905R78116
5517
JUL Io 1978
ENVIRONMENTAL PROTECTION AGENCY
LIBRARY, REGION V
IMPROVING ENVTRCNMENTAL REGULATIONS
r.ction: Request for public comments.
Su.~T7.ary: The Environmental Protection Agency (EPA) seeks comments on its
plan to implement Executive Order 12044, Improving Government Regulations.
The plan includes procedures to improve management oversight in the develop-
ment of regulations, to involve the public and other governmental organi-
sations in evaluating regulatory proposals, to analyze the effects of
r.-2,; and existing regulations, and to avoid unnecessary regulatory burdens
on the public. A draft of this plan appeared in the Federal Register on
::ay 31, 1978 (Vol. 43, p? 23679-23637).
Address; Send comments to:
Lawrence E. McCray
Standards and Regulations Evaluation Division (PM-223)
EPA
Washington, B.C. 20460 • '
Date: Send comments by (sixty days after publication).
Public Meetings: EPA will hold public meetings to discuss its plan in
Kansas City, San Francisco, and Washington, D.C., in August. Contact
Lawrence McCray for further information on these meetings.
June 26, 1978
Administrator
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Organization of this Report; ^
1 » -
Preface
A. Agency Administrator's Oversight
B. External Participation
C. Analysis
D. Reporting Burdens Reduction
Appendices
PREFACE
EPA is now using an efficient system for drafting and reviewing
regulations, parts of which have served as models for the President's Order.
This report presents ways in which we propose to update and modify that
system to comply with the Order. EPA's internal and external review pro-
cedures will ensure that new EPA regulations meet the Order's standards
for quality of analysis of regulatory impacts, openness to participation by
outside parties, and avoidance of undue regulatory burdens.
Part of this report describes EPA's internal procedures for writing
regulations. Key features are the priority classification for all EPA regu-
lations and the use of management controls that systematically focus attention
on the most important regulations. Part B describes how EPA will involve
interested citizens and outside groups (both private and public organizations
and local, State and Federal agencies) in developing regulations, and
announces EPA's plan to formulate a new Agency-wide policy for external
participation in regulation development. Part C sets out guidelines for
economic analysis of regulations in each of three priority classes. It also
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proposes a one-year project to screen all existing EPA regulations to
identify those that require revision to reduce unnecessary burden and
improve effectiveness. Part D describes how EPA will avoid unnecessary
paperwork burdens on the public in the reporting and record-keeping re-
quirements of new and existing regulations.
The parts of this report describing EPA's mechanisms for public
participation are printed in italics.
EPA has scheduled three public meetings on this report. We will
assess the results of these meetings and other comments submitted in the
next sixty days and prepare a final report for approval by the Office of
Management and Budget. We will adopt a revised EPA Manual for our regula-
tion development process that incorporates all changes and implements our
response to the Order.
The process proposed in this report meets all requirements of the
Order. Table 1 lists sections of the OEder and shows where to find a
description of our plan to implement it. As indicated in its Section 7,
failure to comply with the terms of the Order does not provide new
grounds for judicial review of EPA regulations. Procedures described in
this report will not apply when they conflict with statutory requirements.
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Relationship of Ihis Report to Executive Order Requirements
Executive Order Section
Corresponding
Section(s) of Ihis Report
$2 Reform of the Process
(a) Semiannual Agenda
(b) Agency Head Oversight
(c) Public Participation
(d) Approval of Significant
Regulations
(1) Necessity of the
Regulation
(2) Consideration of Impacts
(3) Evaluation of Alternatives
(4) Response to Public Comment
(5) Use of Plain English
(6) Reporting Burden Assess-
ment
(7) Name of Responsible
Official
(8) Evaluation Plan
(e) Criteria for Significant Regs
B(2) Agency Participation Policy
A(2) Development Plan
B(2) Agency Participation Policy
A(2) Development Plan: A(3) Decision
Package
A(3) Decision Package;
c(l) Analysis of New Regulations
A(3) Decision Package;
c(l) Analysis of New Regulations
A(3) Decision Package;
B(2) Agency Participation Policy
A(3) Decision Package;
A(4) Internal Review; B(2) Agency
Participation Policy
Decision Package;
D Reducing Burdens on the Public
A(3}'
A(3)
A(3)
A(l) Initiation of Work; Chart 1
Decision Package;
B(2) Agency Participation Policy
Decision Package;
C(2) Review of Existing Regulations
§3 Regulatory Analysis
(a) Criteria
(b) Procedures
C(l) Analysis of New Regulations;
Chart 4
C(l) Analysis of New Regulations
54 Review of Existing Regs
(a) Selection Criteria
(b) List of Possible Candidates
C(2) Review of Existing Regulations
C(2) Review of Existing Regulations
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Part A: Agency Administrator's Oversight
This part describes how EPA will strengthen top management oversight
for the development of new regulations. It emphasizes EPA's internal pro-
cesses and only touches on (see italicized parts) the way the Agency win
involve outside parties in its decisions. Part B is entirely devoted to
external participation in EPA regulation development.
In outlining the steps for EPA's process the following definitions
may be useful:
— Lead Office; The Assistant Administrator for the relevant
program (the Office of Air and Waste Management, the Office
of Enforcement, the Office of Toxic Substances, or the
.•
Office of Water and Hazardous Materials) has the lead
responsibility for initiating and writing most of the new
regulations.
— Work Group: This is a group of specialists drawn from various
offices within EPA to advise and assist the lead office in
preparing each important regulation and its support materials.
— Steering Committee: This is a continuing group representing -
the six Assistant Administrators and Office Directors on the
Administrator's staff. It oversees the mechanics of the
process and conducts the first internal review of materials
prepared by the lead office.
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— Red Border Review; This is an internal review by all Assistant
Administrators and chief Staff Office Directors. The heads of EPA's
ten regional offices (Regional Administrators) will also have an
opportunity to submit comments. A full review takes three weeks.
— Senior Management: This group includes the Administrator, Deputy
Administrator, Assistant Administrators, Regional Administrators,
the General Counsel, and Staff Office Directors.
— The Administrator; As Agency head, the Administrator provides
the final level of internal review.
— Interagency Regulatory Liaison Group (IRLG): This group includes
EPA, the Consumer Product Safety Comnission, the Food and Drug Adminis-
tration, and the Occupational Safety and Health Administration.
EPA produces regulations in a four stage process: (1) starting work on
a regulation, (2) preparation of a development plan, (3) preparation of a
decision package, and (4) conducting a three-part internal review prior to
publication. Each regulation (except for special cases like interim-final
regulations) goes through the third and fourth stages twice, first as a
proposal and again in final form. (See Figure 1.) The stages of
regulation drafting are explained in detail below.
EPA plans to update this process in response to the President's
Executive Order according to two general principles. First, the system will
establish priorities for all EPA regulations and the Agency will use manage-
ment controls that reflect those priorities. Priorities and different
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* degrees of attention are essential at EPA because of the large volume
of regulations. More than 400 regulations are already in one stage or
another of the drafting process.
EPA plans to use the label "Significant" (as recommended in the
Executive Order) for its roost important regulations. Those regulations
will be subject to the formal EPA procedures outlined in this report.
EPA will clssify all other regulations as "Minor".
Significant regulations will be further subdivided as "Routine" and
"Major". Routine regulations will include most of the Significant actions
in the drafting process. Major will mean those Significant regulations
(from 40 to 60 per year) receiving special attention from senior management,
allowing EPA and the public to focus their attention on the most important
policy areas.
The criteria we will use in classifying regulations' appear in Charts
1 and 2. Figure 2 shows how the classes are related.
Some of EPA's Major regulations will require Regulatory Analyses as
specified in Section 3 of the Executive Order. This requirement will be
the only factor distinguishing these regulations from other Major regula-
tions for purposes of management oversight.
The second general principle of the internal process is extensive *
and continuous participation by various EPA offices. Participatory
decision-making will continue to be important at EPA because systematic
review by other offices provides several types of valuable input.
Scientists and economists will check data and analyses; lawyers will
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CHART 1
CRITERIA FOR AND SIGNIFICANT REGULATIONS
EPA will classify as Minor all regulations which meet the criteria
below. All others will be classified as Significant, Significant
regulations will follow the uniform development process; minor
regulations will not.
1. Regulations that are administrative or procedural in nature and do not
.alter the stringency/ burden of compliance, or the environmental (health)
benefits of the regulation.
2. Minor amendments to existing regulations when the amendment does not
affect the stringency, burden of compliance, or the environmental (health)
benefits of the regulation.
*
3. Approval or disapproval of revisions to State Implementation Plans under
the Clean Air Act.* Although the approval of a SIP with national policy
implications is not subject to full regulation development procedures,
additional EPA review is required. All SIP revisions are subject to
separate EPA review procedures that require public participation.
4. Water Quality Standards set by States.* These standards are subject to
separate EPA review procedures that include public participation.
5. Pesticide tolerances and regulations to exempt pesticides from the pro-
visions of the pesticide statute (FIFRA) under its section 25(b) because
of a determination that: (a) the pesticide is adequately regulated by
another agency, or (b) it is of a character which need not be subject to
FIFRA in order to carry out the purposes of FIFRA.* [Note: Many iinpor-
tant decisions in EPA's pesticide program do not take the form of regula-
tions and are not therefore subject to this report. These include pesti-
cide registrations, cancellations, suspensions, "rebuttable presumptions
against registration", experimental use permits and emergency exemptions.
These actions follow separate requirements for for public notification
and comment.]
6. Actions delegating or transfering authority from the Administrator to other
levels of government, approvals of permits or plans, and actions involving
an individual State (unless such actions impose through regulation economic
impacts meeting the criteria listed in Chart 4).
*
7. Regulatory actions resulting from direct Congressional mandates that are
not subject to interpretation.
8. Regulations classified as Minor by a lead office Assistant Administrator
in the Notification Form. Any senior manager may request a change in the
classification.
* These Minor actions do not require the notification forms described in
Part A(l). EPA will publish regular listings of Minor actions taken in these
three categories.
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CHART 2
CRITERIA FOR MAJOR REGULATIONS
For internal management purposes EPA will divide all Significant
.. regulations into two classes, Major and Routine. Both types will follow
the uniform regulation development process. However, Major regulations
will receive special attention from senior Agency management. We may
classify a regulation as Major if it is likely to:
1. Address a major health or ecological problem.
2. Result in a major health, ecological, or economic impact.
*
3. Cause substantial urban impact, including constraints on
transportation mobility.
4. Initiate a substantial regulatory program or change in policy.
5. Cause a substantial impact on another EPA program or another
federal agency program.
6. Cause a substantial change on a national scale in the scope of
State-administered environmental programs or in the relationship
between EPA and States or localities.
7. Cause a disproportionate impact on a particular region of the
United States.
8. Implement a regulatory program central to the basic purpose of
the statute under which it is adooted.
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EPA
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check procedures and clarity; and managers will know how proposed regulations
might affect their programs. This process starts when the lead office invites
Assistant Administrators, Regional Offices, and Staff Offices to send representa-
tives to a work group to participate in writing any Significant regulation.
The" lead office seeks to identify and resolve issues at each stage, in work
groups, Steering Conmittee review, and senior management review. The lead
office retains primary responsibility for new regulations, and when consen-
sus is not reached at a particular level, the disagreement is spelled out and
the matter is taken to a higher level for review. When consensus is reached
on major issues at lower management levels, the lead office will identify for
senior management the nature of the issue and the consensus opinion that has
been reached. As a result, final decisions will remain with publicly responsible.
appointed officials at the top of the Agency. For individual regulations the
lead office may withdraw a regulation from parts of the formal process, or use
some modification of the process, as long as it justifies the need and meets
other requirements of law and the Executive Order. Before making such changes,
the lead office Assistant Administrator will notify the other Assistant Admin-
istrators, General Counsel, and Office Directors and consult with them if re-
guested. The Administrator may resolve any differences of opinion.
The four stages of regulation writing and review are as follows:
Stage 1; Starting Work on a Regulation
When the Assistant Administrator for a lead office determines that he is
required by law or otherwise decides to start work on a new regulation, he%will
send a notification form to senior management. This brief standard form re-
quires no analysis.
The notification form will tell interested persons that a regulation
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is contemplated and allow them to plan accordingly.
Hie notification form classifies the new regulation as Minor or Signi-
ficant (based on criteria in Chart 1). At the request of another office the
Administrator may reclassify a Minor regulation as Significant. Submitting
this form will place Significant regulations on EPA's Regulatory Agenda,
which is printed semi-annually in the Federal Register and distributed to
the public.
Note: Minor regulations are not subject to the requirements described
below for a development plan and a decision package. Minor regulations do not
pass through Steering Committee review. When published in the Federal Register,
these regulations will carry a disclaimer that they do not meet criteria
for Significant EPA regulations.
Notification forms will invite interested offices to assign appropriate
personnel as work group members. (See Chart 3 for a list of EPA offices with
formal responsibilities for regulation development. These offices will
receive a Notification Form.)
The notification forms will set a date for submitting a development plan
for Significant regulations to the Steering Committee.
Actions initiated outside EPA, which include but are not limited to re-
visions in State Implementation Plans, State water quality designations,
some pesticide actions, delegations of authority by the Administrator to other
levels of government, permit approvals, and plan approvals will not require
a notification form.
Stage 2; Preparation of a Development Plan
The Assistant Administrator for the lead office (or someone, such as a
Deputy Assistant Administrator, to whom such authority is delegated) appoints
a chairperson for the work group assigned to work on specific Significant
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CHART 3
WORK GROOP REPRESENTATION
EPA Regional Offices (coordinated through the Office of Regional and
Intergovernmental Operations)
Office of Air and Waste Management
Office of Enforcement
Office of General Counsel
Office of Legislation
Office of Planning and Management
Office of Research and Development
Office of Toxic Substances
Office of Water and Hazardous Materials
The.Office of International Activities, Office of Civil Rights, Office of
Federal Activities, Office of Land Use Coordination, and Office of Public
Awareness will serve on appropriate work groups.
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'regulations. In the event that special expertise exists in a Regional Office,
the lead office Assistant Administrator should consider asking the Regional
• Administrator to concur in the appointment of an expert in the Regional
Office to serve as chairperson. The lead office puts together a development
plan with the advice and assistance of the work group. An early step in
this process is deciding whether the Significant regulation falls into
the Routine or Major class (see Chart 2 for criteria).
Development plans for Routine regulations must be approved by the
lead office and reviewed by the Steering Committee before significant work
or outside contacts can begin. These development plans are sent to senior
management for their information.
Development plans for Major regulations are reviewed by the lead
office and the Steering Committee but must be approved by the Assistant
Administrators and Administrator before significant work or outside contacts
can begin.
The format for the development plan will vary according to the type
of regulation and will include a discussion of the following items when
they are applicable.
o Priority Classification: This notes whether the Significant
regulation is Routine or Major according to EPA criteria (Chart 2).
o Purpose: This is a brief description of the possible need to
regulate and the consequences of no regulation.
o Alternatives: This is a summary of the major options available
under the authorizing statute that will be evaluated, including
a discussion of whether alternatives or supplements to direct regu-
lation (such as economic incentives) are feasible (see the dis-
cussion of Alternatives in Part C).
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o Issues: This is a list of issues to be resolved including
effects on other EPA, Federal and State programs, and analyses
of environmental, economic, energy, urban, and community impacts.
p Schedule: This is a timetable with target dates for: identifying
and notifying interested outside parties, completion of the initial
draft, internal and external review of drafts, awarding and comple-
ting contracts, any required progress reports, Steering Committee
review, publication of the proposed regulations, end of the public
comment period, and promulgation of the final regulation.
o Exclusions: This is a list of any normally required materials
that the work group expects to omit from the decision package,
with a brief explanation.
o External Participation: This is a plan to involve those parties
outside the Agency in the regulation development process. It indi-
cates how persons interested in an affected by the regulation will
be identified, notified, and brought into discussions. It notes any
interest by other Interagency Regulatory Liaison Group members or
other Federal agencies and lists contact persons. It lists actions
planned for coordination with State and local governments.
o Public Notice; This is the text of a Federal Register notice
f
(usually an Advance Notice of Proposed Rulemakinq) that asks for
public comment and any information that is needed.
o Internal Participation: This is a list of offices within EPA whose
expertise and assistance will be needed, and a plan for coordination
with EPA Regional Offices.
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o Regulatory Analysis: This reports on the need for a Regulatory
Analysis (criteria in Chart 4). This section will identify the
alternatives to be evaluated in the Regulatory Analysis and the
major costs and (where feasible) benefits to be analyzed. The
Administrator may require a Regulatory Analysis even if the
quantitative criteria are not met.
o Resources: This is an estimate of EPA-money and personnel needed
to produce the regulation, with a specific estimate of resources
coming from EPA offices in addition to the lead office.
o EIS: This states whether Agency policy calls for an Environmental
Impact Statement.
Stage 3: Preparation of a Decision Package
After the development plan is completed, the lead office with the advice
and assistance of the work group begins analyzing alternatives, writing the
regulation, and collecting support materials. These make up the decision
package.
Menbers of the work group may, in some cases, write portions of the
document. They review drafts as they are prepared and keep in close touch
with their offices' senior management and Steering Committee representatives.
The chairperson has overall responsibility for regulation drafting and
is accountable to lead office superiors (Division Director, Deputy Assistant
Administrator, and Assistant Administrator), who provide guidance on the
substance, procedures, and policy of the regulation.
The chairperson is responsible for resolving any issues or problems
that may arise during the drafting process. This may be done through pro-
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gress reports to senior management or by consultation with lead office
• superiors and other appropriate EPA managers. For Major regulations the
lead office has an affirmative duty to keep EPA senior management
periodically informed of issues which the work group has under considera-
tion and to seek their policy guidance.
The Lead Office will actively seek the views of outside groups and
consult with them prior to formal publication of proposed and final regu-
lations. These groups include those persons directly affected by the regu-
lation, environmental and consumer groups, industry representatives,, other
Federal agencies and State and local governments. This last group, State
and local governments, will often have a major role in the process because
they implement and enforce many EPA regulations and have special knowledge
of local conditions and available program resources. Whenever possible, the
lead office will provide an opportunity (and adequate time) for the outside
parties to review draft regulations and support documents, including the
Regulatory Analysis when one is required.
The decision package will contain the following items:
o Action Memorandum; This is a brief summary of the regulation,
including alternatives'considered, environmental, economic, and
resource impacts, unresolved issues and recommended action. The
The alternatives should include the realistic options that the -
lead office and work group have considered seriously. Where
feasible a summary of the incremental environmental and economic
effects should accompany the analysis of each alternative.
o Federal Register Documents; This will include a preamble
written in plain English that describes the facts and
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rationale for the decision to regulate and how the regulation fits
into the larger regulatory program. The regulation itself will be
written in a manner clearly understandable to those it affects,
and will comply with the Federal Register Document Drafting Handbook.
The name and address of an EPA contact will be included.
° Analyses; These are support documents that lay out the major issues
and show how alternatives were analyzed. The analyses will identi-
fy and quantify (where possible) the regulation's environmental
effects, economic (including incremental) impacts, energy impacts,
technical feasibility, anticipated barriers to implementation,
alternatives and supplements to direct regulation, and, for Major
regulations, urban and community impacts. The analyses will show
,-
why the recommended option is the least burdensome of the accept-
able alternatives and how unnecessary duplication with other EPA
or Federal programs has been avoided. The Regulatory Analysis,
when one is required, will summarize the results of several of these
analyses. The support documents will be available to the public.
o EIS; An Environmental Impact Statement will be written when
necessary to comply with Agency policy.
o Resource Requirements Summary; This is a summary of money and *
personnel that EPA, State, and local governments will need to imple-
ment the regulation. (Affected officials will have an opportunity
review a draft of this assessment.) Where possible this will in-
clude (or refer to) portions of Agency program guidance and zero
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based budgeting documents that show necessary adjustments in EPA
resources.
o Reporting Impacts Statement; This will detail the impacts of re-
porting and record-keeping on those subject to the regulation, in-
cluding manpower projections and required expertise. New EPA re-
porting and record-keeping requirements will have expiration
schedules. (See Part D.)
o Public Participation Summary: This is a summary of comments,
including comments from other Federal agencies and.State and local
governments received during the process and the Agency's response
to each major issue the comments addressed.
o Evaluation Plan: This is a plan and schedule for subsequent evalua-
tion of the effects of the regulation. (See Section C.2.)
Stage 4; Conducting Internal Reviews
After the lead office Assistant Administrator approves the decision
package, he or she will submit it for prepublication review. This process
has three parts: Steering Committee review, Red Border review and final re-
view by the Administrator.
The Steering Committee will review all Significant regulations to help
resolve any issues on which the work group does not reach consensus and to
make sure the decision package meets standards of completeness, quality^
and comprehensibility. When the Steering Committee resolves a major issue
it will identify for senior management the nature of the issue and the re-
solution reached. The Steering Committee will make sure all components of
the decision package are prepared and that material to be published is
clear and understandable. It is the Steering Committee's responsibility
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to see that the regulation meets the eight specific requirements set forth
in Section 2(d) of the Executive Order.
For Routine regulations, EPA's senior management will rely on the
Steering Committee to see that decision packages are in order. They will
be notified when the Steering Committee "reviews Routine regulations. Un-
less a senior manager requests a full Red Border review period, any Routine
decision package that has received consensus approval from the Steering
Committee will be scheduled for a ten calendar day Red Border review. At
the end of the tenth day it will go to the Administrator for signature.
If the Steering Committee does not reach a consensus the package will enter
full Red Border review. In all cases a copy of the decision package (and the
Steering Committee's summary review) will be sent to senior managers for
their information.
The EPA senior management will review during the Red Border process all
Major regulations regardless of concurrence at lower levels. For Major regu-
lations, the Steering Committee will check the completeness of decision pack-
ages and make sure any unresolved issues are clearly and fairly presented to
senior management.
Red Border review of Major regulations should not exceed three weeks.
The lead office Assistant Administrator may request a shorter review period.
Hie lead office will report to the senior management on how formal objec-
tions or comments by individual Assistant Administrators have been resolved.
When all top-level reviews are complete or the review time has lapsed,
the regulation goes to the Administrator. When he has signed it, it will be
published in the Federal Register.
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• Part B. External Participation '[Entire Part in Italics]
1. Overview
Traditionally, EPA has placed a high priority on public participation
in its decision-making processes. EPA managers realize that when knowledge-
able and interested outside parties participate in Agency work, the result is
more effective regulation.
. EPA's current regulatory practices seek to give the public "an early
and meaningful opportunity to participate" as called for in the President's
Executive Order. EPA practice already includes the specific suggestions
in the Order. These include: regular Federal Register publication of
Regulatory Agendas, routine use of Advance Notices of Proposed Rulemaking;
public participation plans for each regulation,, 60-day public comment
periods, frequent public meetings and hearings, and internal safeguards
that public responses have been carefully considered in the development of
each regulation.
EPA intends to write a comprehensive policy for public participation
in regulation development. We have three primary goals. First, EPA will
identify and notify the range of people and organizations who can contribute
to regulations, including: private citizens; consumer, environmental and
minority associations; trade, industrial and labor organizations; public
health, scientific and technical societies; and local, State and Federal
officials. Second, EPA will encourage their involvement by removing,
where possible, the obstacles to participation, such as lack of resources
or time and unfamiliarity with technical issues or EPA statutes. Finally,
EPA will show how all the major points raised by the public have been
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carefully considered in making policy decisions.
EPA has four major projects already underway: a high level task force;
a reorientation of our public affairs office; an extensive revision to the
regulations covering our public participation programs in the water office;
and a pilot project under the new toxic substances law. The results from
each of these will be used in developing the Agency-wide policy on public
participation.
(a) Administrator's Special Assistant and Task Force: EPA Admini-
strator Costle has appointed a new Special Assistant to the Administrator
for Public Participation who chairs an Internal Task Force. This group
will work with public representatives to evaluate current public partici-
pation programs, develop new ways for the public (including grass-roots
organizations) to take part in decisions, and investigate the use of staff
training systems.
(b) Office of Public Awareness; This office, formerly the Office of
Public Affairs, has been reoriented toward public participation. It is
preparing Public Awareness Plans to cover the next two years. These plans
call for producing informational materials on all the laws EPA now administers,
as well as new ways to help the public take part in hearings and meetings
around the country.
(c) Water and Solid Waste Program Review; Since late 1977, a work
group led by the Office of Water and Hazardous Materials has been reviewing
public participation requirements in the water quality, drinking water, and
solid waste programs. The work group developed preliminary proposals for
overall public participation requirements in water and solid waste programs
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and specific requirements for the construction grants program. These preli-
minary proposals were widely circulated for public comment and were the subject
of two public meetings in Washington, D. C. We plan to publish the proposed
regulations in the Federal Register in June or July.
(d) Pilot Project in Reimbursing Participants: This project to help
reimburse the expenses for certain participants in the toxic substances rule-
making process was announced late last year. EPA has issued regulations on
phasing out polychlorinated biphenyls (PCB's) under the Toxic Substances
Control Act, and people may apply for reimbursement of their reasonable ex-
penses for taking part in the hearings. EPA will reimburse people who can
"substantially contribute to a fair determination of the issues," whose eco-
nomic stake in the issue is small, and who do not have sufficient resources
to participate. The Agency will use the results of this pilot test to guide
the expansion of the concept to other programs.
2- Agency Participation Policy
In accordance with the Executive Order, EPA plans to set up a standard
policy for public participation in the regulation writing process. There
will be variations as required by individual programs and statutes, but the
basic ground rules will be the same for all Agency programs. We plan to work
*
with interested groups and members of the public in formulating this policy.
Although it is too early to anticipate the details of the policy, the
following elements are expected to be part of it.
The Administrator will continue to approve Regulatory Agendas and see
that they are published twice a year (the most recent appeared on April 6 in
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the Federal Register). Each Regulatory Agenda will list the title and
• status of all Significant regulations, cite the appropriate statutory au-
•
thority, say whether a Regulatory Analysis is required; and give the name
and telephone number of a person to contact at EPA. The Agenda will show
the status of regulations removed from the list since the last Agenda pub-
lication. It will indicate existing regulations picked for review (see
Section C.2) and reporting requirenents that will reach their sunset date
(see Section D). EPA will continue to supplement Federal Register publica-
tion of this Agenda with direct distribution to interested parties.
For specific regulations, EPA work groups will:
(1) Draw up a plan for external participation as part of the develop-
ment plan that shows how interested parties will be identified and notified.
(2) Consult with State and local governments, individually and through
major national organizations of State and local officials and associations
of environmental policy officials. Sunmaries of this consultation will
accompany publication of regulations having major intergovernmental importance.
•
(3) Prepare the text of a Federal Register notice (usually an Advance
Notice of Proposed Rulemaking) to inform the public at the development plan
stage that work is under way.
(4) Schedule open conferences, hearings, meetings, and direct mail-
»
ings, and keep a mailing list of those interested in receiving draft regu-
lations and other materials.
(5) Make available a draft of the Regulatory Analysis (when one is
required) by the time we publish a Notice of Proposed Rulemaking. The
Federal Register preamble will have a summary of the Regulatory Analysis
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and information on how the public can obtain it. (Note: EPA will make
public a final Regulatory Analysis when it publishes the final rule.)
(6) Provide at least 60 days for public comment, measured from the date
the proposal is published/ and refrain from requiring commenters to supply
multiple copies of their comments. In any instance in which a 60-day comment
period is not possible the proposal will contain a brief statement of the
reasons for the shorter time period.
(7) Summarize outside comments, indicate EPA's response to major points
and distribute both to interested individuals and groups. (We currently
summarize comments and our responses in preambles to our regulations).
(8) Write the regulation and explanatory materials clearly. To help
lead offices write regulations that people can understand, EPA will develop
a style book for regulation writers, select one or more regulations and
develop them as models of good writing, and hire an editor to assist in the
review of regulations before they are published.
(9) Track any Agency overlap or joint interest with other members of the
«
Inter agency Regulatory Liaison Group. The preamble for regulations of interest
to other IKLG members will describe coordination efforts and how they have
affected the substance and procedure of the regulation.
(10) Communicate with other Federal agencies affected by a planned regu-
*
latory action. EPA's lead office is encouraged to contact another Federal
agency when the other agency (a) has a statutory mandate in the area to be re-
gulated, (b) has a program established or authorized in the area to be regu-
lated, (c) will require additional resources because of the EPA action, or (d)
has important expertise relevant to the matter to be regulated. (Note: Where
possible, these interagency issues will be resolved at the staff level.)
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PART C. ANALYSIS
The Executive Order calls for careful analysis of available
regulatory alternatives. In this Part we propose criteria and procedures
for EPA analysis of (1) the economic effects of new Significant regulations
and "(2) regulations the Agency has already issued.
(1) Economic Analysis for New Significant Regulations
Other parts of this report (see Part A) describe the range of analy-
ses that EPA will provide for all Significant regulations; EPA will assess
the health, ecological, economic, urban, energy, and program resource im-
pacts. This subpart provides further detail on EPA's economic analysis
requirements. In each economic analysis the lead office will indicate by
reference the parts of the decision package that analyze the benefits the
regulation will generate. This will provide to the extent possible a full
identification of the regulation's costs and benefits.
The extent of analysis of the economic impact of new Significant regu-
lations will depend on whether the regulation is Routine, Major, or subject'
to the "Regulatory Analysis" requirements of the Executive Order. Guide-
lines based on our current internal requirements are presented for each of
these categories. The guidelines in subpart (a) apply to those Major regu-
lations that meet the criteria (Chart 4) that trigger a Regulatory Analysis.
Not all regulations requiring a Regulatory Analysis will lend themselves to
the analytic approach in the guidelines. In these cases, the lead office
with the advice and assistance of the work group may amend the approach to
suit the circumstances. For other Major regulations a less intensive
analysis is sufficient, as described in subpart (b). For Routine regula-
tions the basic guidelines in subpart(c) apply.
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CHART 4
•
CRITERIA FOR CONDUCTING REGULATORY ANALYSES
The lead office will prepare a Regulatory Analysis of potential economic
impacts for any regulation that triggers one of the following criteria:
1. Additional annualized costs of compliance, including capital
charges (interest and depreciation), will total $100 million
(i) within any one of the first five years of implementation, or
(ii), if applicable, within any calendar year up to the date by
which the law requires attainment of the relevant pollution stan-
dard.
2. Total additional cost of production of any major industry product
or service will exceed 5 percent of the selling price of the product.
3. Net national energy consumption will increase by the equivalent of
25,000 barrels of oil per day (equal to 50 quadrillion Btu per year,
or 5 billion kilowatt hours per year).
\ 4. Additional annual demand will increase or annual supply will decrease
by more than 3 percent for any of the following materials by the
attainment date, if applicable, or within five years of implementation:
plate steel, tubular steel, stainless steel, scrap steel, aluminum,
copper, manganese, magnesium, zinc, ethylene, ethylene glycol, liqui-
fied petroleum gases, anroonia, urea, plastics, synthetic rubber, or
pulp.
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'.jKuw ^,^t " jtSfcT • *./ A.
(a) Guidelines for Regulatory Analysis
The lead office will base its Regulatory Analysis on the general approach
•
described below. EPA now uses this approach to determine the costs of such
regulations as effluent guidelines and new source performance standards. Some
types of regulations may require a modified approach. Sewage treatment plant
regulations and some solid waste regulations that affect primarily other govern-
ment agencies are examples that do not require industry segmentation as part
of the analysis. In these and other appropriate cases, the lead office may
amend the approach as needed.
General Approach
1. Prepare an economic profile of the affected sectors (producers
and/or consumers), including the industry structure (e.g., degree
of concentration, the way prices are determined), the type of
competition in the affected sectors, and performance trends
(e.g., financial rates, growth trends) of the affected sectors.
2. Segment the industry (or other affected groups) into categories
of economic units that will be similarly-impacted (e.g., accord-
ing to size distribution, pollution control process, age).
3. Develop marginal (incremental) cost effectiveness curves
for each process/strategy for each affected industry segment.
4. Analyze the economic impact of proposed standards and of alter-
natives including any economic benefits from regulation such as
the generation of new product markets and new employment oppor-
tunities. It may not be necessary to analyze all alternatives
in the same level of detail. The following impacts will be
analyzed when feasible:
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(a) price effects
(b) production effects
(c) industry growth, profitability, capital availability effects
(d) employment effects
(e) community effects
(f) balance of trade effects
(g) energy effects
For grant programs, some impact categories are not applicable, although user
charges (as an analogue to price), effects on communities (affordability,
employment, growth), and energy effects may be applicable.
EPA has developed more detailed internal working guidance to assist
program offices in conducting their economic analyses. It is available upon
request from Frans J. Kok, Director, Economic Analysis Division, EPA,
Washington, D. C. 20460.
Alternatives
Although the decision package for a regulation will address alternatives
available under the authorizing statute, the lead office may during its
analysis identify attractive regulatory alternatives that cannot be imple-
mented under existing law. EPA will review such alternatives and where
appropriate develop the alternative in another forum.
»
The analysis should cover the important alternatives that EPA has con-
sidered. Such alternatives may include:
1. Alternative types of regulations
o no additional regulatory action (e.g., reliance on market
forces).
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o an informational requirement where applicable (e.g., product
labeling).
o approaches that specify performance levels (e.g., an allowable
. level of emissions) but allow those regulated to achieve
attainment by whatever means they prefer.
o engineering design approaches that specify how a proposed
outcome is to be achieved.
2. Alternative stringency levels
o making the standard or regulation either more or less
stringent.
o specifically tailoring the degree of stringency to stages
of processing, particular industries or other pertinent groups.
3. Alternative timing
o using different effective dates.
o phasing in the requirement more or less gradually.
4. Alternative methods of ensuring compliance
o use of economic incentives.
o various enforcement options (e.g., on-site inspections vs.
periodic reporting, sharing implementation responsibilities
variously with the different levels of government).
o use of different compliance methods for different industry
segments or types of economic activity where costs of
compliance vary sharply (e.g., treating small firms and
large firms differently).
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(b) Other Major Regulations
For Major regulations that do not require a Regulatory Analysis, the
lead-off ice will conduct an analysis for EPA purposes. This will follow the
same general approach as outlined above, although it will not have the same
level of detail as a fonnal Regulatory Analysis.
(c) Routine Regulations
EPA will continue to analyze all Routine regulations for insights into
the potential effects on the economy and on those who are subject to the
regulation.
To minimize the burden on lead offices, this analysis will be less
sophisticated. It will include the following estimates:
o the number of establishments that will be affected
o an estimate of the total costs that will be borne by each
affected industry segment
o an estimate of the price increases under an assumption that
cost changes will be reflected in prices
o an estimate of lost revenues for each segment if costs
are not fully reflected in price changes
o an estimate of job losses
o an estimate of total energy losses for each affected industry
segment
This analysis will cover both the proposed regulation and, if
applicable, the alternatives considered; however some alternatives may be
analyzed in less detail.
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Review of Existing Regulations
Section 4 of the Executive Order calls for the review of existing
regulations. To comply with Section 4, EPA must establish a set of criteria
that"will be used to select regulations for review and identify a list of
possible regulations for review. Section 2 of the Executive Order requires
that each new Significant regulation include a plan for its future evaluation,
(a) Selection Criteria and Process
Many of EPA's most important regulations are already scheduled for
review in response to statutory or judicial direction: .
Air Program o Ambient Air Quality Standards (40CFR Part 50}
o New Source Performance Standards (40CFR Part 60)
o Approval of State Implementation Plans (40CFR
/
Parts 51.7, 51.17)
Water Program o Best Available Technology for Primary Industries
o Water Quality Management and Standards Regulations
o NPDES Permit Regulations
o Construction Grants Regulations
These reviews will be- the first scheduled. To make the review of
existing regulations a comprehensive program, EPA proposes to screen all of
its existing regulations for the purpose of selecting regulations for more
detailed review. The screening will occur during the first year following
the adoption of this report. The EPA program office responsible for each
subchapter of Title 40 of the Code of Federal Regulations (which contains
almost all of EPA's regulations) will form a work group to conduct the
screening.
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The lead office, with the advice and assistance of the work group,
•will rely on currently available data in its initial screening. The
selection criteria are:
o Estimated high actual costs to the public of implementation and
maintenance of the regulation,
o Estimated low actual benefits;
o Existence of overlap with other regulations (issued by EPA or another
agency);
o Need for integration with other programs
o Existence of preferable alternatives;
o Low degree of compliance;
o Low enforceability;
o High reporting burden;
o Lack of clear language;
o Length of time since the regulation become effective or was
last substantively amended;*
o Intensity of public sentiment in favor of changing the regulation;
o Availability of adequate data for analysis of the effectiveness
and cost of the regulation.
The lead office will summarize its assessment of each regulation and
»
designate appropriate regulations for formal review. It will prepare a plan
to review all regulations selected within five years.
* For example, EPA is now writing regulations which may be adopted within the
next year, including regulations to implement a hazardous waste control program,
identify criteria for acceptable landfills, "and set various new air quality and
drinking water standards. Such new regulations will not be subject to the
screening or review requirements listed in this Part. They are subject to sub-
part (c) of this part which asks that each new Significant regulations contain
an "evaluation plan".
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* The review plan will include an estimate of the necessary dollar
resources and identify data needed for the reviews. Where there are in-
sufficient data for review, the plan will include provisions for obtaining
it. The lead office should make any request for additional or reprogrammed
'resources to carry out its review plan through the zero base budget process.
The lead office will submit designated regulations and review plans
to the Steering Committee for review and to senior management for approval.
(b) Nature of the Review
Ctoce it has selected a regulation for review, the lead office
will conduct the review at the time scheduled in the five year plan with
the advice and assistance of a work group.
The review of existing regulations will .follow the procedures for
the development of new regulations. The review will not unnecessarily
duplicate any analyses made when the regulation was first issued if the
analyses are still valid and meet current quality standards.
(c) Development of Evaluation Plans
Section 2(d)(8) of the Executive Order requires that each new Sign-
ficant regulation have a plan for evaluation of its effectiveness. In compli-
ance with this requirement, the lead office for each Significant regulation
will develop an evaluation plan. Evaluation plans will indicate the resource
needs, data requirements, and a schedule for conducting the subsequent evalua-
tion. Evaluation plans are intended to improve the relevance and adequacy of
of data collected over time to support the analysis of regulatory effectiveness,
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D« Feporting Burdens Reductions
*
To carry out its statutory mandates, EPA must obtain a significant
amount of data from the public, industry/ and State and local governments.
We often request data on environmental (health) effects, economic parameters,
pollutant discharge and emission rates, and much more. EPA's permit and
grant programs also require submission of applications that often contain
detailed requests for information.
While this information remains essential, EPA is designing mechanisms
to minimize paperwork and reporting burdens wherever possible. These
devices will comply with Section 3{d) of the Executive Order, which requires
an analysis of new reporting or record-keeping burdens before Significant
new regulations are adopted; and with Section 4 which requires a review
of burdens imposed by existing regulations.
First, EPA will establish a "sunset" policy on reporting requirements
contained in new regulations. This will terminate automatically those
reports that cannot be justified after a set period, usually five years.
If a lead office requests renewal of a reporting requirement, EPA will
conduct an internal review of its costs and its benefits. The reporting
requirement will not expire during the time it is under review. The review
process will include an early opportunity for public comment. Only after
this review, and upon order of the Administrator, will a reporting require-
ment continue beyond its sunset date. (See the Appendix for details of this
policy.)
Second, EPA will require a "reports impact analysis" for all new
Significant regulations. This analysis will be part of the decision
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package as it moves through the stages of regulation development described
in Part A. The analysis will describe the reason for the reports, evaluate
major alternatives (including the use of existing sources of information),
outline the information requested and the form of the report, and estimate
the costs for the Agency and for those reporting to collect, prepare and
use the data. EPA will- consider public comments on the analysis prior to
proposing the regulation.
t
ghird, EPA will continue to include a request for public comment on
reporting burdens in the Federal Register preambles or proposed new regula-
tions . In the past, EPA has sent these comments to the Office of Management
and Budget when seeking OMB clearance for the report. The lead office and
work group will consider these comments in drafting the final regulation.
Fourth, as part of its review of existing regulations (according to
Part C.2 of this report) SPA will review the reporting and recordkeeping
requirements. These reviews will _follow the public participation
measures used for new regulations.
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APPENDIX
PROPOSED SUNSET POLICY FOR NEW REPORTING REQUIREMENTS
•
I. COVERAGE
New regulations that impose a reporting requirement will contain a
provision for repeal of that requirement on a specific date unless action
is taken by EPA to renew or modify it.
We will establish a review process to place a continuing burden of
proving the report's desirability on those advocating its retention. The
process will include participation by affected parties and the general
public.
Each lead office proposing a new regulation that will impose a
reporting requirement must include a sunset provision. The lead office
will have three options:
,-
1) To set as a termination date the semiannual sunset date (April
1 or October 1) that falls within 5 years after reporting be-
gins (e.g., a reporting requirement taking effect on January
•
1, 1979 would expire not later than October 1, 1983).
2) To set an earlier or later sunset date, depending on such
factors as the lifespan of the program for which the infor-
mation is being sought; the time needed to evaluate the
usefulness of the report; and the burden that frequent
changes in the reporting requirement might impose.
3) To exempt the reporting requirement from the sunset
process if the resources that would be needed for a sun-
set review are greater than the burdens imposed by the
report itself, or if the report is required by statute.
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*II. REVIEW
The review process will begin six months before the scheduled sunset
date. At that time, EPA will publish in its Regulatory Agenda a list
of reporting requirements due to expire on the next semiannual sunset date.
This notice will invite public comment on the need to review, modify or
'??'>*>
•-"'terminate any of the requirements scheduled to expire. The EPA lead office
administering the requirement and any outside party affected by the program
may request renewal for an appropriate period.
After 60 days, another public notice will list those reporting require-
ments for which renewal has been requested. It will invite further public
comment to be included in a public.docket for each requirement.
The lead office that administers the requirement will evaluate it,
inviting other interested EPA offices to participate on a work group.
The evaluation will resemble the reports impact analysis for new regulations,
but will reflect the actual costs, burdens, and usefulness of the reporting
•
requirement. The program office and work group must either provide a justi-
fication for renewing the requirement or recommend that it be modified or
terminated. EPA's Program Reporting Division
will review the assessment and make a recommendation.
»
The Steering Committee will review the assessment along with public
comment and Agency responses to those cotmients and recomnend to the Admini-
strator that he renew, modify, or terminate the reporting requirement.
Upon his approval the Administrator will sign an order implementing the
decision.
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On the sunset date, a Federal Register notice will list those regula-
•
tlons repealed and those renewed. Reporting requirements will not lapse
while they are under review. In the case of a regulation for which modifi-
cation is proposed EPA will retain it until the Agency completes procedures
to implement the modified regulation.
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