EPA to Implement Consistent Economic Analysis for New Clean Air Act Rules


Under newly finalized rule, the U.S. Environmental Protection Agency (EPA) would be required to uniformly document the benefit-cost analysis (BCA) for all significant rulemakings under the Clean Air Act (CAA). The final rule, entitled “Increasing Consistency and Transparency in Considering Benefits and Costs in the Clean Air Act Rulemaking Process” was issued in prepublication form December 9, 2020, and will be effective on publication in the Federal Register. 

The stated intent of the new rule is to provide economic analyses to policy makers and the public to allow them to “assess the likely consequences of various actions or options.” The rule would require “EPA to prepare a BCA for all future significant proposed and final regulations under the CAA.” The BCA must be developed by EPA utilizing economic, engineering and other scientific best practices. The rule also imposes procedural requirements on EPA in that the preamble for significant proposed and final CAA regulations must contain: (a) A summary presentation of the overall BCA results; (b) A report on the public health and welfare benefits that pertain to the specific objectives of the CAA related to the rule; and (c) A clear presentation of how specific costs contemplated by the CAA provisions authorizing the rule relate to total costs. 

Commenters raised concerns the new rule’s focus on benefits specific to the statutory provision under which new regulations are promulgated would discount or ignore the sometimes significant ancillary benefits of regulations and make more stringent regulations less likely to make it out of EPA.  Many industry groups on the other hand have been supportive of the new rule, praising the increased transparency of applying standardized economic analysis to CAA rulemaking. 

Many provisions within the CAA and other major environmental statutes already require EPA to consider the relative costs and benefits of new promulgations. The final rule issued last week attempts to apply those principles more broadly and uniformly, at least within the context of the CAA.  

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