the Benefit-Cost Rule or explain why the Rule 
was needed or reasonable. The Benefit-Cost Rule did not provide any 
record evidence that the guidance and administrative processes already 
in place presented problems that justified the mandate imposed by the 
Rule. Indeed, the Benefit-Cost Rule failed to point to a single example 
of a rule promulgated under the CAA where problems emerged that would 
have been avoided had the mandate imposed by the rule been in place. 
Furthermore, there was no discussion of how the requirements of the 
Benefit-Cost Rule would have improved the Agency's ability to 
accomplish the CAA's goals to protect and enhance air quality. 
Moreover, there has been an unbroken, bipartisan, decades-long 
commitment from Presidential Administrations to conduct BCAs for 
economically significant regulations issued in the United States. These 
analyses are rigorous, publicly available, subject to interagency 
review, and are conducted according to extensive peer-reviewed 
guidelines from OMB and the EPA. We are therefore finalizing rescission 
of the Benefit-Cost Rule on the basis that it failed to articulate a 
rational basis justifying its promulgation.
    Second, the Benefit-Cost Rule's expansion of BCA to all 
``significant'' CAA rulemakings, rather than just those that are 
significant under monetary thresholds of E.O. 12866, is unnecessary. 
The Benefit-Cost Rule greatly expanded the universe of CAA rulemakings 
for which the EPA would have been required to conduct resource-
intensive BCAs without justifying why such expansion was necessary or 
appropriate. In many cases, rules may be designated ``significant'' by 
the Office of Management and Budget (OMB) for reasons other than 
economic significance such that other types of assessments of economic 
impact are appropriate. Requiring BCA for all rules designated 
``significant'' by OMB, even when the primary issues of importance

[[Page 44712]]

are not economic, would have unnecessarily complicated the rulemaking 
process, potentially diverted the Agency's resources from those aspects 
of the rule that warrant additional consideration (i.e., the reasons 
why the rule was designated significant), and could have delayed rules 
needed for protection of public health and the environment. Existing 
directives under E.O. 12866 and guidance regarding BCAs for 
economically significant rules, while retaining flexibility for 
agencies to analyze costs, benefits, and other factors for non-
economically significant rules, strike the better balance between 
agency resources and the information provided by additional economic 
analysis for such rules. Simply put, a BCA is not warranted for every 
CAA rule that is designated as significant under E.O. 12866.
    Third, the codification of specific practices for the development 
of BCA is inadvisable because it is contrary to best practices for 
preparing BCAs and could have prevented the EPA from relying on best 
available science. As articulated by OMB and EPA guidelines, best 
practices for conducting a high-quality BCA cannot be established using 
a set formula, and the Benefit-Cost Rule's codification of specific 
practices would have prevented situation-specific tailoring of the 
regulatory analysis to the policies being proposed. In addition, best 
practices evolve over time, and the Benefit-Cost Rule would have locked 
the EPA into using outdated practices until those practices were 
amended via rulemaking, which could have delayed incorporation of new 
scientific information and methods. Some of the Benefit-Cost Rule's 
``best practice'' requirements did not even derive from the EPA's 
Guidelines for Preparing Economic Analyses (hereinafter ``Economic 
Guidelines''),\8\ OMB's Circular A-4,\9\ or the EPA's Science Advisory 
Board (SAB) advice. As discussed in more detail in the Interim Final 
Rule, a number of the specific provisions required by the Benefit-Cost 
Rule, in particular those related to health-benefits assessments, would 
have promoted particular types of data in a way that could have 
conflicted with the use of best scientific practices or arbitrarily 
caused the Agency to disregard important or high-quality data. The 
Benefit-Cost Rule's attempt to craft a one-size-fits-all approach to 
BCAs in fact demonstrated the difficulty and inadvisability of 
codifying specific practices appropriate for every BCA.
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    \8\ U.S. EPA. 2010. Guidelines for Preparing Economic Analyses. 
https://www.epa.gov/environmental-economics/guidelines-preparing-economic-analyses.
    \9\ Exec. Office of the President, OMB, Circular A-4: Regulatory 
Analysis (Sept. 17, 2003), available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf.
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    Fourth, the Benefit-Cost Rule required the EPA to present net-
benefit calculations in regulatory preambles in a manner that would 
have been misleading and inconsistent with economic best practices. 
Specifically, the Rule required a presentation of only the benefits 
``that pertain to the specific objective (or objectives, as the case 
may be) of the CAA provision or provisions under which the significant 
regulation is promulgated.'' 40 CFR 83.4(b). The Rule also required 
that if any benefits and costs accrue to non-U.S. populations, they 
must be reported separately to the extent possible. This information is 
duplicative of existing information provided in EPA's Regulatory Impact 
Analyses (RIAs) because EPA already presents these types of benefits in 
disaggregated form in its RIAs, so these presentational requirements 
would not have provided additional transparency. EPA is careful, 
however, not to use these disaggregated subsets of benefits in 
calculating total net benefits. Both EPA and OMB guidelines, and 
economic best practice generally, are clear that the purpose of a BCA 
is to assess the economic efficiency of policies, and in order to do so 
accurately, net benefits are calculated by subtracting total costs from 
total benefits, regardless of whether the benefits and costs arise from 
intended or unintended consequences and regardless of the particular 
recipients of the benefits or costs. Even though the Benefit-Cost Rule 
did not specifically require incorrect partial net-benefit calculations 
that excluded certain impacts due to the regulation, we are concerned 
that retaining the Rule's presentational requirements could have 
invited such misleading partial calculations. In fact, in one of the 
rules that was promulgated during the same time period as the Benefit-
Cost Rule's requirements were being considered, the EPA used 
calculations of segregated benefits--like those required under the 
Benefit-Cost Rule--to create tables of misleading ``net'' benefit 
calculations (i.e., benefits minus costs) that only accounted for a 
subset of the rule's benefits.\10\
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    \10\ See 84 FR 32520, 32572 tbl.10-12 (July 8, 2019).
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    Fifth, we are rescinding the Benefit-Cost Rule because the Rule did 
not reconcile its requirement that the Agency ``consider'' in its CAA 
rulemakings the required BCAs with the various and varied substantive 
mandates of the CAA. The Benefit-Cost Rule did not even identify the 
CAA provisions to which it would apply. This identification is critical 
because the statute, not Agency procedural rules, dictate what the 
Agency may or may not ``consider'' in the context of exercising 
authority. For those CAA provisions where EPA is prohibited from 
considering costs, the Benefit-Cost Rule's requirement to prepare a BCA 
and include it in the judicially reviewable rulemaking record solely 
for the purpose of providing ``additional information'' is not 
necessary to effect any purpose under the Act. Even for those CAA 
authorities that permit consideration of cost or other economic 
factors, the Benefit-Cost Rule did not establish why BCA specifically 
is an appropriate way to consider cost. The rule failed entirely to 
grapple with the varied ways in which Congress granted authority or 
directed the EPA whether and how to consider benefits, costs, and other 
factors, and how the Benefit-Cost Rule's requirement to consider BCA 
should be reconciled with the need to adhere to particular statutory 
language and context. As noted in the Interim Final Rule, we are 
finalizing rescission of the Benefit-Cost Rule's requirement to prepare 
and consider BCA (followed by a subsequent attempt to reconcile that 
analysis with the CAA's mandates) in favor of the Agency's current 
``statute first'' approach to decision making. That is, we believe the 
traditional process of statutory interpretation is superior, wherein we 
first look to the text of the relevant statutory provision to determine 
whether Congress intended or permitted the Agency to consider cost or 
economic factors, and, if yes, we then examine the statutory context, 
legislative history, and nature of the program or environmental problem 
to be addressed to determine a reasonable manner of considering that 
cost or economic factor.
    Finally, we are finalizing rescission of the Benefit-Cost Rule on 
the basis that its requirements are not needed with respect to process, 
and that the pre-existing administrative process, including existing 
procedures under the APA and, where applicable, CAA section 307(d), 
provide for ample consistency and transparency. These requirements are 
more than adequate to accomplish the general good-government goals of 
``consistency'' and ``transparency,'' and the Benefit-Cost Rule failed 
to provide any support for its contention that the pre-existing process 
was deficient so as to warrant the Rule's new procedures.

[[Page 44713]]

IV. Responses to Signficant Comments

    This section of the preamble summarizes significant comments 
received on the Interim Final Rule \11\ and the EPA's responses to 
those comments. All comments made on the Interim Final Rule and the 
EPA's responses can be found in the document, ``Summary of Public 
Comments and Responses for Rescinding the Rule on Increasing 
Consistency and Transparency in Considering Benefits and Costs in the 
Clean Air Act Rulemaking Process,'' available in the docket for this 
rulemaking.
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    \11\ 86 FR 26406.
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    Comment: Some commenters supported retaining the Benefit-Cost Rule 
and opposed the Interim Final Rule rescinding it. Several of these 
commenters cited their 2020 comments on the proposed Benefit-Cost Rule, 
asserting that in those comments, they had raised examples of prior 
analyses being performed by the EPA that were inconsistent in their 
approaches or methodologies or inappropriately relied upon a ``misuse 
of co-benefits.'' The commenters claimed that leaving the Benefit-Cost 
Rule in place would have addressed their concerns.
    Response: The commenters to the Interim Final Rule did not provide 
in their comments, with any kind of specificity, examples of how the 
Benefit-Cost Rule would have resolved any problems those commenters had 
with prior BCAs performed by the EPA. Nevertheless, the EPA has 
examined the prior comments that were referenced to determine whether 
any commenter demonstrated that there was a significant problem of 
inconsistency or transparency that the Benefit-Cost Rule's requirements 
would have resolved. After examining the rulemaking record for the 
Benefit-Cost Rule, we do not agree with these commenters that they 
identified concrete examples of how the Benefit-Cost Rule would have 
improved their perceived flaws. To the contrary, the comments in 
support of the Benefit-Cost Rule proposal simply alleged broadly that 
the EPA had ``historically used inconsistent approaches'' to BCA, that 
there was a need to ``correct past practices,'' that there was 
``inconsistency in methodologies,'' and that EPA had ``misused co-
benefits.'' We do not agree that these general complaints about past 
inconsistency, without any specificity, provide an adequate basis for 
establishing a concrete problem, nor do they explain how the Benefit-
Cost Rule would have addressed any such problem.
    Comment: A commenter contended that the EPA should not make a major 
change, such as rescinding the Benefit-Cost Rule, through an Interim 
Final Rule. The commenter stated that this action, by itself, is an 
indication that the EPA has already made up its mind to rescind the 
rule. The commenter added that, in developing the Benefit-Cost Rule, 
the EPA went through a proposed rulemaking process, so in rescinding 
the rule, or revising it, the EPA should go through a similar process 
and revise the Benefit-Cost Rule only to the extent necessary to 
address any concerns that remain after properly considering public 
comments.
    Response: Agencies are always free to adopt additional notice-and-
comment procedures, but to the extent that the commenter suggests that 
such procedures were required in this instance, we do not agree. The 
Benefit-Cost Rule was a procedural rule, i.e., a rule of agency 
organization, procedure, or practice. A procedural rule does not 
regulate any party outside of the EPA but instead exclusively governs 
the EPA's internal process for conducting business. As discussed in 
section IV of the Interim Final Rule, procedural rules are exempt from 
the APA's notice-and-comment requirements, and therefore it was 
permissible and appropriate to make the rescission of that rule 
effective using an interim final rule. However, EPA recognizes the 
value of transparency and public input and therefore voluntarily sought 
public comment on its decision to rescind, consistent with 
Administrative Conference of the United States Recommendation 95-4, 
which recommends that agencies consider providing post-promulgation 
notice and comment even where an exemption is justified, be it a 
substantive rule relying on the ``good cause'' exception to notice and 
comment, 5 U.S.C. 553(b)(B), or a procedural rule such as this one.
    Comment: Several commenters requested that the EPA revise rather 
than rescind the Benefit-Cost Rule in its entirety. These commenters 
said that they do not agree that the issues raised by the EPA were 
significant enough to warrant rescinding the Benefit-Cost Rule. Some 
commenters urged the EPA to reconsider each provision of the Benefit-
Cost Rule on an individual basis, seek public comment on the issue, and 
amend the provisions after considering the comments. Another commenter 
contended that the EPA should have amended the scope of the Benefit-
Cost Rule to address concerns raised in the Interim Final Rule 
regarding burdensome requirements for some non-economically significant 
rules. One commenter noted that, rather than rescinding the rule, the 
EPA could have revised the rule to retain some provisions as regulation 
and left some as guidance, as the Agency's Science Advisory Board (SAB) 
had suggested as a possible improvement in its comments on the Benefit-
Cost Rule. Some commenters contended that EPA's decision to repeal the 
Benefit-Cost Rule is in direct conflict with the January 27, 2021 
memorandum, ``Restoring Trust in Government Through Scientific 
Integrity and Evidenced-Based Policymaking.'' These commenters stated 
that ensuring ``evidence-based decisions'' that are ``guided by the 
best available science and data'' requires the EPA to undertake a 
rigorous and objective BCA and to present the analysis, including key 
uncertainties, in a transparent manner.
    Other commenters agreed with EPA's decision as explained in the 
Interim Final Rule that the rule should be rescinded in its entirety. 
These commenters further stated that fixing the rule through targeted 
amendments was not viable because the problematic elements were 
significant and difficult to address in piecemeal fashion. The 
commenters agreed the problems were substantive and the Benefit-Cost 
Rule as a whole should be rescinded.
    Response: We disagree that the EPA should have revised the Benefit-
Cost Rule rather than rescind it. The EPA conducted a comprehensive 
review of both the legal and factual predicates for the Benefit-Cost 
Rule and, in particular, the need for an imposition of and codification 
of ``one-size-fits-all'' requirements governing economic analyses for a 
large subset of regulations promulgated under the CAA. We do not agree 
that revision rather than rescission would have resolved our concerns 
with the Benefit-Cost Rule. The problematic elements of the Rule were 
significant, and many of those problems extended across the entirety of 
the rule and could not be excised and resolved on a case-by-case basis. 
For example, one particularly problematic element of the Benefit-Cost 
Rule was its codification of methodologies and practices that we think 
are better suited to guidance. As explained in the preamble to the 
Interim Final Rule and in section III of this preamble, and as 
recognized by OMB itself, guidance allows the EPA to tailor economic 
analyses to the regulatory question and problem at hand, and it also 
facilitates using up-to-date methodologies in those analyses without 
first undergoing a notice-and-comment rule revision. Therefore, some

[[Page 44714]]

of the revisions suggested by commenters, such as amending the scope of 
the Benefit-Cost Rule to exclude non-economically significant rules, 
would not have addressed this fundamental problem.
    With respect the SAB's suggestion, we do not agree that the SAB was 
specifically endorsing revision of the Benefit-Cost Rule over 
rescission. The one sentence in the SAB's cover letter in which it 
``urges EPA to carefully consider which aspects of BCA should be 
included in the final [Benefit-Cost] rule versus which aspects should 
be in guidance,'' should be read in context of the significant and 
detailed concerns detailed by the SAB with many of the Rule's specific 
requirements.\12\ The more accurate overall message from the SAB's 
report is that the proposed rule as drafted would have been problematic 
if implemented, and that at the very least the EPA should consider 
retaining some requirements as guidance ``given the case-by-case nature 
of BCA.'' In some instances, the SAB acknowledged that while it was 
providing specific recommendations regarding how to improve certain 
sections of the rule, complete overhaul was preferable.\13\ We also 
disagree with the commenters who assert that repealing the Benefit-Cost 
Rule is in direct conflict with the January 27, 2021 memorandum, 
``Restoring Trust in Government Through Scientific Integrity and 
Evidenced-Based Policymaking.'' To the contrary, the Benefit-Cost Rule 
was not necessary to making ``evidence-based decisions'' ``using best 
available science and data,'' and as we have explained, could have 
hindered that outcome.
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    \12\ U.S. EPA SAB. 2020. Science Advisory Board (SAB) 
Consideration of the Scientific and Technical Basis of EPA's 
Proposed Rule titled ``Increasing Consistency and Transparency in 
Considering Benefits and Costs in the Clean Air Rulemaking 
Process.'' EPA-SAB-20-012. September 30. (``SAB (2020)''), available 
at https://sab.epa.gov/ords/sab/f?p=100:12:6591070354315:::12::.
    \13\ SAB (2020) at 12.
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    Comment: Numerous commenters agreed with the EPA's assertion that 
the Benefit-Cost Rule codified certain practices that conflicted with 
the best science, particularly for quantifying the health benefits of a 
rule. Other commenters disagreed with the EPA's assertion that the 
Benefit-Cost Rule codified certain practices that conflicted with the 
best science. These commenters asserted that the Benefit-Cost Rule 
directed the EPA to base its decisions on the best available science 
and in accordance with best practices from science and fields such as 
economics. The commenters argued that this requirement was a broadly 
supported principle for sound regulatory decision making that has 
enjoyed bipartisan support for decades, as stated in E.O. 13563 and 
E.O. 12866. One commenter asserted that the Benefit-Cost Rule required 
the use of best practices for risk assessment/characterization and 
would have prevented the Agency from taking shortcuts in analyses or 
applying assumptions that are not identified or supportable.
    Response: We agree that the EPA should use the best available 
scientific information and best scientific practices for BCAs. However, 
we disagree that the Benefit-Cost Rule was necessary to promote best 
practices. Indeed, in section III.C.3 of the preamble of the Interim 
Final Rule, we provided several examples of how implementation of some 
of the Benefit-Cost Rule's requirements could have undermined the 
scientific integrity of the EPA's BCAs for CAA regulations rather than 
strengthened them. We also disagree that the Benefit-Cost Rule's 
requirements regarding risk assessments and characterization would have 
prevented the Agency from taking shortcuts or applying unsupportable 
assumptions. As discussed in section III.C.3 of the Interim Final Rule, 
those requirements could have led to inferior selection of health 
studies or the potential exclusion of some health endpoints altogether. 
By imposing a requirement that studies or analyses used to quantify 
concentration-response relationships should ``consider how exposure is 
measured,'' and favor ``particularly those that provide measurements at 
the level of the individual and that provide actual measurements of 
exposure,'' the Benefit-Cost Rule introduced a bias against methods 
that in some cases may have been both higher quality and more 
appropriate by discouraging consideration of studies that combine both 
measured and modeled concentrations.\14\ We have also noted how, rather 
than codifying a best practice, the Benefit-Cost Rule's requirement to 
limit assessment of human health benefit endpoints to instances where 
there is ``a clear causal or likely causal relationship between 
pollutant exposure and effect'' was unsupportable. It did not derive 
from the Economic Guidelines, Circular A-4, or SAB advice, and in fact 
was criticized by the SAB.\15\ Finally, as noted in the Interim Final 
Rule, we are concerned that the Benefit-Cost Rule's imposition of 
highly specific and stringent requirements for assessing benefits in 
conjunction with substantially less stringent requirements for 
assessing costs would have led to unbalanced BCAs. Moreover, these 
requirements only applied to health benefits, which created an 
inconsistency with other categories of benefits (e.g., visibility, 
ecological effects) that were not subject to the requirements. By 
rescinding the Benefit-Cost Rule, the EPA is not forswearing BCAs, 
which it has undertaken for decades consistent with the Executive 
Orders cited by the commenters. Rather, we think undertaking those BCAs 
pursuant to guidelines issued by EPA and OMB, which provide for 
flexibility and tailoring in order to permit incorporation of evolving 
science and best practices, will produce higher quality analyses than 
if EPA conducted BCAs subject to the Benefit-Cost Rule's rigid 
codification of particular practices that were frozen at a moment in 
time, and in some cases, were substantively problematic.
---------------------------------------------------------------------------

    \14\ 85 FR 84155 (40 CFR 83.3(a)(9)(iii)(D)).
    \15\ See, e.g., SAB 2020 at 2-7 (suggesting that there are a 
number of ways to interpret causal relationship and the Benefit-Cost 
Rule is not clear what evidence would be acceptable to demonstrate 
causality), 8 (recommending that the EPA allow inclusion in its 
benefits analyses of effects for which causal or likely causal 
relationships may be less certain, but the impact would be 
substantial).
---------------------------------------------------------------------------

    Comment: Some commenters agreed with the EPA's assertion that the 
Benefit-Cost Rule would have locked the EPA into using outdated 
practices until the rule could be amended. Another commenter said the 
Benefit-Cost Rule would have weakened the integrity of the BCA process 
for CAA regulations by hindering EPA's ability to use the best 
scientific data available. Another commenter asserted that if the 
Benefit-Cost Rule had conflicted with future changes to the Economic 
Guidelines, the EPA would have had to undergo a lengthy notice-and-
comment process to make updates to its rule, as opposed to just 
updating the Economic Guidelines already in existence, and this process 
could seriously delay the EPA's ability to adapt to changes in best 
practices and could hinder the promulgation of public health and 
environmental protections.
    Other commenters argued that the Benefit-Cost Rule would not have 
stopped the adoption of new practices, but instead would have required 
the EPA to notify the public and seek public comment on the basis for 
the Agency's decision to adopt the new procedures. Some of these 
commenters said that 40 CFR 83.3(a)(11)(v) of the Benefit-Cost Rule 
specifically authorized departures from the Rule's requirements if the 
EPA

[[Page 44715]]

provided a ``reasoned explanation,'' including a discussion of the 
``likely effect of the departures on the results of the BCA.'' The 
commenters argued that, in response to changes in best practices, the 
EPA could at any time simply amend the Rule separate from or in 
parallel with a new covered CAA rulemaking after seeking notice and 
comment and providing a reasoned explanation. The commenters asserted 
that rescission of the Benefit-Cost Rule allows the EPA to make ad hoc 
decisions without notification or explanation. Another commenter 
contended that the Benefit-Cost Rule did not force the EPA to revise 
the rule if best practices change over time. The commenter pointed out 
that the Benefit-Cost Rule did not provide a specific definition of 
best practices, and the requirements of 40 CFR 83.3(a)(1) through (12) 
were predominantly general in nature without prescribing exact methods. 
The commenter said that many of the requirements in 40 CFR 83.3(a) 
addressed what information the EPA was required to provide, not the 
specific methodology the EPA had to use to estimate benefits and costs.
    Response: We agree that with the Benefit-Cost Rule in place, if the 
latest or best scientific practice differed from the Rule's 
requirements, the EPA would have been required to amend the Rule in 
order to be consistent with best practice. The process of revising a 
rule often takes a year or more to complete, which would have prevented 
the EPA from keeping up with evolving best practices and required the 
EPA to rely on potentially outdated methods until a revised rulemaking 
could be completed. We maintain this is inconsistent with making 
decisions based on the best scientific data available. As discussed in 
section III.C.2 of the Interim Final Rule, by freezing and defining 
what constituted ``best practices'' at a single point in time, the 
Benefit-Cost Rule elevated ``consistency'' over the exercise of sound 
judgment based on latest scientific knowledge and, given that revision 
by rulemaking could take a long time, would have slowed or discouraged 
progress in the development and use of newer and better methods. 
Promulgating updates to the Benefit-Cost Rule every time the Rule 
became outdated ``in parallel with'' substantive, statutorily required 
CAA rules would have been no small regulatory burden; it would have 
required a significant amount of agency resources to do so and created 
uncertainty in the CAA rule, by linking that rule to an unsettled 
regulatory change to the Benefit-Cost Rule that was itself open to 
challenge and judicial review.
    We also do not agree with commenters that the requirement in 40 CFR 
83.3(a)(11)(v) that the EPA include in every BCA ``[a] reasoned 
explanation for any departures from best practices in the BCA, 
including a discussion of the likely effect of the departures on the 
results of the BCA'' was an authorization for the Agency to diverge 
from the Benefit-Cost Rule. That provision states that the EPA has to 
explain why it has diverged from ``best practices,'' not from the 
Benefit-Cost Rule. ``Best practices'' is a term not defined in the 
Benefit-Cost Rule, and is on its face subject to interpretation. Far 
from providing clear guidance to the Agency on when it would have been 
permitted to take an updated approach to BCA absent a change to the 
Benefit-Cost Rule, we think that provision itself bred a great deal of 
uncertainty--how, for example, is the Agency to know whether it has 
adequately explained the ``likely effect'' of its departures from best 
practices (which, if the Agency is taking such departure, it likely 
does not believe to be ``best practice'')? As further evidence of how 
best practices change over time, we note that the Economic Guidelines 
are in the process of being updated as part of a periodic review 
undertaken by the EPA. In addition, President Biden issued a memorandum 
on January 20, 2021, on Modernizing Regulatory Review,\16\ which 
directs OMB in consultation with other agencies to recommend revisions 
to Circular A-4. The confluence of updates to these two documents, 
which provided the ostensible underpinning to the regulatory 
requirements of the Benefit-Cost Rule, only highlights the misguided 
nature of attempting to freeze ``best practices'' at one moment in 
time.
---------------------------------------------------------------------------

    \16\ 86 FR 7223.
---------------------------------------------------------------------------

    Finally, we do not agree with the commenters who asserted that the 
regulatory requirements of 40 CFR 83.3(a)(1) through (12) were 
predominantly general in nature. For example, as noted in the Interim 
Final Rule, those provisions contained highly prescriptive (but in many 
cases vague and confusing) requirements for benefits assessment and 
uncertainty analyses (with no corresponding requirements for how costs 
are calculated and considered). In contrast, since guidance is 
inherently less prescriptive than regulation, it can be more flexible 
in allowing agencies to keep up with the evolution of best practices to 
support CAA regulations.
    Comment: Some commenters agreed with the EPA's assertion that the 
Benefit-Cost Rule was inconsistent with the mandates in the CAA that 
prohibited the EPA from considering cost for some types of rulemakings. 
They agreed with the EPA that the Benefit-Cost Rule's rationale for 
including BCA in the records and preambles of rulemakings in which the 
agency is prohibited from considering cost is not ``necessary'' to 
carry out the statute within the meaning of CAA section 301(a).
    Other commenters disagreed with the EPA's assertion that the 
Benefit-Cost Rule was inconsistent with the mandates in the CAA that 
prohibited the EPA from considering cost for some types of rulemakings. 
These commenters argued that the Benefit-Cost Rule applied with respect 
to a significant rule implementing the CAA only when the CAA required 
or permitted consideration of cost. These commenters contended that the 
Benefit-Cost Rule did not violate the CAA because it required (at 40 
CFR 83.2(b)) EPA to consider the results of a BCA except in those 
circumstances where the applicable CAA provision(s) prohibited that 
consideration. These commenters added that when not prohibited by the 
statute, the Benefit-Cost Rule left the EPA significant discretion in 
how it would consider the BCAs in individual CAA rules to account for 
the significant differences among statutory provisions as long as the 
Agency provided the public with a description in the preamble. Another 
commenter said that 40 CFR 83.4(d) provided the EPA with clear 
direction and appropriate discretion in when and how to consider the 
results of BCAs in making regulatory decisions.
    One commenter stated that, while the EPA may be prohibited from 
considering costs in some cases, such as with revisions to the NAAQS, 
this did not negate the need for the Rule's requirements with regard to 
how the EPA calculates benefits. The commenter also stated that the EPA 
routinely presents cost information in addition to benefits even in 
cases where the EPA is prohibited from considering costs, such as in 
the RIA for the 2015 ozone NAAQS revision. The commenter contended that 
such information is still beneficial in that it informs the public on 
the potential cost impacts of the EPA's regulatory actions, even if the 
EPA cannot directly consider those cost impacts. Another commenter 
argued that the actual text of the CAA's substantive authorities (and 
most other statutory provisions) rarely prohibits benefit-cost 
balancing and arguably may require it. The commenter stated that 
Administrations have recognized that

[[Page 44716]]

the public has a right to know the projected benefits and costs of a 
new rule even if the underlying statutory provision (as in the case of 
CAA section 109 for setting NAAQS) has been interpreted to prohibit the 
consideration of costs. The commenter said elevating BCA practices is 
consistent with the recent Supreme Court decisions on BCA, particularly 
Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208 (2009) and Michigan v. 
EPA, 135 S. Ct. 2699 (2015). The commenter asserted that these 
decisions apply the fundamental principle, established in Motor Vehicle 
Mfrs. Ass'n, Inc. v. State Farm Mut. Auto. Ins. Co., 463U.S. 29, 43 
(1983), that it is arbitrary for an agency to neglect an important 
aspect of a regulatory problem. Another commenter also pointed out that 
Michigan v. EPA, 135 S. Ct. 2699 (2015), concluded that when 
interpreting CAA section 112(n)(1)(A), ``Read naturally in the present 
context, the phrase `appropriate and necessary' requires at least some 
attention to cost.''
    Response: We disagree that provisions in the Benefit-Cost Rule's 
regulations granting EPA discretion in how and when to consider the 
results of the mandated BCA resolves the problems presented by the 
Rule. Where the CAA prohibits the EPA from considering cost in 
implementing a provision, it cannot be ``necessary'' to require the EPA 
to conduct a BCA and include it in the decisional rulemaking record. 
The EPA is already conducting BCAs pursuant to Executive Order in 
situations where it is appropriate to do so, so commenters' assertions 
that the Benefit-Cost Rule is necessary for public information ring 
hollow, and the commenters did not address how incorporation of a BCA 
into the agency's rulemaking record where Congress has instructed the 
Agency not to consider cost is consistent with the CAA. As one 
commenter pointed out, the Agency's current practice for rules like the 
2015 ozone NAAQS, where the rule is economically significant but where 
the statute does not permit the Agency to consider cost, is to conduct 
RIAs but not to include those in the record. The Benefit-Cost Rule's 
requirement that the EPA include the BCA in its record is a distinct 
change from its current practice, and is both unnecessary and 
inappropriate given the limits of EPA's statutory authority to consider 
cost.
    We are also unconvinced by the commenters who assert that the 
Benefit-Cost Rule is not inconsistent with the CAA for those rules 
promulgated under provisions that permit consideration of cost just 
because the Rule left it to the Agency's discretion how it should 
consider cost. The fact remains that the Rule did not explain why, for 
any particular CAA provision, BCA is the best or even a reasonable way 
for the agency to consider cost. For CAA rules that would have been 
impacted by the Benefit-Cost Rule, the EPA believes it would have 
needed to justify why complying with the Rule's requirement to conduct 
and consider a BCA was reasonable under the given CAA provision; the 
existence of the Agency's own procedural rule requiring analysis and 
consideration of a factor does not create statutory authority to 
consider a factor that Congress did not intend the Agency to consider. 
We do not agree that what would have been a case-by-case post-hoc 
rationalization of the Benefit-Cost Rule as it applied to any 
particular provision is superior to the existing process of statutory 
interpretation, where we first look to the CAA to try to ascertain 
those factors Congress intended the Agency to consider, and whether the 
statutory provision suggested how the EPA should consider any such 
factor. We disagree that any of the court decisions cited by the 
commenters evince any general principles that ``elevate'' BCA over any 
other economic analysis. In Entergy, the Court upheld as reasonable the 
EPA's choice to consider cost using a BCA given particular statutory 
language in the Clean Water Act. In Michigan, the Court spoke only to 
whether the EPA needed to consider cost at all in implementing a CAA 
provision and explicitly did not opine on how the Agency might 
reasonably consider cost. The Michigan Court's holding that a 
particular CAA phrase required the Agency to consider cost is more 
consistent with the EPA's findings today that it should look first to 
the statute to determine what factors are required under a State Farm 
analysis, rather than start from an Agency-generated procedural rule 
that articulates a particular type of analysis irrespective of 
statutory text.
    Comment: Several commenters agreed with the EPA's assertion that 
the administrative processes already in place before the Benefit-Cost 
Rule was promulgated provide ample consistency and transparency in the 
rulemaking process. One commenter asserted that rather than increasing 
transparency, the Benefit-Cost Rule's requirements would have obscured 
the basis of the EPA's decisions. Another commenter said that the 
Benefit-Cost Rule did not support its contention that the pre-existing 
procedural requirements established by Congress were deficient. A 
commenter also noted that the EPA is already required to transparently 
share its data, relevant statutory interpretations, and methodology 
underlying its rulemaking, and concerned parties are able to supplement 
that data, raise arguments that BCA should be integrated into a 
rulemaking, make other recommendations for consideration of costs, or 
share any concerns that the Agency has been insufficiently transparent. 
Another commenter asserted that the EPA failed to articulate any 
inconsistency or lack of transparency in existing BCAs that would call 
for the drastic changes the Benefit-Cost Rule would impose, and that 
the EPA violated numerous executive orders by, for example, failing to 
consult with States on the Benefit-Cost Rule's federalism implications 
and failing to assess regulatory costs and environmental justice 
impacts.
    Other commenters disagreed with the EPA's assertion that the 
administrative processes already in place before the Benefit-Cost Rule 
was promulgated provided ample consistency and transparency in the 
rulemaking process. Several of these commenters referenced comments 
they had submitted on the proposed Benefit-Cost Rule. The commenters 
reiterated their comments on the proposed Benefit-Cost Rule that an 
overriding goal of the Agency should be to present data regarding 
benefits and costs to decisionmakers and the public as objectively and 
accessibly as possible.
    Some commenters also pointed out that the Benefit-Cost Rule 
included additional procedural requirements to increase transparency in 
the presentation of results, such as providing a summary of the overall 
results of the BCA. A commenter noted that while the EPA cannot 
consider the result of the BCA in setting NAAQS, the RIA does play an 
important role in informing the public of the likely costs and benefits 
of setting a new standard. The commenter argued that the Benefit-Cost 
Rule further advanced transparency by requiring more objective analysis 
and explanation of uncertainties in the benefit and cost estimation. 
The commenter added that the analyses should be consistent with 
Circular A-4, establishing the appropriate baseline, analyzing 
alternatives, and estimating benefits and costs. The commenter added 
that rules should be fully transparent about the many uncertainties 
underpinning their cost and benefit estimates, including the many 
embedded policy assumptions made in developing the various estimates of 
costs and benefits associated with a rulemaking and the significance of 
the impact of those

[[Page 44717]]

assumptions on the final policy decision. Another commenter asserted 
that if the EPA decides to rescind the Benefit-Cost Rule, then the EPA 
must still maintain transparency in calculating and reporting the 
ancillary benefits associated with regulatory actions under the CAA and 
all other sources of regulatory authority.
    Response: We disagree that the administrative process already in 
place before the Benefit-Cost Rule was promulgated is inadequate. For 
CAA rules that are subject to the rulemaking requirements of CAA 
section 307(d), which include many of the major CAA rulemakings that 
would have been subject to the Benefit-Cost Rule, the CAA already 
requires proposed rulemakings to include a statement of basis and 
purpose, which must include ``(A) the factual data on which the 
proposed rule is based; (B) the methodology used in obtaining the data 
and in analyzing the data; [and] (C) the major legal interpretations 
and policy considerations underlying the proposed rule.'' CAA section 
307(d)(3). The CAA also requires that these statements ``set forth or 
summarize and provide a reference to any pertinent findings, 
recommendations, and comments by the Scientific Review Committee, . . . 
and, if the proposal differs in any important respect from any of these 
recommendations, an explanation of the reasons for such differences.'' 
Id. Finally, the CAA already requires, for rules subject to CAA section 
307(d), that ``[a]ll data, information, and documents . . . on which 
the proposed rule relies shall be included in the docket on the date of 
publication of the proposed rule.'' Id. Those CAA rulemakings that are 
not subject to these specific requirements are still subject to the 
requirements that apply to all proposed rulemakings under the APA, 
which similarly require the proposal to include ``reference to the 
legal authority under which the rule is proposed; and either the terms 
or substance of the proposed rule.'' APA section 553(b). EPA must also 
provide an opportunity for comment on proposed rulemakings and respond 
to all significant comments, and all final rules are subject to 
judicial review for EPA's failure to adequately respond to significant 
comments.
    We agree that BCA requirements and analyses should be clear and 
transparent, and we agree that EPA should follow OMB Circular A-4 
guidance to present data regarding benefits and costs to decisionmakers 
and the public as objectively and transparently as possible. We 
disagree that this was not the case prior to the promulgation of the 
Benefit-Cost Rule, and we disagree that EPA's analyses of its 
regulatory actions are inconsistent with OMB Circular A-4. Then, as 
now, in performing analyses of regulatory actions, the EPA follows the 
guidance laid out by OMB Circular A-4 and the Economic Guidelines in 
areas such as identifying the baseline, analyzing alternatives, and 
estimating costs and benefits, including ancillary benefits. The 
analyses and results are subject to internal review and an interagency 
review process under E.O. 12866 that involves application of the 
principles and methods defined in Circular A-4. The results of the 
analyses, documented in RIAs, are also reviewed by OMB to ensure 
consistency with Circular A-4. While BCAs are similar for different 
rules, as instructed in Circular A-4 and the Economic Guidelines, the 
analyses are often tailored to the specific source category by 
considering a number of variables, such as the type of pollutants being 
controlled, available data, and the location of the emission sources.
    Additionally, we disagree with commenters who contended that the 
Benefits-Cost Rule would have increased transparency in the 
presentation of results. The EPA already disaggregates benefit and cost 
estimates in BCAs, so these narrow presentational requirements do not 
provide additional transparency. As discussed in the Interim Final 
Rule, the Benefits-Cost Rule would have required the preambles of 
significant proposed and final CAA regulations to include a separate 
presentation that excluded certain categories of benefits that Circular 
A-4 and the Economic Guidelines indicate should be considered. This 
could have resulted in misleading net-benefit calculations that would 
have inaccurately characterized the benefits of a rulemaking and would 
have called into question the significance of the excluded benefits.
    We disagree that RIAs are difficult to find as they are always 
included in the docket for significant rulemakings. Additionally, all 
of the RIAs are available online, and many can be found at EPA's 
website sorted by source category: https://www.epa.gov/economic-and-cost-analysis-air-pollution-regulations/regulatory-impact-analyses-air-pollution. While the RIAs are technical in nature, the EPA takes steps 
to provide information to aid in their interpretation by the public.
    We also note that the overall summary of BCA results that one of 
the commenters supports, which present the overall net benefits 
associated with a rulemaking, are already recommended by Circular A-4 
and are thus included in the RIAs for our rulemakings. The contents of 
the summary tables already provided by the EPA are consistent with the 
guidance for such summary tables in Circular A-4 for all rulemakings. 
For significant rules, the EPA also follows Circular A-4 procedures 
that require presenting a formal quantitative analysis of the relevant 
uncertainties about benefits and costs.
    Comment: Some commenters agreed with the EPA that the Benefit-Cost 
Rule's presentation requirements would be misleading. These commenters 
supported the EPA's assertion that requiring a separate presentation 
that excluded certain categories of benefits that Circular A-4 and the 
Economic Guidelines indicate should be considered could call into 
question the significance of those benefits without justification. They 
contended that excluding co-benefits from a presentation of benefits 
would violate established economic principles, established best 
practices, and longstanding practices of previous administrations. One 
commenter cited Michigan v. EPA, stating that in its view, the Supreme 
Court held that the EPA needed to consider all advantages and 
disadvantages in deciding whether a regulation is appropriate, such as 
in the case where a regulation controls emissions but has the indirect 
effect of causing new health harms.
    Another commenter noted that, out of the hundreds of pollutants the 
EPA regulates under the CAA, the EPA only has sufficient information on 
particulate matter, and more than 90 percent of all benefits that the 
EPA quantifies in its BCAs are attributable to this one pollutant. The 
commenter stated that when significant benefits are missing from the 
monetized estimate, calculating a number that meaningfully represents a 
rule's net benefits is simply a logical impossibility, and any 
calculation that purports to do so is, as OIRA itself acknowledges, 
``misleading'' at best.
    Other commenters opposed rescinding the Benefit-Cost Rule's 
requirements regarding the presentation of ancillary benefits and non-
domestic benefits. One commenter defended the Benefit-Cost Rule on the 
basis that the Rule did not prescribe any specific requirement as to 
how EPA must consider ancillary benefits or provide a formula for when 
a rule ``passes'' a benefit-cost test; the Benefit-Cost Rule only 
required the EPA to better inform the public about basic information 
contained in BCAs and to differentiate in a clear fashion what the 
ancillary benefits are in a given rule. Other commenters stated that 
the Benefit-Cost Rule's requirement to present statutory-

[[Page 44718]]

objective benefits separately from ancillary co-benefits and non-U.S. 
based benefits would enhance transparency and would not limit the 
Agency's ability to recognize and account for these benefits. Another 
commenter contended that, without the required clarity and accounting 
for the sources of the benefits, the public and decisionmakers are more 
likely to be misled in understanding the nature of the benefits and 
whether those benefits could have been achieved more efficiently under 
other provisions of the statute. A commenter re-iterated its previous 
comment on the proposed Benefit-Cost Rule that presenting disaggregated 
cost and benefit information allows for evaluation and consideration of 
possibly disproportionate costs on one population from a rule where the 
benefits are primarily focused on another population. The commenter 
provided an example where it asserted that the EPA's BCA for the Clean 
Power Plan estimated benefits using the global social cost of carbon 
but compared those benefits to costs within the U.S. The commenter 
asserted that such a comparison was misleading and could have caused 
parties to not question EPA's justification of the Clean Power Plan 
when they might have if the EPA had disaggregated the benefits and 
costs as required by the Benefit-Cost Rule. Another commenter contended 
that estimates of global benefits should be reported separately in a 
manner consistent with Circular A-4. The commenter added that the EPA's 
failure to abide by OMB Circular A-4 by reporting only global benefits 
resulted in analyses that compared U.S. costs with global benefits--an 
asymmetry that should be fully disclosed.
    Some commenters contended that the EPA used ancillary benefits to 
justify rules that did not quantify emission reductions or that showed 
only minimal emission reductions from pollutants directly regulated. 
Another commenter cited two greenhouse gas regulations, the EPA's Phase 
2 rule for Medium and Heavy-Duty Engines and Vehicles and the Clean 
Power Plan, where the EPA estimated substantial net economic benefits 
due to the inclusion of the non-climate effects of climate policies as 
co-benefits. Another commenter added that the EPA used ancillary 
benefits to support six major CAA rules that did not quantify direct 
benefits, and in 21 of 26 major non-particulate matter rulemakings 
analyzed from 1997 to 2011, the particulate matter ancillary benefits 
accounted for more than half of the total benefits. A commenter 
contended that reliance on co-benefits to justify regulatory action 
circumvents Congressional intent because it disregards the target of 
the underlying statutory provision and circumvents the substantive 
focus and procedural safeguards established under the law. The 
commenter added that regulation through co-benefits also undermines the 
very purpose of BCA by obscuring the question of whether the proposed 
action accomplishes its intended purpose in a reasonable and resource-
efficient manner. One commenter suggested that the EPA can avoid using 
cost-ineffective ``co-benefits'' in the BCA by requiring a robust 
regulatory baseline that reflects all projected federal and state 
emission reductions, as well as a robust alternatives analysis that 
outlines the opportunity costs of pursuing ``co-benefits'' through sub-
optimal, if not unnecessary, measures to achieve standards.
    Response: At the outset, we note that, by definition, a BCA 
includes all the costs and benefits of a rulemaking, i.e., the net 
benefits of a regulatory change, in order to ascertain the economic 
efficiency of that change. We believe some commenters are mistaken in 
their understanding of how the EPA currently presents net benefits and 
also what the Benefit-Cost Rule required. To clarify, the EPA already 
disaggregates benefit and cost estimates in its RIAs, per the 
instructions in Chapter 11 of the Economic Guidelines (Presentation of 
Analysis and Results) and the OMB Circular A-4 section on 
characterizing uncertainty in benefits, costs, and net benefits. The 
results of BCAs are presented in RIAs. Both guidance documents are 
clear that net benefits are calculated by subtracting total costs from 
total benefits, regardless of whether the benefits and costs arise from 
intended or unintended consequences of the regulation. Section 6 of 
Circular A-4 instructs that the ``analysis should look beyond the 
direct benefits and direct costs of your rulemaking and consider any 
important ancillary benefits and countervailing risks,'' where an 
ancillary benefit is defined as a ``favorable impact of the rule that 
is typically unrelated or secondary to the statutory purpose of the 
rulemaking.'' \17\ This is particularly important in instances when 
unintended effects are important enough to potentially change the rank 
ordering of the regulatory options considered in the analysis or to 
potentially generate a superior regulatory option with strong ancillary 
benefits and fewer countervailing risks. Circular A-4 also notes that, 
``In some cases the mere consideration of these secondary effects may 
help in the generation of a superior regulatory alternative with strong 
ancillary benefits and fewer countervailing risks.''
---------------------------------------------------------------------------

    \17\ We note that the specific term used in Circular A-4 is 
``ancillary benefits'' and not ``co-benefits.''
---------------------------------------------------------------------------

    In our view, the Benefit-Cost Rule's requirements would not have 
provided additional transparency, and we are concerned that the Rule's 
requirements may have led to misleading net-benefit calculations. The 
Benefit-Cost Rule required preambles of affected rules to include a 
summary of both the overall BCA results as well as an additional 
reporting of subsets of the total benefits of the rule. Specifically, 
the Benefit-Cost Rule required a presentation of only the benefits 
``that pertain to the specific objective (or objectives, as the case 
may be) of the CAA provision or provisions under which the significant 
regulation is promulgated.'' The Benefit-Cost Rule also required that 
if any benefits and costs accrue to non-U.S. populations, they must be 
reported separately to the extent possible. These presentational 
requirements are duplicative of information the EPA already presents in 
its RIAs, so they would not have provided additional transparency. If, 
however, these subsets of benefits were compared to total costs and 
deemed to be some type of limited net-benefits calculation, we think 
that application of the information would be misleading and contrary to 
best economic practice. In addition, requiring a separate presentation 
that excluded certain categories of benefits that Circular A-4 and the 
Economic Guidelines indicate should be considered might lead the public 
to question the significance of those benefits without any 
justification.
    The remainder of the comments summarized above are outside the 
scope of this action, and the question of whether the EPA should 
rescind the Benefit-Cost Rule. Specifically, with respect to the 
suggestion that the EPA should include in its baselines projected 
federal and state emission reductions, the Benefit-Cost Rule would not 
have changed how the Agency calculates baselines, and we do not agree 
that the commenter's suggestion would be consistent with recommended 
guidelines or advisable, to the extent that the commenter is including 
in ``projected'' reductions any that are not finalized and on-the-
books. The EPA follows Circular A-4 and the EPA's Economic Guidelines, 
which direct the EPA to develop baselines that include all significant 
projected federal emission reductions for fully promulgated rules and 
the future impacts of state regulation to the extent they are known

[[Page 44719]]

and on the books at the time of the rulemaking.
    Regarding the suggestion that the EPA conduct a ``robust 
alternatives analysis'' looking at lost opportunity costs of pursuing 
co-benefits through ``sub-optimal'' if not unnecessary measures, the 
comment is unclear but also appears to be beyond the scope of this 
action. We disagree that the EPA has designed regulatory options to 
meet its statutory obligations for the purpose of pursuing reductions 
in other pollutants (or ancillary benefits). It is simply a fact that 
many of the control technologies designed to reduce emissions of 
specific pollutants also happen to reduce emissions of other 
pollutants, in part because sources that are targeted under the Act 
often tend to emit many kinds of pollutants and control of one 
pollutant can often result in reductions of other non-targeted 
pollutants.
    Moreover, we disagree with comments that the EPA used ancillary 
benefits to justify regulations or circumvent Congress, but in any 
case, the Benefit-Cost Rule's requirement to report certain subsets of 
benefits separately would not have addressed these concerns. In 
general, the Agency undertakes RIAs in order to comply with E.O. 12866. 
Those Clean Air Act rulemaking RIAs, in almost every instance, are not 
part of the Agency's record basis for the action. They are not included 
in the Agency's record basis for the action because they are not used 
to justify the Agency's decision making. The net-benefits calculations 
in RIAs, which, consistent with Circular A-4 and the Economic 
Guidelines, include all benefits, are provided in order to comply with 
E.O. 12866 and for illustrative and informational purposes only. 
Therefore, even if the monetized particulate matter benefits associated 
with a number of CAA rules were greater than the monetized benefits for 
any other pollutant, it does not follow that the EPA justified 
promulgation of these rules based on particulate matter benefits. 
Instead, it indicates that the Agency may have more data and 
information to monetize the benefits of reducing that particular 
pollutant and that it is extremely common for required emissions 
controls to result in ancillary benefits.
    Commenters cited two examples of EPA RIAs that they claimed would 
have been conducted differently had the Benefit-Cost Rule's 
presentational requirements for ancillary benefits been in place--the 
2016 Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- 
and Heavy-Duty Engines and Vehicles--Phase 2 Rule and the 2015 Clean 
Power Plan, but we do not agree. Both examples adhered to OMB Circular 
A-4. The RIAs provided separate reporting for all categories of both 
benefits and costs (see summary beginning on page 8-71 of the Phase 2 
Rule RIA and Tables ES-6 through ES-8 and additional details in Chapter 
4 of the Clean Power Plan RIA). For example, for the Phase 2 Rule RIA, 
benefits in the form of savings in fuel expenditures, increased vehicle 
use associated with the fuel economy ``rebound'' effect, benefits of 
greenhouse gas emission reductions, benefits of non-greenhouse gas 
emissions reductions, and the economic value of improvements in U.S. 
energy security are separately reported. We also disagree with the 
commenter who cited the Clean Power Plan RIA's estimation of climate 
benefits as an example of a misleading analysis that could have caused 
parties to not question EPA's justification of the Clean Power Plan 
when they might have if the EPA had disaggregated the climate benefits 
as required by the Benefit-Cost Rule. In the RIA, the EPA strove to be 
very transparent and provided a lengthy discussion of why EPA 
appropriately centers attention on a global measure of the social cost 
of carbon when estimating climate benefits resulting from reductions in 
this global pollutant. In addition, the Agency clearly stated that the 
monetized benefits analysis was not EPA's justification for the rule. 
As explained in the preamble for the final rule, ``As required under 
Executive Order 12866, the EPA conducts benefit-cost analyses for major 
Clean Air Act rules. While benefit-cost analysis can help to inform 
policy decisions, as permissible and appropriate under governing 
statutory provisions, the EPA does not use a benefit-cost test (i.e., a 
determination of whether monetized benefits exceed costs) as the sole 
or primary decision tool when required to consider costs or to 
determine whether to issue regulations under the Clean Air Act, and is 
not using such a test here.''
    Comment: One commenter noted that the Benefit-Cost Rule's limits on 
the types of scientific data that the EPA can consider, as well as its 
prescriptions regarding the presentation of certain categories of 
benefits, would have impeded the adoption of additional public health 
protections that are critically needed to ensure breathable air to 
overburdened communities. Some commenters stated that the Benefit-Cost 
Rule's failure to undertake any analysis of these potential 
environmental justice impacts is directly contrary to the EPA's mission 
under the CAA. Some commenters asserted that the Benefit-Cost Rule 
would have interfered with the EPA's efforts to address distributional 
and environmental justice impacts. These commenters said that 
rescinding the Benefit-Cost Rule removed an unnecessary and 
inappropriate impediment to the Agency's rigorous pursuit of its 
mission, including its ability to advance environmental justice. The 
commenters asserted that the Interim Final Rule reduced this risk and 
associated negative environmental health and safety risks that often 
disproportionately affect children and residents of environmental 
justice communities. Some commenters said that the Interim Final Rule 
was fully in line with the Administration's commitment to advancing 
environmental justice, both broadly and through specific agency 
actions. Another commenter contended that the Benefit-Cost Rule 
disregarded the complex ways in which pollutants interact within and 
across environmental media, thereby undermining environmental 
protections and the existing regulatory programs that are essential to 
public health, protection of ecosystems and wildlife, and local 
economies.
    Some commenters argued that the EPA's development of the Benefit-
Cost Rule did not adequately reflect the mandates of E.O. 12898 and 
13045 or comply with the required analysis. A commenter contended that 
E.O. 12898 applies to programs, policies, and activities, and the 
Benefit-Cost Rule was clearly a policy, and therefore, should have been 
subject to E.O. 12898 directives to consider environmental justice. One 
commenter stated that the Benefit-Cost Rule would have codified value 
judgments that could impact the evaluation and development of 
regulations that can significantly affect health risks to children and 
the pollution burdens on environmental justice communities. Another 
commenter asserted that aggregating those health benefits that can be 
quantified overlooks communities of color that have been subjected to 
racist practices, such as redlining, that have confined them to 
pollution hotspots or areas of disinvestment. Another commenter said 
that the Benefit-Cost Rule would have applied benefits as an average 
across societies instead of a distributional analysis and that this was 
extremely problematic and even unethical because the approach masks 
disparities in the location of polluting facilities and resultant air 
pollution (and health outcomes).
    Other commenters said that ongoing efforts are needed to ensure 
that the EPA appropriately considers

[[Page 44720]]

environmental justice implications moving forward. A commenter asserted 
that the EPA failed to recognize any environmental justice 
considerations in both its reasoning for rescinding the Benefit-Cost 
Rule and its explanation for returning to the pre-existing BCA process. 
The commenter argued that building environmental-justice considerations 
into the BCA process is needed to ensure that the EPA's future CAA 
actions do not re-enforce the existing pollution-exposure discrepancies 
underserved communities face. Similarly, another commenter asserted 
that low-income communities and communities of color have long been 
disproportionately harmed by air pollution and other forms of 
environmental degradation. The commenter added that the Benefit-Cost 
Rule would have obscured environmental-justice implications because the 
EPA's BCA would be required to focus on calculated net benefits of 
actions and would ignore distributional equities. Another commenter 
requested that the EPA promulgate a better Benefit-Cost Rule to truly 
realize equality under the law and environmental justice--a rule that 
accurately accounts for cumulative and aggregate impacts of pollutants 
on overburdened communities and gives unquantifiable and/or non-
monetary harms the attention they deserve.
    Response: The EPA agrees that the Benefit-Cost Rule did not address 
the environmental justice impacts raised by the commenters. While this 
final rule rescinding the Benefit-Cost Rule will not directly address 
environmental justice impacts, it should be noted that a cornerstone 
goal of the EPA is to provide an environment where all people enjoy the 
same degree of protection from environmental and health hazards and 
equal access to the decision-making process to maintain a healthy 
environment in which to live, learn, and work.

V. Judicial Review

    Section 307(b)(1) of the CAA indicates which federal courts of 
appeals are the proper forum for petitions of review of final actions 
by the EPA under the CAA. This section provides, in part, that 
petitions for review must be filed in the Court of Appeals for the 
District of Columbia Circuit for (i) ``Any nationally applicable 
regulations promulgated, or final actions taken, by the Administrator'' 
or (ii) when such action is locally or regionally applicable, if ``such 
action is based on a determination of nationwide scope or effect and if 
in taking such action the Administrator finds and publishes that such 
action is based on such a determination.'' For locally or regionally 
applicable final actions, the CAA reserves to the EPA complete 
discretion whether to invoke the exception in (ii).
    This final action is ``nationally applicable'' within the meaning 
of section 307(b)(1). Pursuant to CAA section 307(b), any petitions for 
review of this final action must be filed in the Court of Appeals for 
the District of Columbia Circuit within 60 days from the date this 
final action is published in the Federal Register.

VI. Statutory and Executive Order Reviews

    Additional information about these statutes and Executive Orders 
can be found at https://www.epa.gov/laws-regulations/laws-and-executive-orders.

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 14094: Modernizing Regulatory Review

    This action is not a significant regulatory action as defined in 
Executive Order 12866. The EPA does not anticipate that this rulemaking 
will have an economic impact on regulated entities. This is a rule of 
agency procedure and practice. EPA notes the release of E.O. 14094 
after issuance of the interim final rule, which amended E.O. 12866. The 
discussion in this final action relates to interpretation of E.O. 
12866, which was the governing executive order for the duration of when 
the rule was in effect. The same reasoning applies to the updated 
definitions contained in E.O. 14094. That is, the Benefit-Cost Rule 
expanded the universe of CAA rulemakings for which the EPA would be 
required to conduct BCAs without justifying why such expansion was 
necessary or appropriate.

B. Paperwork Reduction Act (PRA)

    This action does not contain any information collection activities 
and therefore does not impose an information collection burden under 
the PRA.

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. This 
action would not impose any requirements on small entities. This action 
would not regulate any entity outside the federal government and is a 
rule of agency procedure and practice.

D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain any unfunded mandate as described in 
UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect 
small governments. The action imposes no enforceable duty on any state, 
local or tribal governments or the private sector.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    This action does not have tribal implications as specified in 
Executive Order 13175. Thus, Executive Order 13175 does not apply to 
this action.

G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    The EPA interprets Executive Order 13045 as applying only to those 
regulatory actions that concern environmental health or safety risks 
that the EPA has reason to believe may disproportionately affect 
children, per the definition of ``covered regulatory action'' in 
section 2-202 of the Executive Order. This action is not subject to 
Executive Order 13045 because it does not concern an environmental 
health risk or safety risk.

H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This action is not a ``significant energy action'' because it is 
not likely to have a significant adverse effect on the supply, 
distribution or use of energy and has not otherwise been designated as 
a significant energy action by the Administrator of the Office of 
Information and Regulatory Affairs.

I. National Technology Transfer and Advancement Act (NTTAA) and 1 CFR 
Part 51

    This rulemaking does not involve technical standards.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 (59 FR 7629, February 16, 1994) directs 
federal

[[Page 44721]]

agencies, to the greatest extent practicable and permitted by law, to 
make environmental justice part of their mission by identifying and 
addressing, as appropriate, disproportionately high and adverse human 
health or environmental effects of their programs, policies and 
activities on minority populations (people of color and/or Indigenous 
peoples) and low-income populations.
    The EPA believes that this type of action does not concern human 
health or environmental conditions and therefore cannot be evaluated 
with respect to potentially disproportionate and adverse effects on 
people of color, low-income populations and/or Indigenous peoples. This 
action has no current or projected monetized costs or benefits nor does 
it stipulate any changes that may adversely affect people of color, 
low-income populations and/or Indigenous peoples. This rule pertains 
only to internal EPA practices in how the EPA conducts and considers 
benefit-cost analyses. While this rule does not directly address 
environmental justice impacts, it should be noted that a cornerstone 
goal of the EPA is to provide an environment where all people enjoy the 
same degree of protection from environmental and health hazards and 
equal access to the decision-making process to maintain a healthy 
environment in which to live, learn, and work.

K. Congressional Review Act (CRA)

    This rule is exempt from the CRA because it is a rule of agency 
organization, procedure, or practice that does not substantially affect 
the rights or obligations of non-agency parties.

List of Subjects in 40 CFR Part 83

    Environmental protection, Administrative practice and procedures, 
Reporting and recordkeeping requirements.

Michael S. Regan,
Administrator.

PART 83--[REMOVED AND RESERVED]

0
For the reasons stated in the preamble, and under the authority of 42 
U.S.C. 7601, the EPA removes and reserves 40 CFR part 83.

[FR Doc. 2023-14707 Filed 7-12-23; 8:45 am]
BILLING CODE 6560-50-P


