EPA finalizes rule to codify best practices for benefit-cost analyses under the Clean Air Act

The Environmental Protection Agency (EPA) on Dec. 9 finalized a procedural rule to codify best practices in the preparation, development, presentation, and consideration of benefit-cost analyses for significant rulemakings promulgated under the Clean Air Act.

The goal of the final rule is to assist interested parties to understand and evaluate the adequacy and accuracy of the benefit-cost analyses and the role the analysis played in significant regulatory decision-making.

The final rule consists of three main elements.

First, EPA will prepare a benefit-cost analysis for all future significant proposed and final regulations under the Clean Air Act.

Second, EPA is required to develop benefit-cost analyses following best practices from the economic, engineering, physical, and biological sciences.

The analysis must include a statement of need, an examination of regulatory options which would contribute to the stated objectives of the Clean Air Act, and to the extent feasible, an assessment of all benefits and costs of these regulatory options relative to the baseline scenario.

Third, EPA must increase transparency in the presentation of the benefits and costs resulting from significant Clean Air Act regulations. Specifically, the rule requires the preamble of significant proposed and final Clean Air Act regulations to include a section that contains a summary presentation of the overall benefit-cost analysis results for the rule, including total benefits, costs, and net benefits.

The final rule does not change any other requirements related to Clean Air Act rules specified in executive orders and existing guidance documents. For example, this final rule does not change the requirements for what types of analysis should be included in regulatory impact analyses prepared under Executive Order 12866.

The final rule becomes effective upon publication in the Federal Register but does not apply to final rules for which a proposal was published prior to the effective date.

The new rule was part of a broader effort to address cost-benefit analysis requirements for all new significant EPA regulations for water, hazardous waste, and toxics regulations in the next several years. However, the final rule will likely face legal challenges and revocation by the incoming administration of President-elect Joe Biden.

The American Public Power Association submitted joint comments with the National Rural Electric Cooperative Association offering general support for the overall goals of EPA’s efforts to increase transparency and consistency in undertaking a benefit-cost analysis under the Clean Air Act.

A copy of the pre-publication version of the final rule and fact sheet is available here