[Federal Register Volume 88, Number 147 (Wednesday, August 2, 2023)]
[Notices]
[Pages 50912-50914]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-16272]


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OFFICE OF MANAGEMENT AND BUDGET


Request for Comments on Proposed Guidance for Assessing Changes 
in Environmental and Ecosystem Services in Benefit-Cost Analysis

AGENCY: Office of Management and Budget.

ACTION: Notice of availability and request for comments.

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[[Page 50913]]

SUMMARY: The Office of Management and Budget (OMB) is requesting 
comments on proposed guidance for assessing changes in environmental 
and ecosystem services in benefit-cost analysis.

DATES: Comments are requested on the proposed Circular on or before 
September 18, 2023.

ADDRESSES: The proposed Guidance is available at https://www.whitehouse.gov/wp-content/uploads/2023/08/DraftESGuidance.pdf.
    Please submit comments via http://www.regulations.gov, a Federal 
website that allows the public to find, review, and submit comments on 
documents that agencies have published in the Federal Register and that 
are open for comment. Simply type ``OMB-2022-0016'' in the search box, 
click ``Search,'' click the ``Comment'' button underneath ``Request for 
Comments on Proposed Guidance for Assessing Changes in Environmental 
and Ecosystem Services in Benefit-Cost Analysis,'' and follow the 
instructions for submitting comments. All comments received will be 
posted to http://www.regulations.gov, so commenters should not include 
information they do not wish to be posted (e.g., personal or 
confidential business information).

FOR FURTHER INFORMATION CONTACT: Office of Management and Budget, 
Office of Information and Regulatory Affairs, at 
[email protected].

SUPPLEMENTARY INFORMATION: 
    Background: In the process of designing appropriate regulations, 
agencies prepare regulatory impact analyses (RIAs) for certain rules--
consistent with Office of Management and Budget (OMB) Circular A-4--
that sometimes involve environmental and ecosystem services 
(collectively ``ecosystem services''). Agencies also prepare benefit-
cost analyses of public investments--consistent with OMB Circular A-
94--that can involve ecosystem services, which are all relevant 
contributions to human welfare from the environment or ecosystems. In 
order to encourage continued improvements in valuing changes to 
ecosystem services in benefit-cost analyses of regulations or public 
investments, OMB's Office of Information and Regulatory Affairs (OIRA) 
is releasing proposed Guidance for Assessing Changes in Environmental 
and Ecosystem Services in Benefit-Cost Analysis (Guidance). OMB, in 
consultation with the Office of Science and Technology Policy as well 
as relevant agencies and Executive Office of the President components, 
has drafted and proposes this Guidance. OMB now invites public comment 
on this proposed Guidance and is simultaneously initiating a peer 
review process with respect to it.
    OMB believes that the benefits of this proposed Guidance will be 
substantial. Many benefit-cost analyses involve ecosystem services, and 
standardized guidance on how to assess relevant changes and how to 
value such services will help promote consistency and predictability in 
these analyses. The Guidance also aims to make incorporating ecosystem-
service considerations easier for agencies conducting these analyses, 
resulting in lower analytic burdens for agencies and more sound 
analysis. While there are costs associated with performing more robust 
analyses of ecosystem-service effects--as well as with drafting and 
transitioning to new guidance--OMB believes that the benefits of better 
analysis and better-informed public discourse resulting from this 
proposed Guidance are likely to well exceed those costs.
    Some of the motivations for the proposed Guidance, and some 
considerations that OMB would like to highlight, are elaborated below. 
OMB requests comments on all aspects of the proposed Guidance. And OMB 
specifically requests comment on various aspects of the proposed 
Guidance as detailed later in this Notice.
    Origins of, and Reasons for, the Proposed Guidance: To manage 
resources optimally, agencies should assess the full suite of important 
impacts their actions have on the nation's natural assets, including 
benefits and costs to both the assets that an agency manages directly 
and to those managed by others, including, for example, other agencies; 
State, Tribal, Territorial, and local governments; and private resource 
managers. Interest in thoughtfully managing natural assets has a long 
history in the United States, from the recent Executive Order (E.O.) 
14072 \1\ to similar calls dating back well over a century.\2\ This 
interest has resulted in a variety of agency efforts over the years to 
better analyze effects on natural assets and on the ecosystem services 
that they deliver.\3\ These efforts are generally consistent with one 
another, but sometimes differ with respect to scope and focus, 
highlighting the need for government-wide guidance to help facilitate 
interagency consistency and coordination on ecosystem service analyses 
in the context of benefit-cost analysis. Given that certain agencies 
have developed their own ecosystem-service guidance documents--based on 
their own programs and statutory authorities--but others have not, a 
government-wide guidance will also help additional agencies develop 
their own expertise more quickly, so that they too can engage on 
ecosystem-service questions when relevant.
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    \1\ Executive Order No. 14072, Strengthening the Nation's 
Forests, Communities, and Local Economies, 87 FR 24,851 (Apr. 27, 
2022).
    \2\ See, e.g., Theodore Roosevelt, Message to the Senate and 
House of Representatives (Dec. 8, 1908), https://history.state.gov/historicaldocuments/frus1908/message-of-the-president.
    \3\ See, e.g., Env't Prot. Agency, Metrics for National and 
Regional Assessment of Aquatic, Marine, and Terrestrial Final 
Ecosystem Goods and Services (2020), https://nepis.epa.gov/Exe/ZyPDF.cgi/P1010Y7B.PDF?Dockey=P1010Y7B.PDF; U.S. Forest Serv., 
Integrating Ecosystem Services into National Forest Service Policy 
and Operations (2017), https://www.fs.usda.gov/research/treesearch/53358; U.S. Army Corp of Engrs., Using Information on Ecosystem 
Goods and Services in Corps Planning: An Examination on Authorities, 
Policies, Guidance, and Practices (2013), https://www.iwr.usace.army.mil/portals/70/docs/iwrreports/egs_policy_review_2013-r-07.pdf.
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    The importance of standardized guidance for ecosystem-service 
analyses is reflected in E.O. 14072, which calls for OMB to ``issue 
guidance related to the valuation of ecosystem and environmental 
services and natural assets in Federal regulatory decision-making, 
consistent with the efforts to modernize regulatory review required by 
my Presidential Memorandum of January 20, 2021 (Modernizing Regulatory 
Review).'' \4\ That Presidential Memorandum, in turn, ``reaffirms the 
basic principles set forth in'' E.O. 12866 and E.O. 13563.\5\ These 
longstanding principles include assessing environmental costs and 
benefits, including ecosystem service effects.\6\ Since then, E.O. 
14094 again

[[Page 50914]]

emphasized a commitment to these principles.\7\
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    \4\ Id. Sec.  4(b), 87 FR at 24,854.
    \5\ Memorandum of January 20, 2021, Modernizing Regulatory 
Review Sec.  1, 86 FR 7223, 7223 (Jan. 26, 2021).
    \6\ Executive Order No. 12866, Regulatory Planning and Review 
Sec.  1, 58 FR 51,735, 51,735 (Oct. 4, 1993) (``[I]n choosing among 
alternative regulatory approaches, agencies should select those 
approaches that maximize net benefits (including . . . environmental 
. . . advantages . . .), unless a statute requires another 
regulatory approach.''); Executive Order No. 13563, Improving 
Regulation and Regulatory Review Sec.  1(b), 76 FR 3821, 3821 (Jan. 
21, 2011) (reaffirming the same); see also Memorandum of January 20, 
2021 Sec.  2(a), 86 FR at 7223 (listing ``environmental 
stewardship'' as one of the values that the regulatory review 
process should promote).
    \7\ Executive Order No. 14094, Modernizing Regulatory Review 
Sec.  1(a), 88 FR 21,879, 21,879 (Apr. 11, 2023).
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    The Presidential Memorandum and these executive orders all 
emphasize considering impacts on the environment when assessing 
benefits and costs, but they do not provide detailed direction to 
agencies regarding how they should incorporate ecosystem service 
impacts into benefit-cost analyses. Actions affecting a natural asset 
or an associated ecosystem service often interact with natural, built, 
and social systems to yield benefits, costs, and transfers. Agencies 
currently vary in how they consider these dynamics and how they define, 
analyze, and report the resulting impacts. The call for additional 
guidance regarding ecosystem services from E.O. 14072 section 4(b) \8\ 
follows other, recent calls for similar guidance to address these 
questions.\9\ The proposed Guidance seeks to clarify the existing 
guidance provided in Circulars A-4 and A-94, with the goal of yielding 
more predictable, robust, and consistent treatment of ecosystem 
services in benefit-cost analyses. Through harmonized guidance, it also 
aims to achieve: improved consistency and predictability in benefit-
cost analyses that involve ecosystem services, lower burdens to 
incorporating ecosystem-service considerations into analyses, and 
better information to help guide agency decisions when ecosystem 
services are involved.
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    \8\ Executive Order No. 14072 Sec.  4(b), 87 FR at 24,854.
    \9\ See Shaun Donovan, Christina Goldfuss & John Holdren, M-16-
01: Incorporating Ecosystem Services into Federal Decision Making 
(Oct. 7, 2015), https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/memoranda/2016/m-16-01.pdf.
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    Relationship with Other Guidance: The proposed Guidance is intended 
to be fully consistent with--and a faithful application of--the 
principles and guidelines in Circulars A-4 and A-94. Much in the 
proposed Guidance cross-references applicable sections in Circular A-
4--and, per a paragraph on page 1, analogous sections of Circular A-94 
\10\--to address certain analytical steps.
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    \10\ For example, where the proposed Guidance references the 
Circular A-4 section ``Discount Rates,'' readers performing analyses 
consistent with Circular A-94 should refer to the Circular A-94 
section ``Discount Rate Policy.''
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    Many analytical steps that are important for assessing impacts on 
ecosystem services are covered within Circulars A-4 and A-94. 
Therefore, what this Guidance covers in the greatest depth is not 
necessarily what is most important for ecosystem-service analysis. For 
example, deciding on appropriate valuation methods--such as stated-
preference or revealed-preference methods--is often a challenging step 
when valuing ecosystem services. To avoid duplication, this proposed 
Guidance generally directs readers to Circulars A-4 and A-94 on this 
topic, as valuation techniques are discussed there. The proposed 
Guidance instead focuses on highlighting examples of such methodologies 
that may be applied to analyses of ecosystem services. Similarly, 
choosing a discount rate or analytical time horizon is important to 
valuing ecosystem services, but most pertinent considerations to make 
such decisions are in Circulars A-4 and A-94; the proposed Guidance 
devotes little space to discussing those topics, instead referencing 
those circulars.
    As noted above, the proposed Guidance explains that it references 
sections in Circular A-4; agencies conducting analyses consistent with 
Circular A-94 instead of Circular A-4 should reference analogous 
sections within the applicable circular. OMB proposes this arrangement 
for brevity and to avoid undue repetition by avoiding references to two 
documents every time the proposed Guidance mentions one. OMB welcomes 
comment on whether that arrangement is sufficiently clear for 
practitioners preparing analyses consistent with Circular A-94. OMB 
also welcomes comment on opportunities for tailoring the proposed 
Guidance more carefully to the context of such analyses. For example, 
are there issues that are particularly relevant to valuing ecosystem 
services in the public-investment context that would benefit from 
additional detail in the proposed Guidance?
    On April 6, 2023, OMB separately released proposed revisions to 
Circulars A-4 and A-94 and called for public comment on them. The 
proposed Guidance is intended to be consistent with current versions of 
those Circulars as well as the proposed updates to them. Stated 
differently, nothing in the proposed Guidance is meant to depend on any 
of the proposed changes to either Circular A-4 or Circular A-94. The 
proposed updates to both Circulars cross-reference the final version of 
this proposed Guidance for further guidance on valuing ecosystem 
services.
    In addition to Circulars A-4 and A-94, as noted above and in the 
proposed Guidance, many agencies also have internal guidelines for 
analyzing ecosystem services. The proposed Guidance represents OMB's 
recommended best practices for such analyses in benefit-cost analysis 
and should be generally consistent with more specific agency guidance. 
Insofar as this Guidance, when finalized, conflicts with any internal 
guidance, agencies should consult with OMB. Moreover, agencies should 
always refer to their operative statutory authorities and, if their 
authorities are inconsistent with the proposed Guidance, should defer 
to the relevant statute.
    Requests for Comment: While OMB invites comment on any aspect of 
the proposed Guidance, OMB specifically solicits comment on the 
following aspects:

    (1) whether addressing any further topics related to ecosystem 
services would be useful;
    (2) whether the material could be presented more clearly for 
affected public stakeholders, including how the proposed Guidance 
discusses its preference for monetization when feasible, and when 
not, then quantification when feasible, and when not, then qualitive 
description;
    (3) whether the discussion of especially difficult-to-quantify 
and difficult-to-monetize ecosystem services, such as cultural 
services and existence value, is appropriate and sufficient;
    (4) whether methodologies to quantify or describe ecosystem 
services that cannot be monetized are sufficiently described;
    (5) whether integration with and references to Circulars A-4 and 
A-94 efficiently cross-reference the relevant details in the related 
documents;
    (6) whether and how the proposed Guidance conflicts with other 
related guidance documents from OMB or agencies;
    (7) whether to refine guidance on potential double-counting of 
effects; and
    (8) whether to refine guidance on accounting for stocks versus 
flows.

Richard L. Revesz,
Administrator, Office of Information and Regulatory Affairs.
[FR Doc. 2023-16272 Filed 8-1-23; 8:45 am]
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