rule than modeled in ex ante analysis. See, e.g., section III.D of this
preamble, discussing how the actual cost of the ARP was up to 70
percent less than what had been estimated.
---------------------------------------------------------------------------

    \92\ See https://www.epa.gov/airmarkets/ipm-analysis-proposed-mercury-and-air-toxics-standards-mats. Accessed July 23, 2021.
    \93\ See https://www.epa.gov/airmarkets/documentation-supplement-base-case-v410mats. Accessed July 23, 2021.
---------------------------------------------------------------------------

    A first example regards the assumptions of HCl removal for certain
types of coal. When lignite and subbituminous coals are combusted, the
chemistry of coal ash alkalinity removes HCl emissions. The 2011 RIA
modeling assumed a 75 percent reduction of HCl emissions from lignite
and subbituminous coals.\94\ Upon subsequent review of available data,
the EPA updated this assumption to 95 percent HCl removal.\95\ This
revised assumption regarding improved HCl removal from coal ash
alkalinity effectively lowers uncontrolled HCl emissions rates in the
projections and is a better reflection of actual removal rates observed
by EGUs combusting subbituminous and/or lignite coal. This updated
assumption, had it been used in the 2011 RIA modeling, would have
significantly decreased the incremental capacity of acid gas controls
(e.g., DSI, dry FGD) that the model projected to be needed for
compliance with the MATS acid gas limits.\96\ The lower projection for
controls would in turn have resulted in a lower cost estimate.
---------------------------------------------------------------------------

    \94\ Id.
    \95\ See https://www.epa.gov/sites/default/files/2019-03/documents/chapter_5.pdf. Accessed July 23, 2021.
    \96\ While we are unable to quantify precisely the impact that
updating this assumption would have on the projected compliance
costs, we can observe that most incremental DSI capacity (about 40
GW) would not require DSI controls in the 2011 RIA modeling, holding
all else constant.
---------------------------------------------------------------------------

    For a second example, the EPA updated the DSI retrofit cost
methodology used in our power sector modeling. The 2011 RIA compliance
cost projections assumed an SO2 removal rate of 70 percent
and a corresponding HCl removal effect of 90 percent \97\ based on a
technical report, developed by Sargent and Lundy in August 2010.\98\
These assumptions have been updated to reflect an SO2
removal rate of 50 percent and a corresponding HCl removal effect of 98
percent for units with FF in the EPA's recent modeling,\99\ based on an
updated technical report from Sargent and Lundy.\100\
---------------------------------------------------------------------------

    \97\ See https://www.epa.gov/sites/production/files/2015-07/documents/updates_to_epa_base_case_v4.10_ptox.pdf. Accessed July 23,
2021.
    \98\ See Dry Sorbent Injection Cost Development Methodology at
https://www.epa.gov/sites/production/files/2015-07/documents/append5_4.pdf. Accessed July 23, 2021.
    \99\ See https://www.epa.gov/airmarkets/documentation-epa-platform-v6-november-2018-reference-case-chapter-5-emission-control.
Accessed July 23, 2021.
    \100\ See Dry Sorbent Injection for SO2/HCl Control
Cost Development Methodology at https://www.epa.gov/sites/production/files/2018-05/documents/attachment_5-5_dsi_cost_development_methodology.pdf. Accessed July 23, 2021.
---------------------------------------------------------------------------

    These revised assumptions, which better reflect the actual cost and
performance of DSI, would reduce the variable costs significantly, by
about one-third at a representative plant,\101\ because less sorbent is
required to achieve the same amount of HCl reduction. If the EPA had
been able to use this new information in the 2011 RIA modeling, the
projected compliance costs would have been lower, reflecting the
reduced sorbent necessary to achieve the MATS emission limits.
Furthermore, we note that while these modeling assumptions are based on
a single sorbent (trona), alternative sorbents are available,
potentially at a lower cost for some units.
---------------------------------------------------------------------------

    \101\ Based on a 500 MW plant with a heat rate of 9,500 Btu/kWh
burning bituminous coal.
---------------------------------------------------------------------------

    A third example relates to the assumed cost of ESP upgrades. In the
2011 RIA modeling, the EPA assumed that a range of upgrades would be
necessary at units with existing ESP controls in order to meet the MATS
PM standard. The EPA assumed the cost of these upgrades ranged from
$55/kilowatt (kW) to $100/kW (in 2009 dollars). However, new evidence
suggests that many ESP upgrades were installed and are available at
less than $50/kW.\102\
---------------------------------------------------------------------------

    \102\ Analysis of PM and Hg Emissions and Controls from Coal-
Fired Power Plants. Andover Technology Partners (August 19, 2021),
available in the rulemaking docket.
---------------------------------------------------------------------------

    These examples highlight the uncertainty inherent in ex ante
compliance cost projections, and contribute additional evidence that
the projected compliance costs presented in

the 2011 RIA were likely overestimated and that actual compliance costs
for MATS in 2015 were likely significantly less than the $9.6 billion
estimate.
d. Conclusion That the 2011 RIA Costs Were Overestimated
    After reviewing this suite of quantitative and qualitative updates
and considering studies that were performed by outside entities, the
EPA concludes that the available ex post evidence points to
significantly lower costs of compliance for the power sector under MATS
than suggested by the ex ante projections in the 2011 RIA. There are
numerous reasons for this, and chief among them is the fact that the
natural gas industry has undergone profound change in recent years.
Following the promulgation of MATS, natural gas supply increased
substantially, leading to dramatic price decreases that resulted in
major shifts in the economics of fossil fuel-fired electric generating
technologies. The 2011 RIA modeling did not fully anticipate this
historic change in natural gas supply and the related decrease in
natural gas prices. As a result of this and other fundamental changes
in the industry, we see a very different pattern of control
installations than was projected: \103\
---------------------------------------------------------------------------

    \103\ As discussed above, although we attributed all controls of
these types to MATS in this analysis, even those controls that were
installed were likely due in part or in whole for reasons other than
MATS.
---------------------------------------------------------------------------

     21 percent less capacity of dry FGD than projected;
     64 percent less capacity of DSI than projected;
     3 percent less capacity of ACI than projected;
     69 percent less capacity of FF than projected; and
     Likely fewer ESP and scrubber control upgrades than
projected.

These controls were responsible for approximately 70 percent of the
projected annual compliance costs in the 2011 RIA. Because so many
projected controls were not installed, we know that the control-related
costs were almost certainly significantly overestimated. By simply
comparing between projected and installed controls, we now find that
the projected control-related costs for 2015 of about $7 billion were
likely overestimated by $2.2 to $4.4 billion, and possibly more.
    In addition, we have updated some of the modeling assumptions that
supported the 2011 RIA. Specifically:
     HCl emissions for EGUs burning subbituminous and lignite
coals are much lower than originally modeled, reducing the number of
controls necessary for compliance in the model;
     DSI controls require less sorbent than originally assumed,
lower the operating cost of these controls, and other lower-cost
sorbents are likely available; and
     The assumed cost of ESP upgrades in the modeling was
likely much higher than the actual cost of these upgrades.
    While not quantified here, the advances in cost and performance of
control technology between the time of the EPA's modeling and
implementation of the rule would, if quantified, likely add to the $2.2
to $4.4 billion overestimate.
    Furthermore, the three studies submitted to the EPA during earlier
rulemakings support this finding that the 2011 RIA cost projection was
significantly overestimated:
     Andover Technology Partners estimated that the actual
costs of compliance with MATS were approximately $2 billion, and that
the 2011 RIA may have overestimated compliance costs by approximately
$7 billion.
     MJB&A estimated that the total upfront capital
expenditures of pollution controls installed for compliance with the
rule were overestimated in the 2011 RIA by a factor of more than eight.
     EEI, the association that represents all U.S. investor-
owned electric companies, estimated cumulative costs incurred by the
industry in response to MATS, and that estimate suggests an annual
amount about $7 billion less than the 2011 RIA projected.
    Taken together, this information indicates that the projected costs
in the 2011 RIA were almost certainly significantly overestimated. We
solicit comment on data resource and methods such as econometric,
simulation, and event study approaches that may aid the EPA in better
characterizing the ex post regulatory costs of MATS for consideration
before we issue the final rule.
3. Evaluation of Metrics Related to MATS Compliance
    In the next four sections, we place the costs that we estimated in
2011, and which, as just explained, were likely significantly
overestimated, in the context of the EGU industry and the services the
EGU industry provides to society. The purpose of these comparisons is
to better understand the disadvantages conferred by expending this
money, both in terms of their scale and distribution, in order to weigh
cost as a factor in our preferred methodology for making the
appropriate determination. While we recognize the projected cost
estimate from the 2011 RIA in absolute terms is perceived as a large
number, our findings demonstrate that, for example, the (overestimated)
projected cost estimate is less than 3 percent of the power sector's
revenues from electricity sales, even when compared against data from
2019 (which had the lowest electricity sale revenues in a nearly 20
year period). As we did in 2016, we first contextualize the costs of
MATS against power sector data for the years 2000 to 2011, i.e., the
information that was available to the Agency when we were promulgating
MATS in 2012 and reaffirming the appropriate and necessary
determination. For purposes of this proposal, we also expand our
assessment to compare the 2011 cost estimates to the most recent years
of data available regarding, for example, industry revenue and
electricity prices. The intent of expanding the years of analysis is to
update our assessments from the 2016 Supplemental Finding considering
power sector trends with the newest information. We continue to use
projections developed for the 2011 RIA for purposes of these
evaluations, because as discussed in section III.B.2, we are unable to
generate new, bottom-line actual cost projections. However, in section
III.D, we consider these evaluations in light of the EPA's finding that
the projected costs were almost certainly significantly overestimated.
a. Compliance Costs as a Percent of Power Sector Sales
    The first metric examined here (as in 2016) is a comparison of the
annual compliance costs of MATS to electricity sales at the power
sector-level (i.e., revenues), often called a sales test. The sales
test is a frequently used indicator of potential impacts from
compliance costs on regulated industries.\104\ Incorporating updated
information from the EIA, Section 2.a and Table A-4 of the Cost TSD
present the value of retail electricity sales from 2000 to 2019, as
well as net generation totals for the electric power sector for the
same period.
---------------------------------------------------------------------------

    \104\ For example, the sales test is often used by the EPA when
evaluating potential economic impacts of regulatory actions on small
entities. In the context of a small entity analysis, an evaluation
of the change in profits to owners is likely the best approach to
assessing the economic burden to owners from a regulatory action.
Data limitations prevent solely analyzing profit changes to EGU
owners as a result of MATS in this proposal.
---------------------------------------------------------------------------

    This information indicates that the $9.6 billion in annual
compliance costs of MATS projected for 2015 would have represented
about 2.7 percent of 2008 power sector revenues from retail electricity
sales, the peak year during

the 2000 to 2019 period. The $9.6 billion in projected compliance costs
would constitute about 2.9 percent of 2019 sales, which was the lowest
sales level observed in the post-2011 period. These projected
compliance costs are a very small percentage of total EGU revenues from
electricity sales in both robust or lean years, and newer data confirms
the findings of the 2016 record. Moreover, if we account for the fact
that the $9.6 billion figure likely significantly overestimated the
actual cost of compliance, the percentage of compliance costs to
revenues would be even smaller.
b. Compliance Expenditures Compared to the Power Sector's Annual
Expenditures
    The next metrics we examine are a comparison of the annual capital
expenditures projected in the 2011 RIA to be needed for MATS compliance
to historical power sector-level overall capital expenditures, followed
by a comparison of projected annual capital and production expenditures
related to MATS compliance to historical power sector-level overall
capital and production expenditures.
    First, we evaluate capital expenditures. Capital costs represent
largely irreversible investments for firms that must be paid off
regardless of future economic conditions, as opposed to other important
variable costs, such as fuel costs, that may vary according to economic
conditions and generation needs. Section 2.b and Table A-5 of the Cost
TSD present two sets of estimates for trends in annual capital
expenditures by the electric power sector through 2019. The first set
of information is based on data compiled by S&P Global, a private
sector firm that provides data and analytical services. The second set
of information is from the U.S. Census Bureau's Annual Capital
Expenditures Survey. While each dataset has limitations, the estimates
from each correspond to one another reasonably well.
    The 2011 RIA modeling estimated the incremental capital
expenditures associated with MATS compliance to be $4.2 billion for
2015. As discussed in section III.B.2, the 2011 RIA likely
significantly overestimated compliance costs. This conclusion also
applies to the capital cost component of the overall cost because, as
detailed earlier, fewer pollution controls were installed during the
2013-2016 timeframe than were projected in the 2011 RIA. While the EPA
is not able to produce an alternative capital cost estimate directly
comparable to the estimates from the 2011 RIA, the analysis discussed
in section III.B.2 and the Cost TSD indicated the annualized capital
expenditures at units that installed controls under MATS might be as
low as $0.7 billion ($3.5 billion lower than projected in 2011 RIA, or
less than one-fifth).
    Even using the significantly overestimated figure of $4.2 billion
in our comparison shows that the projected capital expenditures
associated with MATS represent a small fraction of the power sector's
overall capital expenditures in recent years. Specifically, the $4.2
billion estimate represents about 3.6 or 3.7 percent of 2019 (i.e.,
most recent) power sector level capital expenditures based on the S&P
Global and U.S. Census information, respectively. Compared against 2004
power sector level capital expenditures (i.e., the 20-year low), the
$4.2 billion figure represents 10.4 or 9.3 percent of sector level
capital expenditures (using the two respective data sets).
Additionally, the projected $4.2 billion in incremental capital costs
is well within the range of annual variability associated with capital
expenditures for the sector over the 2000-2019 period. During this
period, based on the Census information, for example, the largest year-
to-year decrease in power sector-level capital expenditures was $19.5
billion (from 2001 to 2002) and the largest year-to-year increase in
power sector-level capital expenditures was $23.4 billion (from 2000 to
2001). This wide range (-$19.5 to +$23.4 billion) indicates substantial
year-to-year variability in industry capital expenditures, and the
projected $4.2 billion increase in capital expenditures in 2015
projected under MATS falls well within this variability. Similar
results are found using the S&P Global information. If a $4.2 billion
increase in capital expenditures in 2015 projected under MATS falls
well within the variability of historical trends, then a capital
expenditure of less than $4.2 billion would also fall within this
variability.
    Next, in order to provide additional perspective to the projected
cost information, we look at a broader set of costs faced by industry,
including both capital and production expenditures together. Section
2.b and Table A-6 of the Cost TSD present two sets of estimates through
2019 for trends in annual total (capital and production) expenditures
by the electric power sector using the same two data sets as above,
which we then compare with the projected annual total expenditures
required by MATS.
    We find that even the overestimated $9.6 billion compliance cost
projection from the 2011 RIA represents a small fraction of the power
sector's annual capital and production expenditures compared to
historical data, and is well within annual variability in total costs
over the 2000 to 2011 and the 2012 to 2019 periods. Compared to 2008
data (i.e., the historic high for total industry expenditures), the
projected $9.6 billion estimate represents about 4.2 to 4.3 percent of
total expenditures. The MATS projected compliance cost represents 6.2
to 6.6 percent of total expenditures in 2003 (which was the lowest year
for total industry expenditures during the studied time period).
Additionally, the EPA notes that, similar to the capital expenditures
analysis set forth in the 2015 Proposal, the projected $9.6 billion in
incremental capital plus production costs is well within the range of
annual variability in costs in general over the 2000 to 2019 period.
For example, during this period, the largest year-to-year decrease in
power sector-level capital and production expenditures ranged from
$30.5 billion to $32.8 billion. The largest year-to-year increase in
power sector-level capital and production expenditures in this period
ranged from $27.5 billion to $28.7 billion. If a $9.6 billion increase
in expenditures falls well within the variability of historical trends,
then an expenditure substantially less than $9.6 billion would also
fall within this variability.
c. Impact on Retail Price of Electricity
    We are cognizant that, for an industry like the power sector, costs
and disadvantages to regulation are not solely absorbed by regulated
sources. Many firms in the industry are assured cost-recovery for
expenditures, so there is considerable potential for EGUs to pass
through the costs of compliance to consumers via increases in retail
electricity prices. This is especially true given that the demand for
electricity is not particularly price-responsive. That is, because
people are dependent on electricity for daily living, they are not
likely to reduce their consumption of electricity even when the price
goes up but will instead pay the higher price, thus absorbing the costs
of compliance incurred by the industry. Notably, average retail
electricity prices have fallen since the promulgation of MATS.
    While we analyze these aspects of cost separately, control costs
and electricity prices are not separate economic indicators.
Electricity price increases are generally related to increases in the
capital and operating expenditures by the power sector. Therefore, the
electricity price impacts and the associated increase in electricity

bills by consumers are not costs that are additional to the compliance
costs described earlier in this section. In fact, to the extent the
compliance costs are passed on to electricity consumers, the costs to
the EGU owners in the power sector are reduced. Therefore, in order to
further assess the disadvantages to regulation, in this case to
consumers of electricity in all sectors (residential, commercial,
industrial, transportation, and other sectors), we evaluate as we did
in 2016 the projected effect MATS was anticipated to have on retail
electricity prices, as measured against the variations in electricity
prices from year to year. For this proposal, we expanded that analysis
using updated data from the EIA, as presented in section 2.c and Table
A-7 of the Cost TSD.
    Looking at 2000-2019 data, we find that the projected 0.3 cents per
kilowatt-hour projected increase in national average retail electricity
price under MATS is well within the range of annual variability over
the 2000-2019 period. During that time period, the largest year-to-year
decrease in national average retail electricity price was -0.2 cents
per kilowatt-hour (from 2001 to 2002) and the largest year-to-year
increase was 0.5 cents per kilowatt-hour (from 2005 to 2006). For the
newer data analyzed, we also found that average retail electricity
prices have generally decreased since 2011, from 9.33 cents per
kilowatt-hour in 2011 to 8.68 cents per kilowatt-hour in 2019, or by
nearly 7 percent.
    After considering the potential impacts of MATS on retail
electricity prices, the EPA concludes that the projected increase in
electricity prices is within the historical range. In addition, any
increase in electricity prices would not be additive to the overall
compliance costs of MATS. Rather, such price impacts would in part
reflect the ability of many EGUs to pass their costs on to consumers,
thereby reducing the share of MATS compliance costs borne by owners of
EGUs. Given the relationship between compliance costs and electricity
prices, we would also therefore expect the significant overestimate of
compliance costs reflected in the $9.6 billion figure to translate into
overestimates in our projections for electricity price increases.
Therefore, incorporating this newer data into our analysis, we find
that MATS did not result in increases in electricity prices for
American consumers that were outside the range of normal year-to-year
variability, and during the period when MATS was implemented,
electricity prices generally decreased.
d. Impact on Power Sector Generating Capacity
    We recognize that the power sector plays a role of critical
importance to the American public. A potential disadvantage to
regulation that we consider to be a relevant factor in our
consideration under CAA section 112(n)(1)(A) is how such regulation
would impact the provision of adequate and reliable electricity
throughout the country.\105\ Therefore, we analyzed, as part of the
2012 record, projected net changes in generation capacity under MATS,
as compared to the base case, that is, what expected generation
capacity would have been absent the rule.\106\ We also conducted an
analysis of the impacts of projected retirements on electric
reliability. Id. And finally, in parallel with finalizing MATS, the
EPA's Office of Enforcement and Compliance Assurance issued a policy
memorandum describing an approach for units that were reliability
critical that could demonstrate a need to operate in noncompliance with
MATS for up to a year.\107\
---------------------------------------------------------------------------

    \105\ The EPA generally uses the term ``reliability'' to refer
to the ability to deliver the resources to the projected electricity
loads so the overall power grid remains stable, and the term
``resource adequacy'' generally refers to the provision of adequate
generating resources to meet projected load and generating reserve
requirements in each region.
    \106\ U.S. EPA. 2011. Resource Adequacy and Reliability in the
Integrated Planning Model Projections for the MATS Rule (Resource
Adequacy and Reliability TSD), http://www3.epa.gov/ttn/atw/utility/revised_resource_adequacy_tsd.pdf, Docket ID Item No. EPA-HQ-OAR-
2009-0234-19997.
    \107\ U.S. EPA. 2011. The Environmental Protection Agency's
Enforcement Response Policy For Use of Clean Air Act Section 113(a)
Administrative Orders In Relation To Electric Reliability And The
Mercury and Air Toxics Standard, https://www.epa.gov/sites/default/files/documents/mats-erp.pdf, Docket ID Item No. EPA-HQ-OAR-2009-
0234-20577.
---------------------------------------------------------------------------

    Our analysis indicated that the vast majority of the generation
capacity in the power sector directly affected by the requirements of
MATS would remain operational following MATS. Specifically, our model
projected that operational capacity with MATS in place would be reduced
by less than 1 percent nationwide. See Resource Adequacy and
Reliability TSD at 2. With respect to reliability, our modeling
indicated that coal retirements would be distributed throughout the
power grid, and that there would only be small impacts at the regional
level, and that in those regions, we anticipated small decreases in
overall adequacy of resources and robust remaining reserve margins. Id.
These analyses therefore found that the power sector would be able to
continue to provide adequate and reliable electricity even with
regulation of the EGU sector for HAP.
    Additionally, since MATS was promulgated, the EPA has not been made
aware of reliability or resource adequacy problems attributable to
MATS. As noted, the EPA's enforcement office concurrently issued a
policy memorandum to work with sources that faced demonstrated
reliability concerns, and five administrative orders were issued in
connection with the policy.\108\ We think this small number of sources
obtaining relief due to their reliability critical status provides some
confirmation of the EPA's projections that regulation would not cause
widespread resource and reliability problems.
---------------------------------------------------------------------------

    \108\ https://www.epa.gov/enforcement/enforcement-response-policy-mercury-and-air-toxics-standard-mats.
---------------------------------------------------------------------------

4. Other Cost Considerations
    We also propose to reaffirm our previous findings regarding the
costs of mercury controls, consistent with the instruction from the
statute to study the availability and cost of such controls in CAA
section 112(n)(1)(B). 80 FR 75036-37 (December 1, 2015). We similarly
propose to reaffirm our previous records and findings regarding the
cost of controls for other HAP emissions from EGUs, and the cost of
implementing the utility-specific ARP, which Congress wrote into the
1990 CAA Amendments and implementation of which Congress anticipated
could result in reductions in HAP emissions. Id. With respect to the
costs of technology for control of mercury and non-mercury HAP, the
record evidence shows that in 2012 controls were available and
routinely used and that control costs had declined considerably over
time. Id. at 75037-38. With regard to the ARP, industry largely
complied with that rule by switching to lower-sulfur coal, and
subsequently the actual costs of compliance were substantially lower
than projected. Though the reasons for discrepancies between projected
and actual costs are different for MATS, as discussed in section
III.B.2, the newer information examined as part of this proposal
demonstrates that the projected cost estimates for MATS were also
likely significantly overestimated.
5. Summary of Consideration of Cost of Regulating EGUs for HAP
    In this section, the EPA noted several studies performed by outside
entities suggesting that costs of MATS may have been overestimated in
the 2011 RIA. We discussed the dramatic impacts to the power sector
over the last 10 years due to increasing supplies and decreasing price
of natural gas and renewables, and

we conducted a suite of quantitative and qualitative updates to the
information available in the 2011 RIA. Based on this information, we
propose to conclude that the available ex post evidence points to a
power sector that incurred significantly lower costs of compliance
obligations under MATS than anticipated based on the ex ante
projections when the rule was finalized in 2012. This overestimate was
significant--for just one part of the original compliance cost
estimate, the EPA was able to quantify a range of at least $2.2 to $4.4
billion in projected costs related to the installation, operation, and
maintenance of controls which were not expended by industry. This
projected overestimation is limited to these costs; it does not account
for other ways in which the rule's costs were likely overestimated,
such as advances in control technologies that made control applications
less expensive or more efficient at reducing emissions. The other
studies conducted by stakeholders asserted there were even greater
differences between projected and actual costs of MATS.
    We next examined the 2011 projected costs, which were almost
certainly significantly overestimated, in the context of the EGU
industry and the services the EGU industry provides to society. The
purpose of these comparisons was to better understand the disadvantages
imposed by these costs, in order to weigh cost as a factor in our
preferred methodology for making the appropriate determination. Even
though the cost estimates we used in this analysis were almost
certainly significantly overestimated, we noted they were relatively
small when placed in the context of the industry's revenues and
expenditures, and well within historical variations.
    Based on the 2011 RIA, the total projected cost of the MATS rule to
the power sector in 2015 represented between 2.7 and 3.0 percent of
annual electricity sales when compared to years from 2000 to 2019, a
small fraction of the value of overall sales (and even smaller when one
takes into account that the 2011 RIA projections were likely
significantly overestimated). Looking at capital expenditures, the EPA
demonstrated that the projected MATS capital expenditures in 2015
represented between 3.6 and 10.4 percent of total annual power sector
capital expenditures when compared to years surrounding the
finalization of the MATS rule. Such an investment by the power sector
would comprise a small percentage of the sector's historical annual
capital expenditures on an absolute basis and also would fall within
the range of historical variability in such capital expenditures.
Similarly, the EPA demonstrated that the projected capital and
operating expenditures in 2015 represented between 4.3 and 6.2 percent
of total annual power sector capital and operating expenditures over
2000 to 2019, and is well within the substantial range of annual
variability. This proposal's analysis indicating that the far fewer
controls were installed than the EPA had projected would be required is
particularly relevant to considering our findings as to this metric;
with the overestimation of capital expenditures in mind, actual
investments by the power sector to comply with MATS would have
comprised an even smaller percentage of historical annual capital
expenditures.
    With respect to impacts on the wider American public, the EPA
examined impacts on average retail electricity prices and found the
modest increases--which, like overall compliance costs, are also likely
to have been significantly overestimated--to be within the range of
historical variability. Experience has also shown that national average
retail electricity prices in years after MATS promulgation have
declined. Finally, previous analysis indicated that the vast majority
of the generation capacity in the power sector would remain operational
and that the power sector would be able to continue to provide adequate
and reliable electricity after implementation of the rule, and we have
seen no evidence to contradict those findings.
    The EPA proposes that each of these analyses are appropriate bases
for evaluating the disadvantages to society conferred by the MATS-
related projected compliance expenditures. As we note above, even
though the projected costs we use in this analysis are almost certainly
significantly overestimated, we find that they are still relatively
small when placed in the context of the economics of the industry, and
well within historical variations. We solicit comments on all aspects
of this proposed consideration of costs.

C. Revocation of the 2020 Final Action

    We are proposing to revoke the 2020 Final Action because we find
that the framework used to consider cost in 2020, which centered the
Agency's mandated determination under CAA section 112(n)(1)(A) on a
comparison of costs to monetized HAP benefits, was an approach ill-
suited to making the appropriate and necessary determination in the
context of CAA section 112(n)(1)(A) specifically and the CAA section
112 program generally. Moreover, the statutory text and legislative
history do not support a conclusion that the 2020 framework is required
under CAA section 112(n)(1)(A), and we exercise our discretion to adopt
a different approach. We also disagree with the conclusions presented
in the 2020 Final Action as to the 2016 Supplemental Finding's two
approaches.
    The 2020 Final Action established the following framework for
making the appropriate and necessary determination. It stated:

    ``The Administrator has concluded that the following procedure
provides the appropriate method under which the EPA should proceed
to determine whether it is appropriate and necessary to regulate
EGUs under CAA section 112(n)(1)(A). First, the EPA compares the
monetized costs of regulation against the subset of HAP benefits
that could be monetized. . . . Second, the EPA considers whether
unquantified HAP benefits may alter that outcome. . . . Third, the
EPA considers whether it is appropriate, notwithstanding the above,
to determine that it is ``appropriate and necessary'' to regulate
EGUs under CAA section 112(n)(1)(A) out of consideration for the PM
co-benefits that result from such regulation.'' 85 FR 31302 (May 22,
2020).

    Applying the first part of the framework, the Agency noted that the
costs of regulation estimated in the 2011 RIA were disproportionately
higher--by three orders of magnitude--than the monetized HAP benefits,
and concluded ``[t]hat does not demonstrate `appropriate and
necessary.' '' Id. Under the framework's second inquiry, the EPA
determined that the unquantified HAP benefits, even if monetized, were
unlikely to alter its conclusion under the first part of the framework.
Id.; see also 85 FR 31304 (noting that ``valuing HAP-related morbidity
outcomes would not likely result in estimated economic values similar
to those attributed to avoiding premature deaths''). Finally, applying
the third part of its framework, the EPA noted that nearly all of the
monetized benefits of MATS as reflected in the 2011 RIA were derived
from PM benefits. See 85 FR 31302-03 (May 22, 2020). The EPA then
posited that, ``[h]ad the HAP-specific benefits of MATS been closer to
the costs of regulation, a different question might have arisen as to
whether the Administrator could find that co-benefits legally form part
of the justification for determination that regulation of EGUs under
CAA section 112(d) is appropriate and necessary.'' See 85 FR 31303 (May
22, 2020). However, because of the factual scenario presented in the
record, the Agency in the 2020 Final Action stated that ``[t]he

EPA does not need to, and does not, determine whether that additional
step would be appropriate . . . given that the monetized and
unquantified HAP-specific benefits do not come close to a level that
would support the prior determination.'' Id. In conclusion, the EPA
stated that ``[u]nder the interpretation of CAA section 112(n)(1)(A)
that the EPA adopts in this action, HAP benefits, as compared to costs,
must be the primary question in making the `appropriate and necessary'
determination.'' Id.
    We note that the three-step framework employed by the 2020 Final
Action is not a BCA conforming to recognized principles (see, e.g., OMB
Circular A-4, EPA Economic Guidelines). BCA is a specific tool
developed by economists to assess total society-wide benefits and
costs, to determine the economic efficiency of a given action. Instead
of conforming to this comprehensive approach, the three-step framework
focused primarily on comparing the rule's total costs to a very small
subset of HAP benefits that could be monetized. The Agency gave
secondary weight to the vast majority of the benefits of regulating HAP
emissions from stationary sources that cannot be quantified, and
completely ignored the non-HAP monetized benefits directly attributable
to the MATS rule.
    We propose to find that this three-step framework is an unsuitable
approach to making the appropriate and necessary determination under
CAA section 112(n)(1)(A) because it places undue primacy on those HAP
benefits that have been monetized, and fails to consider critical
aspects of the inquiry posed to the EPA by Congress in CAA section
112(n)(1). The 2020 three-step framework also did not in any meaningful
way grapple with the bases upon which the EPA had relied to design the
2016 preferred approach, as discussed above, including the broad
statutory purpose of CAA section 112 to reduce the volume of HAP
emissions with the goal of reducing the risk from HAP emissions to a
level that is protective of even the most exposed and most sensitive
subpopulations; the fact that we rarely can fully characterize or
quantify risks, much less benefits, at a nationwide level; and the fact
that except for one of the many health endpoints for only one of the
many HAP emitted from EGUs, the EPA lacked the information necessary to
monetize any post-control benefit of reductions in HAP emissions. The
sole rationale provided in the 2020 Final Action for rejecting the
relevance of the statute's clear purpose as evinced in the broader CAA
section 112 program and reflected in the provisions of CAA section
112(n)(1) was that CAA section 112(n)(1)(A) is a separate provision and
threshold determination. See 85 FR 31293-94 (May 22, 2020). But we do
not think it is sensible to view the statute's direction to the EPA to
make a separate determination as to EGUs as an invitation to disregard
the statutory factors of CAA section 112(n)(1) and the greater
statutory context in which that determination exists, and we do not
think that the 2020 Final Action provided an adequately reasoned basis
for abandoning the interpretation and assessment provided in the 2016
Supplemental Finding. And in any event, we believe the methodology we
propose today is better suited to making the statutory finding than the
2020 framework.
    In the 2020 rulemaking, the EPA did not explain its rationale for
its decision to anchor the appropriate and necessary determination at
step one as a comparison between the monetized costs of regulation and
monetized HAP specific benefits. Rather, the proposed and final rules
repeatedly state that the ``primary'' inquiry in the determination
should be a comparison of costs and HAP benefits, but did not explain
why only monetized HAP benefits should be given primacy. See, e.g., 85
FR 31286, 31288, 31303 (May 22, 2020). Given the Agency's recognition
of the broad grant of discretion inherent in the phrase ``appropriate
and necessary,'' see 81 FR 24430-31 (April 25, 2016), its
acknowledgement of Congress' ``particularized focus on reducing HAP
emissions and addressing public health and environmental risks from
those emissions'' in CAA section 112, see 85 FR 31299 (May 22, 2020),
and its knowledge and recognition that the dollar value of one of its
points of comparison represented but a small subset of the advantages
of regulation, see 85 FR 31302 (May 22, 2020), we now believe it was
inappropriate to adopt a framework that first and foremost compared
dollar value to dollar value. Nothing in the CAA required the Agency's
decision in 2020 to hinge its framework on monetized HAP benefits. The
consideration of the non-monetized benefits of MATS (i.e., dozens of
endpoints, including virtually all of the HAP benefits associated with
this rule) occurred only at step two, where the Agency considered
whether the unquantified benefits, if monetized, were ``likely to
overcome the imbalance between the monetized HAP benefits and
compliance costs in the record.'' See 85 FR 31296 (May 22, 2020). This
approach discounts the vast array of adverse health and environmental
impacts associated with HAP emissions from coal- and oil-fired EGUs
that have been enumerated by the EPA \109\ and discounts the social
value (benefit) of avoiding those impacts through regulation, simply
because the Agency cannot assign a dollar value to those impacts.
Further, the three-step framework gave no consideration to the
important statutory objective of protecting the most at-risk
subpopulations. As noted above, in CAA section 112(n)(1)(C) Congress
directed the EPA to establish threshold levels of exposure under which
no adverse effect to human health would be expected to occur, even
considering exposures of sensitive populations, and throughout CAA
section 112, Congress placed special emphasis on regulating HAP from
sources to levels that would be protective of those individuals most
exposed to HAP emissions and most sensitive to those exposures. The
rigid and narrow approach to making the appropriate and necessary
determination in the 2020 Final Action is at odds with the text and
purpose of CAA section 112, and is certainly not required under the
express terms of CAA section 112 or CAA section 112(n)(1)(A).
---------------------------------------------------------------------------

    \109\ See, e.g., 65 FR 79829-30 (December 20, 2000); 76 FR
24983-85, 24993-97, 24999-25001, 25003-14, 25015-19 (May 3, 2011).
---------------------------------------------------------------------------

    Commenters on the 2019 Proposal objected strenuously to the
Agency's revised framework for making the appropriate and necessary
determination, arguing that the 2019 Proposal's interpretation ``fails
to meaningfully address factors that are `centrally relevant' to the
inquiry of whether it is appropriate and necessary to regulate HAP from
EGUs,'' and that the Agency's new interpretation must fall because the
EPA failed to provide a reasoned explanation for its change in policy,
as required by Motor Vehicle Mfrs. Ass'n of United States, Inc. v.
State Farm Mut. Automobile Ins. Co., 463 U.S. 29 (1983), and FCC v. Fox
Television Stations, Inc., 556 U.S. 502 (2009). See 85 FR 31294 (May
22, 2020). Among the factors that commenters argued had been
inadequately addressed under the new framework were the ``hazards to
public health reasonably anticipated to occur'' that had not been
monetized; the non-monetizable benefits of HAP regulation such as
preservation of tribal social practices; the latency, persistence in
the environment, and toxicity of HAP as recognized by Congress; and the
distributional impacts on particular communities and individuals most

impacted by HAP emitted from power plants. In responses to these
comments, the EPA claimed that it was not ``disregarding'' or
``dismissing'' the concerns raised by the commenters, but rather simply
weighing them differently, and explained that the Administration's
changed priorities provided the ``reasoned basis'' for its changed
interpretation. See 85 FR 31296-97 (May 22, 2020).
    Agencies do have broad discretion to re-evaluate policies and
change their ``view of what is in the public interest,'' State Farm,
463 U.S. at 57, but such re-evaluations must still adhere to principles
of reasoned decision-making. The 2020 Final Action did not aver that
the concerns identified by commenters were factors that the statute
does not instruct the Agency to consider in making its appropriate and
necessary determination. Instead, the EPA stated that it was permitted
to pick its decisional framework and admitted that its decisional
framework might undervalue certain factors. For example, with respect
to commenters' concerns that the revised appropriate and necessary
framework did not adequately account for adverse impacts on tribal
culture or undue concentration of public health risks on certain
population subgroups or individuals, the EPA stated,

    ``In a cost-benefit comparison, the overall amount of the
benefits stays the same no matter what the distribution of those
benefits is. The EPA, therefore, believes it is reasonable to
conclude that those factors to which the EPA previously gave
significant weight-including qualitative benefits, and
distributional concerns and impacts on minorities-will not be given
the same weight in a comparison of benefits and costs for this
action under CAA section 112(n)(1)(A).'' 85 FR 31297 (May 22, 2020).

    The decisional framework in the 2020 Final Action, however, did not
give ``less weight'' to these factors--it gave them none. In both the
selection and application of its framework, the EPA in the 2020 Final
Action effectively ignored these factors altogether, and we do not
agree that the inability to monetize a factor should render it
unimportant. Cf. Am. Trucking Ass'ns, Inc. v. EPA, 175 F.3d 1027, 1052-
53 (D.C. Cir. 1999), reversed in part on other grounds in Whitman v.
Am. Trucking Ass'ns, 531 U.S. 457 (2001) (holding that the EPA was not
permitted to ignore information ``because the . . . benefits are
difficult, if not impossible, to quantify reliably and because there is
`no convincing basis for concluding that any such effects . . . would
be significant' ''); Pub. Citizen v. Fed. Motor Carrier Safety Admin.,
374 F.3d 1209, 1219 (D.C. Cir. 2004) (``The mere fact that the
magnitude of . . . effects is uncertain is no justification for
disregarding the effect entirely.'') (emphasis in original). The mere
mention and summary dismissal of factors does not constitute meaningful
consideration of those factors.
    In the 2020 Final Action, like the 2016 Supplemental Finding before
it, the EPA maintained that there is more than one permissible way to
interpret the Agency's obligation to consider cost in the appropriate
and necessary determination. Given the Agency's knowledge of the
significant risks and often irreversible impacts of HAP exposure on
vulnerable populations like developing fetuses, the disproportionate
impact of EGU HAP emissions on communities who subsist on freshwater
fish due to cultural practices and/or economic necessity, and the
record of data demonstrating risks to public health amassed over
decades, and, perhaps more importantly, the overwhelming quantity of
advantages to regulation that could not be monetized, we do not think
that selecting a framework that compared first and foremost monetized
HAP benefits with costs was appropriate. And even if the framework
ultimately addressed the statutorily relevant factors because at the
second step the EPA stated that it was considering non-monetized HAP
benefits, we think that the application of that second step fell short.
The secondary consideration of non-monetized HAP benefits in the three-
step framework only considered post-control HAP-related impacts of
regulation insofar as the EPA speculated about what the monetized value
of those benefits might be (see 85 FR 31296 (May 22, 2020), asserting
that monetized value of avoiding morbidity effects such as
neurobehavioral impacts is ``small'' compared to monetized value
associated with avoided deaths). The Agency did not, at this second
step, grapple with the existing risk analyses, including those stemming
from the statutorily mandated studies in CAA section 112(n)(1). Those
analyses demonstrated substantial public health and environmental
hazards, even if the hazards were not translated into post-control
monetized benefits. See White Stallion, 748 F.3d at 1245. The Agency
also did not explain why other attributes of risk--such as impacts on
vulnerable populations and the reality that HAP pollution from EGUs is
not distributed equally across the population but disproportionately
impacts some individuals and communities far more than others--were
unimportant, stating only that the selected framework did not
accommodate consideration of those factors.
    As noted, the Agency did not point to anything in the CAA as
supporting the use of its three-step framework. This is in stark
contrast to the 2016 Supplemental Finding rulemaking, in which the EPA
examined CAA section 112(n)(1)(A) and the other section 112(n)(1)
provisions, and the rest of CAA section 112 generally, and D.C. Circuit
case law on CAA cost considerations to inform the EPA's interpretation
of CAA section 112(n)(1)(A). See 80 FR 75030 (December 1, 2015); 2015
Legal Memorandum. In the 2020 Final Action, the EPA merely asserted
that a comparison of benefits to costs is ``a traditional and
commonplace way to assess costs'' and claimed that the Supreme Court's
holding in Entergy Corp. v. Riverkeeper, 556 U.S. 208 (2009) supported
the EPA's 2020 position that, absent an unambiguous prohibition to use
a BCA, an agency may generally rely on a BCA as a reasonable way to
consider cost. See 85 FR 31293 (May 22, 2020). The 2020 Final Action
also pointed out ``many references comparing'' costs and benefits from
the Michigan decision, including: ``EPA refused to consider whether the
costs of its decision outweighed the benefits'' (576 U.S. at 743);
``[o]ne would not say that it is rational, never mind `appropriate,' to
impose billions of dollars in economic costs in return for a few
dollars in health or environmental benefits'' (Id. at 752); and ``[n]o
regulation is `appropriate' if it does more harm than good'' (Id.).
    But while we agree that a comparison of benefits to costs is a
traditional way to assess costs, the 2020 framework was not a BCA.
There is no economic theory or guidance of which we are aware that
endorses the version of BCA presented in the 2020 Final Action, in
which total costs are compared against a small subset of total
benefits. See section III.E for further discussion. Moreover, general
support for weighing costs and benefits does not justify placing undue
weight on monetized HAP benefits, with secondary consideration for all
other benefits, and only valuing those other benefits to the extent of
their speculative monetized effects. As noted in Justice Breyer's
concurrence in Entergy Corp., the EPA has the ability ``to describe
environmental benefits in non-monetized terms and to evaluate both
costs and benefits in accordance with its expert judgment and
scientific knowledge,'' and to engage in this balancing outside of
``formal cost-

benefit proceedings and futile attempts at comprehensive
monetization.'' 556 U.S. at 235 (Breyer, J., concurring). Benefits--the
advantages of regulation--can encompass outcomes that are not or cannot
be expressed in terms of dollars and cents, just as the Court found
that `` `cost' includes more than the expense of complying with
regulations; any disadvantage could be termed a cost.'' Michigan, 576
U.S. at 752. And the Court faulted the EPA's interpretation for
``preclud[ing] the Agency from considering any type of cost--including,
for instance, harms that regulation might do to human health or the
environment. . . . No regulation is `appropriate' if it does
significantly more harm than good.'' Id. The constricted view of
benefits that the Agency adopted in 2020 was ill-suited to the
statutory inquiry as interpreted in Michigan.
    The primary basis in the 2020 action upon which the EPA relied to
find that the 2016 preferred approach was flawed was that the preferred
approach failed to ``satisf[y] the Agency's obligation under CAA
section 112(n)(1)(A) as interpreted by the Supreme Court in Michigan.''
See 84 FR 2674 (February 7, 2019). The 2019 Proposal claimed that the
chief flaw of the preferred approach was the Agency's failure to
``meaningfully consider cost within the context of a regulation's
benefits,'' asserting that the Michigan Court contemplated that a
proper consideration of cost would be relative to benefits. See 84 FR
2675 (February 7, 2019). But that is not an accurate characterization
of the 2016 preferred approach, wherein the Agency weighed the existing
record from 2012 demonstrating that HAP emissions from EGUs pose a
number of identified hazards to both public health and the environment
remaining after imposition of the ARP and other CAA requirements
against the cost of MATS. See 81 FR 24420 (April 25, 2016) (``After
evaluating cost reasonableness using several different metrics, the
Administrator has, in accordance with her statutory duty under CAA
section 112(n)(1)(A), weighed cost against the previously identified
advantages of regulating HAP emissions from EGUs--including the
agency's prior conclusions about the significant hazards to public
health and the environment associated with such emissions and the
volume of HAP that would be reduced by regulation of EGUs under CAA
section 112.''). The 2020 Final Action further stated that the
preferred approach was an ``unreasonable'' interpretation of CAA
section 112(n)(1)(A) and impermissibly de-emphasized the importance of
the cost consideration in the appropriate and necessary determination.
See 85 FR 31292 (May 22, 2020). It is a decisional framework which
rests primarily upon a comparison of the costs of a regulation and the
small subset of HAP benefits which could be monetized that does not
``meaningfully consider[s] cost within the context of a regulation's
benefits,'' because such a narrow approach relegates as secondary (and
in application appeared to ignore altogether) the vast majority of that
rule's HAP benefits and other advantages. We therefore propose to
revoke the 2020 three-step approach and determination because we do not
think it is a suitable way to assess the advantages and disadvantages
of regulation under CAA section 112(n)(1)(A) and in applying it, the
Agency failed to meaningfully address key facts in the existing record.
Even if the Agency's selection of the 2020 framework could be
considered a permissible interpretation of the broad ``appropriate and
necessary'' determination in CAA section 112(n)(1)(A), we exercise our
discretion under the statute and as described in Michigan, to approach
the determination differently.

D. The Administrator's Proposed Preferred Framework and Proposed
Conclusion

    The EPA is proposing a preferred, totality-of-the-circumstances
approach as a reasonable way to ``pay attention to the advantages and
disadvantages of [our] decision,'' Michigan, 576 U.S. at 753, in
determining whether it is appropriate to regulate coal- and oil-fired
EGUs under section 112 of the CAA. This approach, including which
factors we consider and how much weight we give them, is informed by
Congress' design of CAA section 112(n)(1) specifically, and CAA section
112 generally.
    Specifically, under this approach we first consider and weigh the
advantages of reducing EGU HAP via regulation. We focus on the public
health advantages of reducing HAP emissions because in CAA section
112(n)(1)(A), Congress specifically directed the EPA to regulate EGUs
under CAA section 112 after considering the results of the ``study of
hazards to public health reasonably anticipated to occur as a result of
emissions'' by EGUs. We also consider the other studies commissioned by
Congress in CAA sections 112(n)(1)(B) and (C) and the types of
information the statute directed the EPA to examine under those
provisions--the rate and mass of EGU mercury emissions, the health and
environmental effects of such emissions, and the threshold level of
mercury concentrations in fish tissue which may be consumed (even by
sensitive populations) without adverse effects to public health.\110\
We place considerable weight on the factors addressed in the studies
required in the other provisions of CAA section 112(n)(1) because that
provision is titled ``Electric utility steam generating units,'' so it
is reasonable to conclude that the information in those studies is
important and relevant to a determination of whether HAP emissions from
EGUs should be regulated under CAA section 112.\111\ See Michigan, 576
U.S. at 753-54 (citing CAA sections 112(n)(1)(B) and (C), its caption,
and the additional studies required under those subparagraphs as
relevant statutory context for the appropriate and necessary
determination).
---------------------------------------------------------------------------

    \110\ CAA section 112(n)(1)(B) also directs the EPA to study
available technologies for controlling mercury and the cost of such
controls, and we consider those in our assessment of cost.
    \111\ The statute directed the EPA to complete all three CAA
section 112(n)(1) studies within 4 years of the 1990 Amendments,
expressing a sense of urgency with regard to HAP emissions from EGUs
on par with addressing HAP emissions from other stationary sources.
See CAA section 112(e) (establishing schedules for setting standards
on listed source categories as expeditiously as practicable, but no
later than between 2-10 years).
---------------------------------------------------------------------------

    Notably, the studies of CAA section 112(n)(1) place importance on
the same considerations that are expressed in the terms and overall
structure of CAA section 112. For example, CAA section 112(n)(1)(A) and
section 112(n)(1)(B) both show interest in the amount of HAP emissions
from EGUs--section 112(n)(1)(A) by requiring the EPA to estimate the
risk remaining after imposition of the ARP and other CAA requirements
and section 112(n)(1)(B) by requiring the EPA to study the rate and
mass of mercury emissions; therefore, we believe it is reasonable to
conclude that we should consider and weigh the volume of toxic
pollution EGUs contributed to our air, water, and land absent
regulation under CAA section 112, in total and relative to other
domestic anthropogenic sources, and the potential to reduce that
pollution, thus reducing its grave harms. In addition, the clear goal
in CAA section 112(n)(1)(C) and elsewhere to consider risks to the most
exposed and susceptible populations supports our decision to place
significant weight on reducing the risks of HAP emissions from EGUs to
the most sensitive members of the population (e.g., developing fetuses
and children), and communities that are reliant on self-

caught local fish for their survival. Finally, we also consider the
identified risks to the environment posed by mercury and acid-gas HAP,
consistent with CAA section 112(n)(1)(B) and the general goal of CAA
section 112 to address adverse environmental effects posed by HAP
emissions. See CAA section 112(a)(7) (defining ``adverse environmental
effect'').
    We next examine the disadvantages of regulation, principally in the
form of the costs incurred to capture HAP before they enter the
environment. As with the advantages side of the equation, where we
consider the consequences of reducing HAP emissions to human health and
the environment, we consider the consequences of these expenditures for
the electricity generating sector and society. We therefore consider
compliance costs comprehensively, placing them in the context of the
effect those expenditures have on the economics of power generation
more broadly, the reliability of electricity, and the cost of
electricity to consumers. These metrics are relevant to our weighing
exercise because they give us a more complete picture of the
disadvantages to society imposed by this regulation, and because our
conclusion might change depending on how this burden affects the
ability of the industry to thrive and provide reliable, affordable
electricity to the benefit of all Americans. Consistent with CAA
section 112(n)(1)(B), we further consider relevant control costs for
EGUs and the relationship of control costs expected and experienced
under the ARP and MATS.
    Below, consistent with this framework, we consider and weigh the
advantages to regulation against the costs of doing so, giving
particular weight to our examination of the public health hazards we
reasonably anticipate to occur as a result of HAP emissions from EGUs,
and the risks posed by those emissions to exposed and vulnerable
populations. We note as well that had we found regulation under CAA
section 112 to impose significant barriers to provision of affordable
and reliable electricity to the American public, this would have
weighed heavily in our decision.
    We acknowledge, as we recognized in the 2016 preferred approach,
that this approach to making the appropriate and necessary
determination is an exercise in judgment, and that ``[r]easonable
people, and different decision-makers, can arrive at different
conclusions under the same statutory provision,'' (81 FR 24431; April
25, 2016), but this type of weighing of factors and circumstances is an
inherent part of regulatory decision-making. As noted in then-Judge
Kavanaugh's dissent in White Stallion, ``All regulations involve
tradeoffs, and . . . Congress has assigned EPA, not the courts, to make
many discretionary calls to protect both our country's environment and
its productive capacity.'' 748 F.3d at 1266 (noting as well that ``if
EPA had decided, in an exercise of its judgment, that it was
`appropriate' to regulate electric utilities under the MACT program
because the benefits outweigh the costs, that decision would be
reviewed under a deferential arbitrary and capricious standard of
review''). Bright-line tests and thresholds are not required under the
CAA's instruction to determine whether regulation is ``appropriate and
necessary,'' nor have courts interpreted broad provisions similar to
CAA section 112(n)(1)(A) in such manner. In Catawba Cty. v. EPA, the
D.C. Circuit held that ``[a]n agency is free to adopt a totality-of-
the-circumstances test to implement a statute that confers broad
authority, even if that test lacks a definite `threshold' or `clear
line of demarcation to define an open-ended term.' '' 571 F.3d 20, 37
(D.C. Cir. 2009).
    In undertaking this analysis, we are cognizant that, while the
Agency has been studying the science underlying this determination for
decades, the understanding of risks, health, and environmental impacts
associated with toxic air pollution continues to evolve. In this
notice, we explained the additional information that has become
available to the Agency since we performed our national risk
assessments, and explained why, despite the certainty of the science
demonstrating substantial health risks, we are unable at this time to
quantify or monetize many of the effects associated with reducing HAP
emissions from EGUs.\112\ We continue to think it is appropriate to
give substantial weight to these public health impacts, even where we
lack information to precisely quantify or monetize those impacts. As
the D.C. Circuit stated in Ethyl Corp. v. EPA,
---------------------------------------------------------------------------

    \112\ Unquantified effects include additional neurodevelopmental
and cardiovascular effects from exposure to methylmercury, ecosystem
effects, health risks from exposure to non-mercury HAP, and effects
in EJ relevant subpopulations that face disproportionally high
risks.

    ``Where a statute is precautionary in nature, the evidence
difficult to come by, uncertain, or conflicting because it is on the
frontiers of scientific knowledge, the regulations designed to
protect public health, and the decision that of an expert
administrator, we will not demand rigorous step-by-step proof of
cause and effect. . . . [I]n such cases, the Administrator may
assess risks. . . . The Administrator may apply his expertise to
draw conclusions from suspected, but not completely substantiated,
relationships between facts, from trends among facts, from
theoretical projections from imperfect data, from probative
---------------------------------------------------------------------------
preliminary data not yet certifiable as `fact,' and the like.''

541 F.2d 1, 28 (D.C. Cir. 1976). See also Lead Industries Ass'n v. EPA,
647 F.2d 1130, 1155 (D.C. Cir. 1980) (``[R]equiring EPA to wait until
it can conclusively demonstrate that a particular effect is adverse to
health before it acts is inconsistent with both the [Clean Air] Act's
precautionary and preventive orientation and the nature of the
Administrator's statutory responsibilities.'').
    The EPA is not alone in needing to make difficult judgments about
whether a regulation that has a substantial economic impact is ``worth
it,'' in the face of uncertainty such as when the advantages of the
regulation are hard to quantify in monetary terms. The Transportation
Security Administration (TSA), when determining whether to require
Advanced Imaging Technology at certain domestic airports, faced
assertions that the high cost of widespread deployment of this type of
screening was ``not worth the cost.'' TSA acknowledged that it did not
``provide monetized benefits'' or ``degree of benefits'' to justify the
use of the screening, but noted that the agency ``uses a risk-based
approach . . . in order to try to minimize risk to commercial air
travel.'' See 81 FR 11364, 11394 (March 3, 2016). The agency pointed
out that it could not consider ``only the most easily quantifiable
impacts of a terrorist attack, such as the direct cost of an airplane
crashing,'' but rather that it had an obligation to ``pursue the most
effective security measures reasonably available so that the
vulnerability of commercial air travel to terrorist attacks is
reduced,'' noting that some commenters were failing to consider the
more difficult to quantify aspects of the benefits of avoiding
terrorist attacks, such as ``substantial indirect effects and social
costs (such as fear) that are harder to measure but which must also be
considered by TSA when deciding whether an investment in security is
cost-beneficial.'' Id.
    In reviewing Agency decisions like these, courts do ``not to
substitute [their] judgment[s] for that of the agenc[ies],'' State
Farm, 463 U.S. at 43 (1983), and ``[t]his is especially true when the
agency is called upon to weigh the costs and benefits of alternative
policies,'' Center for Auto Safety v. Peck, 751 F.2d 1336, 1342 (D.C.
Cir. 1985). See also

United Church of Christ v. FCC, 707 F.2d 1413, 1440 (D.C. Cir. 1983)
(``[C]ost benefit analyses epitomize the types of decisions that are
most appropriately entrusted to the expertise of an agency.'').
Agencies are entitled to this deference even where, or perhaps
particularly where, costs or benefits can be difficult to quantify. For
example, in Consumer Elecs. Ass'n v. FCC, the D.C. Circuit upheld the
FCC's mandate to require digital tuners, finding reasonable the
Commission's identification of benefits, that is, ``principally
speeding the congressionally-mandated conversion to DTV and reclaiming
the analog spectrum,'' coupled with the FCC's ``adequate[ ] estimate[
of] the long-range costs of the digital tuner mandate within a range
sufficient for the task at hand . . . and [its finding of] the
estimated costs to consumers to be `within an acceptable range.''' 347
F.3d 291, 303-04 (D.C. Cir. 2003) (``We will not here second-guess the
Commission's weighing of costs and benefits.'').
    Similarly, the Food and Drug Administration, in weighing the costs
and benefits of deeming electronic cigarettes to be ``tobacco
products,'' described the benefits qualitatively, `` `potentially
coming from' . . . premarket review [i.e., the statutory consequence of
deeming], which will result in fewer harmful or additive products from
reaching the market than would be the case in the absence of the rule;
youth access restrictions and prohibitions on free samples, which can
be expected to constrain youth access to tobacco products and curb
rising uptake; health warning statements, which will help consumers
understand and appreciate the risks of using tobacco products;
prohibitions against false or misleading claims and unsubstantiated
modified risk claims; and other changes [such as monitoring and
ingredient listings].'' Nicopure Labs, LLC v. FDA, 266 F. Supp. 3d 360,
403-404 (D.D.C. 2017), aff'd, 944 F.3d 267 (D.C. Cir. 2019). Plaintiffs
challenging the rule claimed that because the FDA had not quantified
the benefits of the rule, it ``cannot realistically determine that a
rule's benefits justify its costs,'' because ``it does not have . . . a
general grasp of the rule's benefits.'' Id. at 406. The court
disagreed, finding the agency's statement of benefits to have
``provided substantial detail on the benefits of the rule, and the
reasons why quantification was not possible'' and in any case agreeing
with the agency that there was no obligation to quantify benefits in
any particular way. Id.
    We think the inquiry posed to the Agency by CAA section
112(n)(1)(A) has similarities to these other decisions, in which
agencies tasked with protecting and serving the American public elected
to take actions that would impose significant costs in order to achieve
important benefits that could not be precisely quantified or were in
some cases uncertain--protection from terrorist attacks, speeding the
advancement of digital technology, and subjecting a new product to
marketing and safety regulation. In those cases, the framework for
decision-making was to make a judgment after a weighing of advantages
against disadvantages, considering qualitative factors as well as
quantified metrics. Here, we employ a similar totality-of-the-
circumstances approach to the CAA section 112(n)(1)(A) inquiry as to
whether it is appropriate to regulate HAP emissions from EGUs.
    Earlier sections of this preamble (sections III.A. and III.B.)
discuss in detail the EPA's evaluation of the public health and
environmental advantages of regulating HAP from U.S. EGUs and the
reasons it is not possible to quantify or monetize most of those
advantages, as well as the EPA's comprehensive assessment of the costs
of doing so. We will not in this section repeat every detail and data
point, but we incorporate all of that analysis here and highlight only
a few of the considerations that weighed heavily in our application of
the preferred totality-of-the-circumstances approach.
    Under our preferred approach, we first consider the public health
advantages to reducing HAP from EGUs, and the other focuses for study
identified by Congress in CAA section 112(n)(1). As noted, we give
particular weight in our determination to the information related to
the statutory factors identified for the EPA's consideration by the
studies--namely, the hazards to public health reasonably anticipated to
occur as a result of EGU HAP emissions (112(n)(1)(A)), the rate and
mass of mercury emissions from EGUs (112(n)(1)(B)), the health and
environmental effects of such emissions (112(n)(1)(B)), and the levels
of mercury exposure below which adverse human health effects are not
expected to occur as well as the mercury concentrations in the tissue
of fish which may be consumed (including by sensitive populations)
without adverse effects to public health (112(n)(1)(C)).
    The statutorily mandated studies are the foundation for the
Agency's finding that HAP emissions from U.S. EGUs represent a clear
hazard to public health and the environment, but as documented in
section III.A., the EPA has continued to amass an extensive body of
evidence related to the original study topics that only furthers the
conclusions drawn in the earlier studies. As discussed in section
III.A, the EPA completed a national-scale risk assessment focused on
mercury emissions from U.S. EGUs as part of the 2011 Final Mercury TSD.
That assessment specifically examined risk associated with mercury
released from U.S. EGUs that deposits to watersheds within the
continental U.S., bioaccumulates in fish as methylmercury, and is
consumed when fish are eaten by female subsistence fishers of child-
bearing age and other freshwater self-caught fish consumers. We focused
on the female subsistence fisher subpopulation because there is
increased risk for in utero exposure and adverse outcomes in children
born to female subsistence fishers with elevated exposure to
methylmercury.\113\ Our analysis estimated that 29 percent of the
watersheds studied would lead to exposures exceeding the methylmercury
RfD for this population, based on in utero effects, due in part to the
contribution of domestic EGU emissions of mercury. We also found that
deposition of mercury emissions from U.S. EGUs alone led to potential
exposures that exceed the RfD in up to 10 percent of modeled
watersheds.
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    \113\ The NAS Study had also highlighted this population as one
of particular concern due to the regular and frequent consumption of
relatively large quantities of fish. See 65 FR 79830 (December 20,
2000).
---------------------------------------------------------------------------

    We have also examined impacts of prenatal methylmercury exposure on
unborn children of recreational anglers consuming self-caught fish from
inland freshwater lakes, streams, and rivers, and found significant IQ
loss in the affected population of children. Our analysis, which we
recognized did not cover consumption of recreationally caught seafood
from estuaries, coastal waters, and the deep ocean, nevertheless
indicated significant health harm from methylmercury exposure.
Methylmercury exposure also leads to adverse neurodevelopmental effects
such as performance on neurobehavioral tests, particularly on tests of
attention, fine motor function, language, and visual spatial ability.
See section III.A.2.a.
    The population that has been of greatest concern with respect to
methylmercury exposure is women of childbearing age because the
developing fetus is the most sensitive to the effects of methylmercury.
See 85 FR 24995 (May 3, 2011). In the Mercury Study, the EPA estimated
that, at the time of the study, 7 percent of women of childbearing age
in the continental U.S.

(or about 4 million women) were exposed to methylmercury at levels that
exceeded the RfD and that about 1 percent of women of childbearing age
(or about 580,000 women) had methylmercury exposures three to four
times the RfD. See 65 FR 79827 (December 20, 2000). We also performed a
new bounding analysis for this proposal that focuses on the potential
for IQ points lost in children exposed in utero through maternal fish
consumption by the population of general U.S. fish consumers (section
III.A.3.d).
    Another important human health impact documented by the EPA over
the last 2 decades includes cardiovascular impacts of exposure to
methylmercury--including altered blood-pressure and heart-rate
variability in children as a result of infant exposure in the womb and
higher risk of acute MI, coronary heart disease, and cardiovascular
heart disease in adults, due to dietary exposure. Studies that have
become available more recently led the EPA to perform new quantitative
screening analyses (as described in section III.A.3) to estimate the
incidence of MI (heart attack) mortality that may be linked to U.S. EGU
mercury emissions. The new analyses performed include an extension of
the original watershed-level subsistence fisher methylmercury risk
assessment to evaluate the potential for elevated MI-mortality risk
among subsistence fishers (section III.A.3.b; 2021 Risk TSD) and a
separate risk assessment examining elevated MI mortality among all
adults that explores potential risks associated with exposure of the
general U.S. population to methylmercury from domestic EGUs through
commercially-sourced fish consumption (section III.A.3.c; 2021 Risk
TSD). The updated subsistence fisher analysis estimated that up to 10
percent of modeled watersheds are associated with exposures linked to
increased risk of MI mortality, but for some populations such as low-
income Black subsistence fishers active in the Southeast, that number
is approximately 25 percent of the watersheds modeled. The bounding
analysis results estimating MI-mortality attributable to U.S. EGU-
sourced mercury for the general U.S. population range from 5 to 91
excess deaths annually. As noted, we give significant weight to these
findings and analyses examining public health impacts associated with
methylmercury, given the statutory focus in CAA section 112(n)(1)(B)
and 112(n)(1)(C) on adverse effects to public health from EGU mercury
emissions and the directive to develop an RfD (``threshold level of
mercury exposure below which adverse human health effects are not
expected to occur''), and in particular one that is designed to assess
``mercury concentrations in the tissue of fish which may be consumed
(including consumption by sensitive populations).'' See CAA section
112(n)(1)(C).
    Because of CAA section 112(n)(1)(A)'s broader focus on hazards to
public health from all HAP, not just mercury, we also give considerable
weight to health effects associated with non-mercury HAP exposure (see
section III.A.2.b for further detail), including chronic health
disorders such as irritation of the lung, skin, and mucus membranes;
decreased pulmonary function, pneumonia, or lung damage; detrimental
effects on the central nervous system; damage to the kidneys; and
alimentary effects such as nausea and vomiting). The 2011 Non-Hg HAP
Assessment, performed as part of the EPA's 2012 reaffirmation of the
appropriate and necessary determination, expanded on the original CAA
section 112(n)(1)(A) Utility Study by examining further public health
hazards reasonably anticipated to occur from EGU HAP emissions after
imposition of other CAA requirements. This study included a refined
chronic inhalation risk assessment that was designed to assess how many
coal- and oil-fired EGUs had cancer and non-cancer risks associated
with them, and indicated that absent regulation, a number of EGUs posed
cancer risks to the American public (see section III.A.2.b).
    As discussed in section II.B, the statutory design of CAA section
112 quickly secured dramatic reductions in the volume of HAP emissions
from stationary sources. CAA section 112(n)(1)(B) also directs the EPA
to study, in the context of the Mercury Study, the ``rate and mass'' of
mercury emissions. We therefore think it is reasonable to consider, in
assessing the advantages to regulating HAP emissions from EGUs, what
the volume of emissions was from that sector prior to regulation--as an
absolute number and relative to other sources--and what the expected
volume of emissions would be with CAA section 112(d) standards in
place. Prior to the EPA's promulgation of MATS in 2012, the EPA
estimated that in 2016, without MATS, coal-fired U.S. EGUs above 25 MW
would emit 29 tons of mercury per year. While these mercury emissions
from U.S. EGUs represented a decrease from 1990 and 2005 levels (46
tons and 53 tons, respectively), they still represented nearly half of
all anthropogenic mercury emissions in 2011 (29 out of 64 tons total).
Considered on a proportional basis, the relative contribution of U.S.
EGUs to all domestic anthropogenic mercury emissions was also stark.
The EGU sector emitted more than six times as much mercury as any other
sector (the next highest being 4.6 tons). See Table 3 at 76 FR 25002
(May 3, 2011). Prior to MATS, U.S. EGUs were estimated to emit the
majority of HCl and HF nationally, and were the predominant source of
emissions nationally for many metal HAP as well, including antimony,
arsenic, chromium, cobalt, and selenium. Id. at 25005-06. In 2012, the
EPA projected that MATS would result in an 88 percent reduction in
hydrogen chloride emissions, a 75 percent reduction in mercury
emissions, and a 19 percent reduction in PM emissions (a surrogate for
non-mercury metal HAP) from coal-fired units greater than 25 MW in 2015
alone. See 77 FR 9424 (February 16, 2012). In fact, actual emission
reductions since MATS implementation have been even more substantial.
In 2017, by which point all sources were required to have complied with
MATS, the EPA estimated that acid gas HAP emissions from EGUs had been
reduced by 96 percent, mercury emissions had been reduced by 86
percent, and non-mercury metal HAP emissions had been reduced by 81
percent compared to 2010 levels. See 84 FR 2689 (February 7, 2019).
Retaining the substantial reductions in the volume of toxic pollution
entering our air, water, and land, from this large fleet of domestic
sources reduces the substantial risk associated with this pollution
faced by all Americans.
    Even though reducing HAP from EGUs would benefit all Americans by
reducing risk and hazards associated with toxic air pollution, it is
worth noting that the impacts of EGU HAP pollution in the U.S. have not
been borne equally nationwide. Certain communities and individuals have
historically borne greater risk from exposure to HAP emissions from
EGUs prior to MATS, as demonstrated by the EPA's risk analyses. The
individuals and communities that have been most impacted have
shouldered a disproportionate burden for the energy produced by the
power sector, which in turn benefits everyone--i.e., these communities
are subject to a greater share of the externalities of HAP pollution
that is generated by EGUs producing power for everyone. A clear example
of these disproportionately impacted populations are subsistence
fishers who live near U.S. EGUs

experiencing increased risk due to U.S. EGU mercury deposition at the
watersheds where they are active (2011 Final Mercury TSD). CAA section
112(n)(1)(C) directed the EPA to examine risks to public health
experienced by sensitive populations as a result of the consumption of
mercury concentrations in fish tissue, which we think includes fetuses
and communities that are reliant on local fish for their survival, and
CAA section 112 more generally is drafted in order to be protective of
small cohorts of highly exposed and susceptible populations. We
therefore weigh heavily the importance of reducing risks to
particularly impacted populations, including those who consume large
amounts of self-caught fish reflecting cultural practice and/or
economic necessity, including tribal populations, specific ethnic
communities and low-income populations including Black persons living
in the southeastern U.S.
    Consistent with CAA section 112(n)(1)(B) and the general goal of
CAA section 112 to reduce risks posed by HAP to the environment, we
also consider the ecological effects of methylmercury and acid gas HAP
(see section III.A.2.c). Scientific studies have consistently found
evidence of adverse impacts of methylmercury on fish-eating birds and
mammals, and insect-eating birds. These harmful effects can include
slower growth and development, reduced reproduction, and premature
mortality. Adverse environmental impacts of emissions of acid gas HAP,
in particular HCl, include acidification of terrestrial and aquatic
ecosystems. In the EPA's recent Integrated Science Assessment for
Oxides of Nitrogen, Oxides of Sulfur and Particulate Matter--Ecological
Criteria (2020), we concluded that the body of evidence is sufficient
to infer a causal relationship between acidifying deposition and
adverse changes in freshwater biota like plankton, invertebrates, fish,
and other organisms. Adverse effects on those animals can include
physiological impairment, loss of species, changes in community
composition, and biodiversity. Because EGUs contribute to mercury
deposition in the U.S., we conclude that EGUs are contributing to the
identified adverse environmental effects, and consider the beneficial
impacts of mitigating those effects by regulating EGUs.
    We turn next in our application of the preferred approach to the
consideration of the disadvantages of regulation, which in this case we
measure primarily in terms of the costs of that regulation. As
discussed in section III.B, for purposes of this preferred totality-of-
the-circumstances approach, we start with the sector-level estimate
developed in the 2011 RIA. Given the complex, interconnected nature of
the power sector, we think it is appropriate to consider this estimate,
which represents the incremental costs to the entire power sector to
generate electricity, not just the compliance costs projected to be
borne by regulated EGUs. We explain in section III.B that while a
precise ex post estimate of this sector-level figure is not possible,
we update those aspects of the cost estimate where we can credibly do
so (see section III.B.2), and our consideration of the cost of
regulation therefore takes into account the fact that new analyses
performed as part of this proposal demonstrate that the 2011 RIA cost
estimate was almost certainly significantly overestimated. We propose
to conclude that regulation is appropriate and necessary under either
cost estimate.
    As with the benefits side of the ledger, where we look
comprehensively at the effects of reducing the volume of HAP, we also
comprehensively assess costs in an attempt to evaluate the economic
impacts of the regulation as a whole. We situate the cost of the
regulation in the context of the economics of power generation, as we
did in 2016, because we think examining the costs of the rule relative
to three sector-wide metrics provides a useful way to evaluate the
disadvantages of expending these compliance costs to this sector beyond
a single monetary value. For each of these metrics, we use our 2011
estimate of compliance costs, which, as is discussed in section III.B.2
and the Cost TSD, was likely to have been significantly overestimated
by a figure in the billions of dollars. We first evaluate the 2011
projected annual compliance costs of MATS as a percent of annual power
sector sales, also known as a ``sales test.'' A sales test is a
frequently used indicator of potential impacts from compliance costs on
regulated industries, and the EPA's analysis showed that projected 2015
compliance costs, based on the 2011 estimate, represented between 2.7-
3.5 percent of power sector revenues from historical annual retail
electricity sales. See section III.B.3; Cost TSD; 80 FR 75033 (December
1, 2015). We also examine the annual capital expenditures that were
expected for MATS compliance as compared to the power sector's
historical annual capital expenditures. We conclude that projected
incremental annual capital expenditures of MATS would be a small
percentage of 2011 power sector-level capital expenditures, and well
within the range of historical year-to-year variability on industry
capital expenditures. Id. Finally, we consider the annual operating or
production expenses in addition to capital expenditures because we were
encouraged during the 2016 rulemaking to use this broader metric of
power industry costs to provide perspective on the cost of MATS
relative to total capital and operational expenditures by the industry
historically. Consistent with our other findings, we conclude that,
even when using the likely overestimated cost of MATS based on the 2011
RIA, the total capital and operational expenditures required by MATS
are in the range of about 5 percent of total historical capital and
operational expenditures by the power sector during the period of 2000-
2011. See section III.B.3; Cost TSD; 81 FR 24425 (April 25, 2016). In
this proposal, we re-analyze all of these metrics using updated data to
reflect more recent information (as of 2019), and took into
consideration the fact that the 2011 RIA cost estimate was almost
certainly significantly overestimated. All of this new analysis further
supports our findings as to the cost of MATS relative to other power
sector economics based on the record available to the Agency at the
time we were making the threshold determination (i.e., the 2012
record).
    Consistent with the Michigan Court's instruction to consider all
advantages and disadvantages of regulation, we also assess, as we did
in 2016, disadvantages to regulation that would flow to the greater
American public. Specifically, we examine whether regulation of EGUs
would adversely impact the provision of reliable, affordable
electricity to the American public, because had regulation been
anticipated to have such an effect, it would have weighed heavily on
our decision as to whether it was appropriate to require such
regulation. The CAA tasks the EPA with the purpose of protecting and
enhancing air quality in the U.S., but directs that in doing so we
promote public health and welfare and the productive capacity of the
U.S. population. CAA section 101(b)(1). As noted, we also think
examining these potential impacts is consistent with the ``broad and
all-encompassing'' nature of the term ``appropriate,'' as characterized
by the Supreme Court. Michigan, 576 U.S. at 752. We were particularly
interested in examining the expected impact of MATS implementation on
the retail price of electricity, because in electricity markets,
utility expenditures can be fully or partially passed to consumers. It
was therefore reasonable to assume

that the cost of MATS could result in increased retail electricity
prices for consumers, although we emphasize, as we did in 2016, that
the electricity price impacts examined under this metric do not reflect
additional compliance costs on top of the estimate produced in the 2011
RIA but rather reflect the passing on of a share of those costs to
consumers (and ultimately reducing the costs EGU owners would otherwise
bear). However, even though the impacts on electricity prices are
reflected in the total cost estimate to the sector as a whole, we
think, for the reasons stated above, that electricity price impacts are
worthy of special attention because of the potential effect on the
American public.
    We therefore estimate the percent increase in retail electricity
prices projected to result from MATS compared to historical levels of
variation in electricity prices. See section III.B.3; 80 FR 75035
(December 1, 2015). We estimate that retail electricity prices for 2015
would increase by about 0.3 cents per kilowatt-hour, or 3.1 percent
with MATS in place. Between 2000 and 2011, the largest annual year-to-
year decrease in retail electricity price was -0.2 cents per kilowatt-
hour and the largest year-to-year increase during that period was +0.5
cents per kilowatt-hour. The projected 0.3 cents increase due to MATS
was therefore well within normal historical fluctuations. Id. As with
the other metrics examined, as the increase in retail electricity
prices due to MATS was within the normal range of historical
variability, a substantially lower estimate for impacts on electricity
prices would only further support the EPA's determination. We also note
in section III.B.3 that the year-to-year retail electricity price
changes in the new information we examined (i.e., years 2011-2019) were
within the same ranges observed during the 2000-2011 period, and that
in fact, during that period when MATS was implemented, retail
electricity prices have generally decreased (9.3 cents per kilowatt-
hour in 2011 to 8.7 cents per kilowatt-hour in 2019). Consistent with
these observed trends in retail electricity prices, as discussed in
section III.B.2 and further below, our ex post analysis of MATS
indicates that the projected compliance costs in the 2011 RIA--and, as
a corollary, the projected increases in retail electricity prices--were
likely significantly overestimated. Certainly, we have observed nothing
in the data that suggests the regulation of HAP from EGUs resulted in
increases in retail electricity prices for the American public that
would warrant substantial concern in our weighing of this factor.
    Similar to our reasoning for examining impacts on electricity
prices for American consumers, in assessing the potential disadvantages
to regulation, we elected to also look at whether the power sector
would be able to continue to provide reliable electricity to all
Americans after the imposition of MATS. We think this examination
naturally fits into our assessment of whether regulation is
``appropriate,'' because had MATS interfered with the provision of
reliable electricity to the American public, that would be a
significant disadvantage to regulation to weigh in our analysis. In
examining this factor, we looked at both resource adequacy and
reliability--that is, the provision of generating resources to meet
projected load and the maintenance of adequate reserve requirements for
each region (resource adequacy) and the sector's ability to deliver the
resources to the projected electricity loads so that the overall power
grid remains stable (reliability). See section III.B.3; U.S. EPA 2011,
Resource Adequacy and Reliability TSD; 80 FR 75036 (December 1, 2015).
Our analysis indicated that the power sector would have adequate and
reliable generating capacity, while maintaining reserve margins over a
3-year MATS compliance period. Id. We did not in this proposal update
the Resource Adequacy and Reliability Study conducted in 2011, but we
note that the EPA, as a primary regulator of EGUs, is keenly aware of
adequacy and reliability concerns in the power sector and in particular
the relationship of those concerns to environmental regulation. We have
not seen evidence in the last decade to suggest that the implementation
of MATS caused power sector adequacy and reliability problems, and only
a handful of sources obtained administrative orders under the
enforcement policy issued with MATS to provide relief to reliability
critical units that could not comply with the rule by 2016.
    In addition to the cost analyses described above, the EPA revisited
its prior records examining the costs of mercury controls consistent
with the requirement in CAA section 112(n)(1)(B), the cost of controls
for other HAP emissions from EGUs, and the cost of implementing the
utility-specific ARP, which Congress wrote into the 1990 CAA Amendments
and implementation of which Congress anticipated could result in
reductions in HAP emissions. 80 FR 75036-37 (December 1, 2015). The
ARP, like MATS, was expected to have a significant financial impact on
the power sector, with projections of its cost between $6 billion to $9
billion per year (in 2000 dollars), based on the expectation that many
utilities would elect to install FGD scrubbers in order to comply with
the ARP. Id. at 75037. The actual costs of compliance were much less
(up to 70 percent lower than initial estimates), in large part because
of the utilities' choice to comply with the ARP by switching to low
sulfur coal instead of installing scrubbers.\114\ This choice also
resulted in far fewer reductions in HAP emissions than would have
occurred if more EGUs had installed SO2 scrubbers. We
believe the considerable reduction in the implementation cost of the
ARP is important because of the economic benefit that accrued from
delaying the large capital costs of controls by almost 25 years. With
respect to the costs of technology for control of mercury and non-
mercury HAP, the record evidence shows that in 2012 controls were
available and routinely used and that control costs had declined
considerably over time. Id. at 75037-38. We also note that, as
explained at length in section III.B.2, the actual compliance costs of
MATS, with respect to capital and operating expenditures associated
with installing and operating controls, were significantly lower than
what we projected at the time of the rule. In addition, the newer
information examined as part of this proposal demonstrates that actual
control costs were much lower than we projected, which weighs further
in favor of a conclusion that it is appropriate to impose those costs
in order to garner the advantages of regulation.
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    \114\ U.S. EPA Clean Air Markets Div., 2011, National Acid
Precipitation Assessment Program Report to Congress 2011: An
Integrated Assessment, National Science and Technology Council,
Washington, DC.
---------------------------------------------------------------------------

    Our review of the record and application of the preferred totality-
of-the-circumstances approach has demonstrated that we have, over the
last 2 decades, amassed a voluminous and scientifically rigorous body
of evidence documenting the significant hazards to public health
associated with HAP emissions from EGUs, particularly to certain
vulnerable populations that bear greater risk from these emissions than
the general public. We have looked at the volume of emissions coming
from these sources and what the impact of regulation would be on that
volume. We examined the cost of regulation to industry (even using an
estimate of cost that we know to be higher than what was expended), and
the potential

adverse impacts that could be felt by the American public via increased
electricity prices and access to reliable electricity. And, consistent
with the statute, we have also considered adverse impacts of EGU
pollution on the environment as well as availability of controls and
the costs of those controls.
    Even based solely on the record available to us at the time we
issued the regulation and made the threshold determination in 2012, we
find that the benefits of regulation are manifold, and they address
serious risks to vulnerable populations that remained after the
implementation of the ARP and other controls imposed upon the power
sector that were required under the CAA. We have placed considerable
weight on these benefits, given the statutory directive to do so in CAA
section 112(n)(1)(A) and Congress' clear purpose in amending CAA
section 112 in 1990. In contrast, the costs, while large in absolute
terms, were shown in our analyses to be within the range of other
expenditures and commensurate with revenues generated by the sector,
and our analysis demonstrated that these expenditures would not and did
not have any significant impacts on electricity prices or reliability.
After considering and weighing all of these facts and circumstances, in
an exercise of his discretion under the Act, the Administrator proposes
to conclude that the substantial benefits of reducing HAP from EGUs,
which accrue in particular to the most vulnerable members of society,
are worth the costs. Consequently, we propose to find after weighing
the totality of the circumstances, that regulation of HAP from EGUs is
appropriate after considering cost.
    The newer information examined as part of this proposal regarding
both benefits and costs is directionally consistent with all of the
findings the EPA has made in the 2016 administrative record. The robust
and long-standing scientific foundation regarding the adverse health
and environmental risks from mercury and other HAP is fundamentally
unchanged since the comprehensive studies that Congress mandated in the
CAA were completed decades ago. But in this proposal, we completed
screening level risk assessments, informed by newer meta-analyses of
the dose-response relationship between methylmercury and cardiovascular
disease, which indicate that a segment of the American public is at
increased risk of prematurely dying by heart attack due to
methylmercury exposure with as many as 91 deaths per year (and possibly
more) being attributable to mercury emissions from EGUs.\115\ Further,
analyses show that some populations (e.g., low-income Blacks in the
Southeast and certain tribal communities engaging in subsistence
fishing activity) likely bear a disproportionately higher risk from EGU
HAP emissions than the general populace.
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    \115\ This estimate of premature mortality is for the EGU sector
after imposition of the ARP and other CAA requirements, but before
MATS implementation.
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    The new cost information analyzed by the EPA, discussed in section
III.B, indicates that the cost projection used in the 2016 Supplemental
Finding (i.e., the 2011 RIA cost estimate) likely significantly
overestimated the actual costs of compliance of MATS. Specifically, the
EGU sector installed far fewer controls to comply with the HAP
emissions standards than projected; certain modeling assumptions, if
updated with newer information, would have resulted in a lower cost
estimate; unexpected advancements in technology occurred; and the
country experienced a dramatic increase in the availability of
comparatively inexpensive natural gas. All of these factors likely
resulted in a lower actual cost of compliance than the EPA's projected
estimates in 2011. We therefore find that when we consider information
available to the Agency after implementation of the rule, our
conclusion that it was appropriate to regulate this sector for HAP is
further strengthened. The costs projected in the 2011 RIA were almost
certainly overestimated by an amount in the billions of dollars.
    We note as well that during prior rulemaking processes related to
the appropriate and necessary determination, stakeholders suggested
that undermining the threshold finding in order to pave the way to
rescinding MATS would have grave economic and health consequences.
Utilities reported that they rely upon the mandated status of MATS in
order to recoup expenditures already made to comply with the rule
before Public Utility Commission proceedings.\116\ States asserted that
they rely upon the Federal protections achieved by the rule in state
implementation planning and other regulatory efforts.\117\ And other
industries, such as pollution control companies, have made business
decisions based on the existence of MATS.\118\ We think these reliance
interests, nearly all of which are aligned, also weigh in favor of
retaining the appropriate and necessary determination, particularly
given the fact that a significant portion of compliance costs have
already been spent.
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    \116\ See, e.g., Comment Letter from Edison Electric Institute,
Docket ID Item No. EPA-HQ-OAR-2018-0794-2267; Comment Letter from
Edison Electric Institute, NRECA, American Public Power Association,
The Clean Energy Group, Class of '85 Regulatory Response Group,
Large Public Power Council, Global Energy Institute, International
Brotherhood of Electrical Workers, International Brotherhood of
Boilermakers, Iron Ship Builders, Blacksmiths, Forgers & Helpers,
and the Laborers' International Union of North America, Docket ID
Item No. EPA-HQ-OAR-2018-0794-0577.
    \117\ See, e.g., Comment Letter from Attorneys General of
Massachusetts, California, Connecticut, Delaware, Illinois, Iowa,
Maine, Maryland, Michigan, Minnesota, Nevada, New Jersey, New
Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont,
Virginia, Washington, and the District of Columbia, the Maryland
Department of the Environment, the City Solicitor of Baltimore, the
Corporation Counsels of Chicago and New York City, the County
Attorney of the County of Erie, NY, and the County Counsel for the
County of Santa Clara, CA, Docket ID Item No. EPA-HQ-OAR-2018-0794-
1175.
    \118\ See, e.g., Comment Letter from ADA Carbon Solutions, LLC,
Docket ID Item No. EPA-HQ-OAR-2018-0794-0794; Comment Letter from
Advanced Emissions Solutions, Inc., Docket ID Item No. EPA-HQ-OAR-
2018-0794-1181; Comment Letter from Exelon Corporation, Docket ID
Item No. EPA-HQ-OAR-2018-0794-1158.
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    Finally, while we focus on the HAP benefits, we note that the
Michigan court directed that ``any disadvantage could be termed a
cost.'' Michigan, at 752. The corollary is that any advantage could be
termed a benefit. And so, while it is not necessary to our conclusion
that regulation is appropriate, we also consider, under our totality-
of-the-circumstances approach, whether there are additional advantages
or disadvantages to the specific controls imposed under MATS.
Specifically, we note that because the controls required to reduce HAP
from U.S. EGUs resulted in substantial reductions in co-emitted
pollutants, including direct PM2.5 as well as SO2
and NOX, which are both precursors to ozone and fine
particle formation, the Administrator's proposed conclusion is further
supported by the ramifications of the regulatory requirements in MATS
for these pollutants. We propose that the benefits associated with such
reductions may be appropriate to consider where the framework for
making the CAA section 112(n)(1)(A) determination is a totality-of-the-
circumstances approach, and we take comment on that approach.
Therefore, while we conclude that the benefits associated with
regulating HAP alone outweigh the costs without consideration of non-
HAP benefits, we also propose that, to the extent we consider benefits
attributable to reductions in co-emitted pollutants as a concomitant
advantage, these benefits act to confirm that regulation is

appropriate under a totality-of-the-circumstances approach.
Specifically, we note that reductions in co-emissions of direct
PM2.5, SO2 and NOX will have
substantial health benefits in the form of decreased risk of premature
mortality among adults, and reduced incidence of lung cancer, new onset
asthma, exacerbated asthma, and other respiratory and cardiovascular
diseases. In the 2011 RIA, the EPA estimated the number and value of
avoided PM2.5-related impacts, including 4,200 to 11,000
premature deaths, 4,700 nonfatal heart attacks, 2,600 hospitalizations
for respiratory and cardiovascular diseases, 540,000 lost work days,
and 3.2 million days when adults restrict normal activities because of
respiratory symptoms exacerbated by PM2.5. We also estimated
substantial additional health improvements for children from reductions
in upper and lower respiratory illnesses, acute bronchitis, and asthma
attacks. In addition, we estimated the benefit of reductions in
CO2 emissions under MATS. Although the EPA only partially
monetized the benefits associated with these reductions in co-emitted
pollutants in the 2011 RIA, the Agency estimated that--due in
particular to the strong causal relationship between PM2.5
and premature mortality--these reductions could result in as much as
$90 billion (in 2016 dollars) in additional public health benefits
annually. Therefore, if these non-HAP benefits are considered in the
totality-of-the-circumstances approach, we take note of the fact that
regulating EGUs for HAP emissions results in substantial other health
benefits accruing to the American public by virtue of regulating HAP
from EGUs.

E. The Administrator's Proposed Benefit-Cost Analysis Approach and
Proposed Conclusion

    In addition to the preferred approach, we separately put forward an
alternative approach, as we did in 2016, to support a determination
that it is appropriate and necessary to regulate HAP from EGUs when
looking at the results of a formal BCA. The formal BCA we conducted for
purposes of meeting Executive Order 12866 using established BCA
practices also demonstrates that the benefits estimated for MATS far
exceed the estimated costs, as reported in the 2011 RIA.\119\ In its
net benefits projection, the 2011 RIA monetized only one post control
benefit from regulating HAP emissions from EGUs because the Agency did
not and does not have the information necessary to monetize the many
other benefits associated with reducing HAP emissions from EGUs. See
section III.A.4. However, the 2011 RIA properly accounted for all
benefits by discussing qualitatively those that could not be quantified
and/or monetized. While some of the impacts on particularly impacted
populations--such as the children of recreational anglers experiencing
IQ loss--were reflected in the net benefits calculation, that
accounting does not really grapple with the equitable question of
whether a subset of Americans should continue to bear disproportionate
health risks in order to avoid the increased cost of controlling HAP
from EGUs. We continue to prefer a totality-of-the-circumstances
approach to making the determination under CAA section 112(n)(1)(A),
but we think that if a BCA is to be used, it should, consistent with
economic theory and principles, account for all costs and all benefits.
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    \119\ We use the term ``formal benefit-cost analysis'' to refer
to an economic analysis that attempts to quantify all significant
consequences of an action in monetary terms in order to determine
whether an action increases economic efficiency. Assuming that all
consequences can be monetized, actions with positive net benefits
(i.e., benefits exceed costs) improve economic efficiency.
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    BCA has been part of executive branch rulemaking for decades. Over
the last 50 years, Presidents have issued Executive Orders directing
agencies to conduct these analyses as part of the rulemaking
development process. Executive Order 12866, currently in effect,
requires a quantification of benefits and costs to the extent feasible
for any regulatory action that is likely to result in a rule that may
have an annual effect on the economy of $100 million or more or
adversely affect in a material way certain facets of society. Executive
Order 12866, at section 3(f)(1).
    The EPA performed a formal BCA to comport with Executive Order
12866 as part of the 2012 MATS rulemaking process (referred to herein
as the 2011 RIA). In the 2016 Supplemental Finding, the EPA relied on
the BCA it had performed for Executive Order 12866 purposes as an
alternative basis upon which to make the appropriate and necessary
determination. That BCA, which reflected in its net benefits
calculation only certain categories of benefits that could be
confidently monetized, estimated that the final MATS would yield annual
net monetized benefits (in 2007 dollars) of between $37 billion to $90
billion using a 3-percent discount rate and $33 billion to $81 billion
using a 7-percent discount rate. See 80 FR 75040 (December 1, 2015).
These estimates included the portion of the HAP benefits described in
section III.A that could be monetized at the time, along with
additional health benefits associated with the controls necessary to
control the HAP emissions from U.S. EGUs. Specifically, as noted, the
net benefits estimates included only one of the many HAP benefits
associated with reduction of HAP. Nonetheless, the monetized benefits
of MATS outweighed the estimated $9.6 billion in annual monetized costs
by between 3-to-1 or 9-to-1 depending on the benefit estimate and
discount rate used. The implementation of control technologies to
reduce HAP emissions from EGU sources also led to reductions in
emissions of SO2, direct PM2.5, as well as other
precursors to PM2.5 and ozone. In the 2011 RIA, the EPA did
not quantify the benefits associated with ozone reductions resulting
from the emissions controls under MATS, but we did include estimates of
the projected benefits associated with reductions in PM2.5.
These benefits were quite substantial and had a large economic value.
Newer scientific studies strengthen our understanding of the link
between PM2.5 exposure to a variety of health problems,
including: premature death, lung cancer, non-fatal heart attacks, new
onset asthma, irregular heartbeat, aggravated asthma, decreased lung
function, and respiratory symptoms, such as irritation of the airways,
coughing or difficulty breathing. Furthermore, since the RIA was
completed in 2011, the EPA has updated its conclusions about how
PM2.5 emissions can adversely affect the environment through
acidic deposition, materials damage, visibility impairment, and
exacerbating climate change (EPA, 2019).\120\ In its most recent review
of the effects of ozone pollution, the EPA concluded that ozone is
associated with a separate but similarly significant set of adverse
outcomes including respiratory-related premature death, increased
frequency of asthma attacks, aggravated lung disease, and damage to
vegetation (EPA, 2020).\121\
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    \120\ U.S. EPA. Integrated Science Assessment (ISA) for
Particulate Matter (Final Report, Dec 2019). U.S. Environmental
Protection Agency, Washington, DC, EPA/600/R-19/188, 2019.
    \121\ U.S. EPA. Integrated Science Assessment (ISA) for Ozone
and Related Photochemical Oxidants (Final Report, Apr 2020). U.S.
Environmental Protection Agency, Washington, DC, EPA/600/R-20/012,
2020.
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    BCAs are a useful tool to ``estimate the total costs and benefits
to society of an activity or program,'' and ``can be thought of as an
accounting framework of the overall social welfare of a program.'' EPA
Economic Guidelines, Appendix A, A-6 (emphasis in

original).\122\ In a BCA, ``[t]he favorable effects of a regulation are
the benefits, and the foregone opportunities or losses in utility are
the costs. Subtracting the total costs from the total monetized
benefits provides an estimate of the regulation's net benefits to
society.'' Id. Importantly, however, ``[t]he key to performing BCA lies
in the ability to measure both benefits and costs in monetary terms so
that they are comparable.'' Id.; see also OMB Circular A-4 (``A
distinctive feature of BCA is that both benefits and costs are
expressed as monetary units, which allows you to evaluate different
regulatory options with a variety of attributes using a common
measure.'').\123\
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    \122\ U.S. EPA. 2014. Guidelines for Preparing Economic
Analyses. EPA-240-R-10-001. National Center for Environmental
Economics, Office of Policy. Washington, DC. December. Available at
https://www.epa.gov/environmental-economics/guidelines-preparing-economic-analyses, accessed July 23, 2021. Docket ID Item No. EPA-
HQ-OAR-2009-0234-20503.
    \123\ U.S. OMB. 2003. Circular A-4 Guidance to Federal Agencies
on Preparation of Regulatory Analysis. Available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf, accessed July 23, 2021.
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    In the 2020 Final Action, the EPA rescinded the 2016 alternative
approach on the basis that it was ``fundamentally flawed'' because it
applied ``a formal cost-benefit analysis'' to the CAA section
112(n)(1)(A) determination. The Agency's objection at the time to the
use of ``a formal cost-benefit analysis'' in the context of this
determination was that doing so ``implied that an equal weight was
given to the non-HAP co-benefit emission reductions and the HAP-
specific benefits of the regulation.'' See 85 FR 31299 (May 22, 2020).
The Agency concluded that it was not appropriate to use a formal BCA in
this situation because ``to give equal weight to the monetized
PM2.5 co-benefits would permit those benefits to become the
driver of the regulatory determination, which the EPA believes would
not be appropriate.'' Id. The EPA reiterated in the 2020 Final Action
that ``HAP benefits, as compared to costs, must be the primary question
in making the `appropriate and necessary' determination'' and ``the
massive disparity between co-benefits and HAP benefits on this record
would mean that that alternative approach clearly elevated co-benefits
beyond their permissible role.'' Id. at 31303. ``To be valid, the EPA's
analytical approach to [CAA section 112(n)(1)(A)] must recognize
Congress' particular concern about risks associated with HAP and the
benefits that would accrue from reducing those risks.'' Id. at 31301.
    We agree that the analytical framework for the appropriate and
necessary determination should first and foremost be one that is
focused on ``Congress' particular concern about risks associated with
HAP and the benefits that would accrue from reducing those risks.'' Id.
It is for this reason, as discussed in section III.C of this preamble,
that we propose to revoke the analytical framework advanced for the
appropriate and necessary determination by the 2020 Final Action, as
being insufficiently attentive to the public health advantages of
regulation. However, if the decisional framework is going to be one
that considers advantages to regulation primarily in terms of potential
monetized outcomes (see 85 FR 31296-97; May 22, 2020), a formal BCA
that estimates net outcomes (i.e., by comparing total losses and gains)
and conforms to established economic best practices and accounts for
all of the effects of the rule that can be quantified should be
used.\124\
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    \124\ In addition, CAA section 112(n)(1)(A) directs the EPA to
evaluate the hazards to public health from EGU HAP emissions that a
reasonably anticipated ``after imposition of the other requirements
of the [CAA].'' The direction to consider the impacts of non-CAA
section 112 requirements on HAP emissions from EGUs demonstrates
that Congress understood that criteria pollutant controls would
achieve HAP reductions. Given this understanding, it is reasonable
for the EPA to consider the consequent criteria pollutant reductions
attributable to CAA section 112 standards if a BCA is used to
evaluate cost in the context of the appropriate finding.
Furthermore, CAA section 112 legislative history not specifically
directed at EGUs also supports the consideration of criteria
pollutant benefits attributable to the regulation of HAP emissions.
Specifically, the Senate report for the 1990 CAA amendments states:
``When establishing technology-based [MACT] standards under this
subsection, the Administrator may consider the benefits which result
from control of air pollutants that are not listed but the emissions
of which are, nevertheless, reduced by control technologies or
practices necessary to meet the prescribed limitation.'' A
Legislative History of the Clean Air Act Amendments of 1990 (CAA
Legislative History), Vol. 5, pp. 8512 (CAA Amendments of 1989; p.
172; Report of the Committee on Environment and Public Works S.
1630).
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    Consistent with scientific principles underlying BCA, both OMB
Circular A-4 and the EPA's Guidelines for Preparation of Economic
Analyses direct the Agency to include all benefits in a BCA. Per
Circular A-4, OMB instructs ``Your analysis should look beyond the
direct benefits and direct costs of your rulemaking and consider any
important ancillary benefits and countervailing risks. An ancillary
benefit is a favorable impact of the rule that is typically unrelated
or secondary to the statutory purpose of the rulemaking.'' Circular A-4
at 26. Similarly, the Guidelines state, ``An economic analysis of
regulatory or policy options should present all identifiable costs and
benefits that are incremental to the regulation or policy under
consideration. These should include directly intended effects and
associated costs, as well as ancillary (or co-) benefits and costs.''
Guidelines at 11-2. As discussed in prior MATS rulemakings (see, e.g.,
80 FR 75041; December 1, 2015), installing control technologies and
implementing the compliance strategies necessary to reduce the HAP
emissions directly regulated by the MATS rule also results in
reductions in the emissions of other pollutants such as directly
emitted PM2.5 and SO2 (a PM2.5
precursor). A particularly cost-effective control of emissions of
particulate-bound mercury and non-mercury metal HAP is through the use
of PM control devices that indiscriminately collect PM along with the
metal HAP, which are predominately present as particles. Similarly,
emissions of the acid gas HAP are reduced by acid gas controls that are
also effective at reducing emissions of SO2 (also an acid
gas, but not a HAP). Id. While these PM2.5 and
SO2 emission reductions are not the objective of the MATS
rule, the reductions are, in fact, a direct consequence of regulating
the HAP emissions from EGUs. Specifically, controls on direct
PM2.5 emissions are required to reduce non-mercury metal
HAP, while SO2 emissions reductions come from controls
needed to reduce acid gas emissions from power plants.
    However, we recognize that there are significant reasons to
question whether a formal BCA is the best way to interpret the Agency's
mandate in CAA section 112(n)(1)(A), and we take comment on whether the
Agency should continue to rely on this alternative basis for making its
determination. We have consistently taken the position that a formal
BCA is not required under CAA section 112(n)(1)(A). See 80 FR 75039
(December 1, 2015). As set forth above, in Michigan, the Supreme Court
declined to hold that CAA section 112(n)(1)(A) required such an
assessment, stating, ``We need not and do not hold that the law
unambiguously required the Agency, when making this preliminary
estimate, to conduct a formal cost-benefit analysis in which each
advantage and disadvantage is assigned a monetary value.'' Michigan,
576 U.S. at 759. However, the Court did note that ``[c]onsideration of
cost reflects the understanding that reasonable regulation ordinarily
requires paying attention to the advantages and disadvantages of agency
decisions.'' Id. at 2707. Moreover, in finding the EPA's decision not
to

consider cost irrational, the Court suggested that unintended
disadvantages of a regulation could be considered costs as well,
implying that such disadvantages should be accounted for. Id. at 2707
(``The Government concedes that if the Agency were to find that
emissions from power plants do damage to human health, but that the
technologies needed to eliminate these emissions do even more damage to
human health, it would still deem regulation appropriate. No regulation
is `appropriate' if it does significantly more harm than good.'').
    In the 2015 Proposal, we identified several policy reasons for
preferring to apply a totality-of-the-circumstances approach to
weighing costs and benefits over using a formal BCA as our decisional
framework under CAA section 112(n)(1)(A). See 80 FR 75025 (December 1,
2015). We recognized that benefits like those associated with reduction
of HAP can be difficult to monetize, and this incomplete quantitative
characterization of the positive consequences can underestimate the
monetary value of net benefits. See 80 FR 75039 (December 1, 2015).
This is well-established in the economic literature. As noted in OMB
Circular A-4, ``[w]here all benefits and costs can be expressed as
monetary units, BCA provides decision makers with a clear indication of
the most efficient alternative.'' Circular A-4 at 2. However, ``[w]hen
important benefits and costs cannot be expressed in monetary units, BCA
is less useful, and it can even be misleading, because the calculation
of net benefits in such cases does not provide a full evaluation of all
relevant benefits and costs.'' Circular A-4 at 10. The EPA's Guidelines
for Preparation of Economic Analyses also recognizes the limitations of
BCA, noting that ``[m]ost important, [BCA] requires assigning monetized
values to non-market benefits and costs. In practice it can be very
difficult or even impossible to quantify gains and losses in monetary
terms (e.g., the loss of a species, intangible effects).'' Guidelines,
Appendix A at A-7.
    We also pointed out in the 2015 Proposal that national level BCAs
may not account for important distributional effects, such as impacts
to the most exposed and most sensitive individuals in a population. See
80 FR 75040 (December 1, 2015). These distributional effects and equity
considerations are often considered outside of (or supplementary to)
analyses like BCAs that evaluate whether actions improve economic
efficiency (i.e., increase net benefits). For example, children near a
facility emitting substantial amounts of lead are at significantly
greater risk of neurocognitive effects (including lost IQ) and other
adverse health effects. One perspective on the costs and benefits of
controlling lead pollution would be to aggregate those costs and
benefits across society, as in a BCA net benefits calculation. However,
neither costs nor benefits are spread uniformly across society and
failing to take account of that can overlook significant health risks
for sensitive subpopulations, such as children exposed to lead
pollution. Similarly, in the context of this determination, where we
have found disproportionate risk for certain highly exposed or
sensitive populations, such considerations are also particularly