United States      Regulation and Information  June 1984
Environmental Protection   Management Division
Agency        Office of Standards & Regs.
          Washington.DC 20460

Regulation

Management  Series
A Decision System For
Regulatory Development

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           A DECISION SYSTEM FOR REGULATORY DEVELOPMENT
                           INTRODUCTION

      Over  the  last  several months,  we  have  adopted  a  number  of
 innovations  in our  internal  procedures for  developing and  review-
 ing  regulations and  other policy documents.  We  adopted  these
 changes  with several objectives  in  mind—to improve the  oppor-
 tunity for top management to direct Agency  policy,  promote more
 systematic assessment  of policy  options, establish  standards
 for  decision documents  and support  analyses, and use  the Agency's
 management and analytic resources more efficiently.

      I have  approved three principal documents that establish
 these changes:      '

     1.    The  Options  Selection/Rejection Process.  This decision
 procedure  gives the  Administrator,  the Deputy Administrator,
 Assistant  Administrators, and Regional Administrators the  oppor-
 tunity to  participate  in a rulemaking  before the rule's  decision
 package  undergoes' Steering Committee Review.  Under this process,
 these senior Agency  officials meet  to  consider an array  of options
 for  the  rulemaking--presented by the lead program office—early
 in the development of'  the' rule.  These options meetings  are"
 chaired  either  by jthe Deputy' Administrator  or the lead office.'s
 Assistant  Administrator (depending  on  the scope  and complexity
 of the rulemaking).  At these meetings, the participants discuss
 the  options  that:'are presented, and attempt to reach  a consensus
 of the best  approach '£6''take. f Issues  not resolved  at the  first
 meeting  are  addressed at subsequent options meetings.

     2.    The Criteria and Guidelines  Memorandum.   This  document
 sets forth general criteria  that all Agency rules and other  policy-
 setting  actions must satisfy before they can be  approved by  the
 Administrator.   The  Document also sets  out  specific substantive
 guidelines for  developing and reviewing a rulemaking  action--
 explicitly relating  each guideline  to  a given stage'in the regu-
 latory development process.  Taken  as  a whole, the  document  sets
 the Agency's standards for acceptable  policy products.

 3.   The Memorandum on Procedures for  Regulation Development
 and Review.  This document provides a  comprehensive statement
of the required procedures for developing a rule, taking into
 account  the  innovations introduced  by  the Options Selection/
Rejection Process and the Criteria  and Guidelines memorandum.
The document also spells out the internal review processes
 (Steering Committee'  and Red Border  reviews), and adapts  them
 to recent Agency organizational changes.

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                               -2-
     Taken together,  these three documents give the Agency a
comprehensive system  for making decisions on regulatory poli-
cies.  I urge you to  become familiar with them and rely on them
in planning and carrying out your rulemaking responsibilities.
                                      Alvin L. Aim
                                  Deputy Administrator
                                      JUNE 7, 1984

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          UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                      WASHINGTON. D.C. 20460


                           NOV  41983
                                                         OFFICE OF
                                                      THE ADMINISTRATOR
MEMORANDUM

TO:       Assistant  Administrators
          General  Counsel
FROM:     Alvin  L. Aim
          Deputy Administrator

SUBJECT:  Options Selection/Rejection Process


     Attached is a description  of  the regulatory options
selection/rejection process which  was approved at our meeting
on November 1.

     As we agreed, incorporated into  the  description of the
Level II process are statements designed  to clarify the
circumstances under which Steering Committee options meetings
would be convened.
cc:  Regional Administrators
     S. Schulhof
Attachment

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                    PROCESS  FOR  LEVEL  I  REGULATIONS
            Deputy Administrator  selects  the  rules  from nominations
            by  the lead  office AA, OPPE,  OGC  and  other interested
            parties

            Purpose of the  quarterly  planning meetings (chaired
            by  DA) is to:

             —Give status overview  of Level I rules

             —Provide  advance notice of rules that will  be
               ripe for an options review during the  quarter*

             —Decide which AAs  and  RAs  in addition to the lead
               office,  OPPE, OGC and ORD should participate  in
               options  review meetings and whether DA chooses
               to chair the meeting  or designate the  lead AA
               as chairman.

            Options  review  meetings for each  regulation will  occur
            whenever a decision point is  reached and will  be  sche-
            duled  through the quarterly planning meetings  or
            independently if necessary.   They will be  called  by
            the chairman on the advice of  the lead office  or  other
            affected parties.  The initial meeting will be held
            very early in the development  process—typically  as
            part of  the  process of approving  a development plan—
            to serve as  a guide in the basic  research  and  analysis.

             —Lead AA  circulates options paper to all participants
               10 days  before meeting

             —Lead AA  briefs, with  reactions from other  participants

             —If resolution is  not  reached  on which  options
               should be retained for further analysis and which
               might be rejected, each AA presents recommendations
               in writing  during week following options meeting

             —OPPE serves as secretariat to DA, documents results
               of meeting  and options rejected or selected, and
               issues closure memo (which will be a vehicle  for
               raising disagreements to the  DA for resolution
               when necessary).

           Would cover about 20-30 rules each year
* Perhaps a specific day each month would be set aside so that
  the options reviews could be slipped easily into AA's schedules.

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                 PROCESS FOR LEVEL II REGULATIONS
     Level II covers all other rules under development, including
a large number of routine, non-controversial rules for which a
formal options selection process would not be appropriate.  The
options selection review for Level II rules would normally apply
only to rules that are of sufficient importance to undergo a
Steering Committee review.  Approximately 40-50 Level II rules
a year would be subject to options selection review.

     o  Options selection will be under the direction of the
        lead program Assistant Administrator with participa-
        tion of other affected program offices, Office of
        Research and Development, Office of the General Counsel,
        and Office of Policy, Planning and Evaluation.  This
        process will typically be performed through the work
        group, and initial selections will be incorporated in
        the development plan.  Subsequent options selection
        meetings, as required to further refine and limit
        options for development, will also be the responsi-
        bility of the lead program Assistant Administrator.

     o  OPPE lead analysts will be responsible for periodic
        reports to the Steering Committee Chairman.  These
        reports will outline work group progress, including
        options under consideration and those rejected.

     o  Each participating office will be responsible for
        raising to the Steering Committee Chairman—through
        its Steering Committee representative—those options
        with merit which, in" its judgment, are not being
        investigated, or which have been rejected wrongly
        or prematurely.  Before raising the issue to the
        Steering Committee Chairman, reasonable attempts
        should be made to resolve concerns by working with
        the lead program Assistant Administrator.

     o  If these attempts to resolve the issue prove unsuc-
        cessful, Steering Committee options meetings would
        be convened at the request of Steering Committee
        representatives or by decision of the Steering
        Committee Chairman.  The AA's representative must
        be able to speak for and bind the AA when such
        meetings have been called.

     o  In such cases, the Steering Committee determines
        options for consideration; when the Steering
        Committee is unable to achieve closure, it iden-
        tifies disagreements to be raised to the affected
        AAs and DA.

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                          -2-
o  OSR documents results of such meetings and options
   selected or rejected.

o  OD/OSR signs and circulates closure memo to participants
   and AA/OPPE.

o  Lead office will include as part of the Steering Committee
   and Red Border packages a summary of options considered
   and rejected, as well as why and when each was rejected.

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             UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

                        WASHINGTON, D.C. 20460


                           JAN 3 1 1984


                                                          OFFICE OF
 MEMORANDUM                                             THE ADM.NISTRATOR


 SUBJECT:  Criteria  and  Guidelines  for Review  of Agency Actions
 FROM:      Alvin  L. Aim
           Deputy Administrator

 TO:        Assistant Administrators
           General Counsel
           Inspector General
           Associate Administrators
           Regional Administrators
           Agency Office Directors


     To assure that Agency regulations  and  other  policy-setting
 actions are of high quality, present defensible options,  and
 meet the Administrator's policy goals,  I have  established general
 criteria that regulations and other general statements  of policy
 must meet  to be  deemed acceptable for the Administrator's consid-
 eration.   I expect you to do your best  to ensure  that each of
 your decision packages satisfies these  criteria.   For each rule-
 making, I  will solicit the independent  advice  of  OPPE on  whether
 these criteria — and the associated guidelines — have  been  appropri-
 ately taken into account.  However, I will  hold the  program offices
 accountable for  consistency wit-h these  criteria,  as  well  as for
 timeliness and policy.

     This memorandum will set out:

       o   in section I, general criteria that  regulatory  actions
          must satisfy to be considered acceptable;  and

       o   in section II, guidelines for developing Agency
           regulatory actions.

The guidelines in section II are divided into  units  corresponding
to the main stages in developing an Agency  action.   The intention
is to bring into focus those considerations that  should be para-
mount for you at each stage in the regulatory  development process.

     I should add at the outset, that I am  well aware of  the enormous
differences among rulemakings, and even, for a given rule,  between
its proposal and the final promulgation.  In offering the criteria
and guidelines that follow, therefore,  it is with  the understanding

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                              -2-


that  not  all  will  be  equally  relevant or appropriate to any given
individual  case.   For example,  in  the case of minor rules, emergency
actions,  or purely administrative  rulemakings, many of the criteria
will  apply  very loosely  or  not  at  all.


I.    POLICY CRITERIA  FOR ACCEPTABLE AGENCY ACTIONS

      The  Agency's  primary goal  is  to develop standards and regulations
that  protect  human health and the  environment.  Ultimately, the most
important criterion for  evaluating any of our actions is the extent
to which  they achieve this  goal.

      Given  this responsibility, and within the limits of time,
resources,  and statutory authority, any Agency standard, regulation,
or other  policy-setting  action  should achieve high levels of environ-
mental protection  and the best  possible combination of the following
criteria:


      A.   Compared  with  the feasible alternative options, the
          action produces the greatest net benefit to society.

      B.   As  a means  of  achieving  efficient outcomes, compared
          with all  the alternative options, the action allows
          maximum  flexibility in compliance with standards or
          rules—for  instance,  where possible, specifying perfor-
          mance or  end-results  rather than means.

     C.   To  the extent  possible,  the action encourages environ-
          mentally  acceptable innovation in the regulated community—
          for example, by encouraging the development and use of
          better or more  efficient control technology, or providing
          incentives  for  the development of safer products.

     D.   The action  is  consistent with other regulatory programs—
          EPA's, the  States' and those of other Federal agencies—
          and complements them  where possible, especially when
          they affect the same  regulated community.

     E.   Consistent  with meeting  the other criteria, the action
          places the  least possible burden on the public and
  :        regulated parties with respect to reporting, record-
          keeping, and information collection requirements.

     F.   The action  avoids disrupting competitive markets, or
          is the least disruptive of the alternative options
          with similar levels of net benefits.

     G.   The action  can  be smoothly implemented and adequately
          enforced by those responsible for doing so, within
          likely budget/resource constraints.

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                                   -3-


          Often no one action consistent with our primary goal  of
     protecting the public dominates all others with respect to these
     criteria.  In that case, unless an explicit choice has been made
     by the Administrator at a previous stage,  alternatives must be
     presented for his consideration accompanied by the recommendations
     of all the offices that have  participated  in developing the action.


II.  GUIDELINES FOR INTERNAL DEVELOPMENT AND REVIEW OF DECISION
     PACKAGES

          The process  of developing  a regulatory action can be  divided--
     in terms of work  products—into four stages:

            o  submission of start action request (SAR),

            o  preparation of the  development plan,

            o  development of options in conjunction with
                 the options selection process,  and

            o  drafting of the regulatory decision package.

          The guidelines for each  of  these stages  are the following:


     A.    The Start Action Request (SAR)

          Before you submit  a SAR, you should determine that, to the
     best  of  your knowledge:

          1.    The action  responds to a  clearly  defined problem that
               requires regulatory action.

          2.    The action  will be  consistent  with,  and adequate to,
               the statutory mandate.

          3.    The action  is  not likely  to duplicate or conflict with
               other regulatory programs,  either at  EPA or at other
               Federal  agencies, without  adequate  justification.

          4.    The action  will  coordinate  its approach with  that of
               other relevant  Federal and  State  programs  that affect
               the same  prospective regulated community.

          5.    This is  the appropriate time to develop the action, and
               the effort will make the  best  use of  our resources  in
               view of  competing priorities.

    B.   The Development  Plan

         The development  plan  (where  required)  sets forth the  basic
    policy and  management framework  for  developing  the regulation.
    You should  ensure  that:

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                        -4-
1.   The plan  states the need for the regulation and
     identifies  its goals and objectives.

2.   The plan  discusses the prima facie reasonable, legal,
     and technically feasible options, including;

      -  no action;

      -  alternatives to Federal regulation, including
         market, judicial, or State or local regulatory
         mechanisms;

      -  alternatives within the scope of the action's
         legislative provision, including degree of
         control, effective compliance dates, and
         methods of ensuring compliance.

3.   The plan  identifies any alternatives that may be
     environmentally or administratively preferable, or
     more cost-effective, but that currently cannot be
     considered because they are precluded under existing
     law.

4.   The plan specifies any generic decision rules drawn
     from current or historical Agency policy that will
     be used to choose among the options.  (For example,
     certain generic forms of regulations are compared
     on the basis of the cost of pounds of pollutants
     reduced.)

5.   The plan presents a work plan for developing the
     regulation that outlines, as appropriate;

      -  the areas that projected analyses will cover,
         including, as applicable: health and environ-
         mental risks, benefits, economic impacts,
         effects on small entities, paperwork and record-
         keeping burdens, potential for fraud, waste, or
         mismanagement;

      -  the major areas of technical uncertainty, and how
         we plan to resolve them;

      -  the major tasks that will be performed—from the
         first work group meeting to the final promulgation
         of the regulation—and milestones for each task;

      -  the Agency offices—including EPA Regional Offices-
         that will participate in developing the rule, and
         the choice of the work group chairperson;

      -  other agencies, States, and others that will be
         involved in developing the regulation, and the
         nature of their involvement;

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              the mechanisms for communicating with participants
              external to the Agency, other affected parties,
              and the general public during the regulatory
              development process; and

           -  the Agency personnel and contract resources that
              will be necessary to develop the regulation.


C. The Options Selection Process

     The options selection process involves the formulation of,
and selection among,  feasible options, connected with one or a
series of decision points that successively narrows the range  of
alternatives for the  Administrator's final consideration.  At  each
of the decision points the process is supported by the analyses
anticipated in the development plan, performed with respect to the
options that still remain under active consideration.  For each  of
these options, you should ensure that to the extent possible:

     1.   The analyses are based on the best data available
          within the  constraints of the decision schedules,
          taking into consideration;

              uncertainties in the data;

              other technically sound scientific studies
              based on adequate peer review;

           -  anticipated requirements for further research; and

           -  adequate and appropriate statistical data.

     2.   The analyses consider all relevant health and environ-
          mental impacts,  including primary and secondary impacts,
          cumulative  impacts, .and short and long term impacts.
          Especially  for major rules,  the analyses should consider
          these impacts not only in qualitative terms, but—where
          possible—in quantitative and monetized terms as well.

     3.   The analyses consider the relevant economic impacts,
          such as;

              the  effect on product prices,  and overall economic
              output;

              the  impact on foreign trade and competition;

           -   potentially  disproportionate effects on small
              businesses;  and

           -   potential  effects on plant closures or employment.

     4.    The analyses take account of the reporting and record-
          keeping  burdens  that  the option entails.

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                              -6-
           The  analyses  consider  the following  issues related to
           implementation;

           -  the  resources  required for  implementation and enforcement;

           -  the  enforceability of the option;

           -  the  degree  to  which  the option allows for flexibility
             in achieving compliance; and

           -  the  potential  inherent in the option for fraud, waste,
             or mismanagement  in  practice.

           The  analyses  assess impacts on other regulatory programs—
           both within and  beyond the Agency—and overall consistency
           with Agency policy and regulatory strategy.
D.  The Decision Package

     The decision package provides the Agency's brief for the
option(s) it presents, based on the supporting analyses.  You
should ensure that the package clearly presents the results of
these analyses.  Specifically, you should ensure that to the
extent appropriate:

     1.   The package includes a neutral discussion of the
          major options that were considered at the most
          recent decision point in the options selection
          process,including;

          - the comments of any Assistant Administrators
            who were involved in the decision, reflecting
            their preference among the options;

          - the pros and cons of each of these options.

     2.   The package very briefly summarizes the major
          options considered and rejected at earlier decision
          points, indicating (again, very briefly) the point
          at which each option was rejected and why.

     3.   The package very briefly summarizes any legally
          proscribed alternatives that were identified as
          environmentally or administratively preferable, or
          more cost-effective—explaining in each case the
          legal restrictions that operate.

     4.    The package clearly presents;

          -  as appropriate, the comparable costs, risks and
             benefits of the options considered based on com-
             parable assumptions; and

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                               -7-
             a comparison of the action's cost-effectiveness
             with that of any similar regulatory actions.

     5.   The package adequately analyzes reporting and
          recordkeeping burdens, including:

          -  the uses of the required information; and

             effective means to control the quality of
             the information and data processing.

     6.   The package assesses resources for implementing
          the ruler including;

          -  plans for enforcement,  implementation, and
             fpllpw-up actions; and

             resource needs, particularly for regional
             requirements.

     You should also ensure that the package satisfies the
applicable procedural requirements,  specifically that:

     1.   The package has met the requirements of E.O. 12291,
          the Paperwork Reduction Act, the Regulatory Flexibility
          Act,  and EPA's "functional equivalency" requirements
          for compliance with the National Environmental Policy
          Act,  including;

             analytical requirements;

             public participation requirements;

             OMB review requirements;  and

             preamble requirements for appropriate statements
             and certifications.

     2.    The package has met Federal  Register requirementsi
          including vocabulary and format constraints.

     3.    The package complies with  Agency procedures for
          Steering  Committee and  Red Border review, and
          incorporates a "communication plan"  for the
          the proposed action.

     Finally, you  should ensure that:

     1.    The presentation  of the action is adequate, both
          in  internal documents and  in the published rule
          and preamble,  and includes;

             a  clear statement of the  problem;

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                              -8
           -  clear conclusions flowing logically from the
              basic information;

           -  a clear, consistent,  and logical rationale  for
              the proposed or final Agency position;

           -  clear justification for any departures  from the
              environmentally preferable option;  and

           -  presentation of any risk analysis information in
              a clear and consistent format.

           The action includes a mechanism for decision follow
           through, including plans for;

           -  evaluating the effectiveness of  the regulation;

           -  correcting data gaps  identified during the rule
              development process;

           -  analyzing statutory restrictions against  alternatives
              that may be environmentally or administratively
              preferable, or more cost-effective,  for  possible
              corrective action; and

           -  preventing fraud,  waste,  or mismanagement in
              implementing the action.
     The criteria  and  guidelines  set  forth  in this memorandum are
necessary  to  establish adequate policy oversight and quality control
over the Agency's  policy-setting  actions.   I expect you to treat
them as standards  for  acceptable  regulatory development in your
offices.   They will  be the measure  I  will use — with the advice of
OPPE — to assess  your recommendations.  Of course, I expect that we
will all treat these criteria  and guidelines intelligently — recog-
nizing both that not all will  apply,  or  apply equally, in every
case, and  that sometimes the press  of deadlines or the limitations
on resources  will  dictate flexibility.

     I should add  that while some of  the guidelines as set out in
this memorandum  are  rather general, more specific guidance exists
in a number of instances.  Attached to this memorandum is a list
of review  guidelines,  along with  references to relevant guidance
documents.  The  list includes  both  currently available and forth-
coming documents,  as well as their  estimated completion dates.  I
welcome suggestions  of additional areas  where more detailed regula-
tory development guidance is needed.


Attachment

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                            GIJIDANCK FOR DEVELOPMENT AND REVIEW OF REGULATORY ACTIONS

   Tlie chart below lists the questions to be addressed during the four-stage process of developing a regulatory
action, together with sources of official guidance on how  to consider such  issues.
A. The Start Action Request (SAR)

       A Start Action Request represents the
judgment of the lead program office that a prob-
lem requires some action by the Agency.
  Currently Available Guidance
Forthcoming Guidance
o  Does the SAR clearly define  the problem?

o  Does it justify a regulatory approach  to  the
   problem, as opposed to other approaches?

o  Does the proposed action fulfill the statu-
   tory mandate?

o  Will the action conflict with or duplicate
   other regulatory programs, particularly those
   covering the same prospective regulated com-
   mun ity?

o  Will the proposed action make the  best use
   of the Agency's resources, in view of  com-
   peting priorities?  Is this  the best time to
   develop the action?
Procedures for Regulation Develop-
 ment and Review (Office of Stan-
 dards and Regulations, OPPE, 4/82)
 UNDER REVISION

Checklist of Regulatory Alternatives
 (Office of Planning and Management,
 7/80)

Managing the Process (Office of
Standards and Regulations,OPPE,8/82)

EPA Chemical Activities Status Re-
 port (Chemical Coordination Staff,
 OPTS, 6782 and CIS)

Overview of the Industry File Index
 System (Chemical Coordination
 Staff, OPTS, 6/83)

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R. The Development Plan
  Currently Available Guidance
   Forthcoming  Guidance
   The development plan sets forth the basic
policy and management framework for developing
the regulation by presenting a preliminary set
of options and their projected analytical needs.
o  noes the plan state the need for the regula-
   tion?

o  Does it present all reasonable and technical-
   ly feasible options, including:
   o   alternatives to Federal regulation, in-
       ding market, judicial, or State or local
       regulatory mechanisms; and
   o   alternatives within the scope of the ac-
       tion's legislative provision, including
       degree of control, effective compliance
       dates, and methods of ensuring compli-
       ance?

o  Does the plan identify any generic Agency de-
   cision rules that will dictate a choice among
   the options?

o  noes the plan outline projected analytical
   requirements, including (as applicable):
   o   health and environmental risks;
   o   benefits;
   o   economic impacts;
   o   effects on small entities; and
   o   paperwork and recordkeeping burdens.

o  Does the plan identify major technical un-
   certainties and their possible resolution?

o  Does the plan identify major tasks and pro-
   vide milestones for them?
Checklist of Regulatory Alternatives
(op. cit.)

Managing the Process (op.cit.)

Procedures for Regulation Develop-
 ment and Review (op. cit.)

Procedural Requirements of Executive
 Order 12291(President Reagan,2/81)

Regulatory Options Selection/Rejec-
 tion Process (Memo from Alvin Aim,
 11/83)

Compliance with the Regulatory
 Flexibility Act (Memo from Ron
 Smith to Steering Committee Repre-
 sentatives, 4/83)

Guidelines for Performing Regula-
 tory Impact Analyses (Office of
 Policy Analysis, OPPE, 11/83)

Chemical Substances Designation
 (Chemical Coordination Staff,
  OPTS, 12/81)

Checklist for Regional Review (Of-
 fice of Standards and Regulations,
 OPPE
Feasibility Study Guidance
 Document (Office of Policy
 and Program Management,OSWER,
 1/84)

Planning and Budgeting Manual
 (Office of the Comptroller,
  ARM, 3/84)

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Development Plan  (Continued)
                                                  Currently Available Guidance
                                         Forthcoming Guidance
Does the plan identify participating Agency
offices and a work group chairperson?

Does the plan identify how and why other Fed-
eral and non-Federal institutions will be in-
volved?

Does the plan anticipate needed personnel
and contract resources?

Does the plan present a mechanism for commu-
nicating with participants external to the
Agency, other affected parties, and the gen-
eral public during the development of the
regulation?
Background Information for Develop-
 ment of Communication Strategies
 (Memo from Josephine Cooper,  8/83)

Federal Activities in Toxic Sub-
 stances (Chemical Coordination
 Staff, OPTS, 5/80) UNDER REVISION

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C. Options Selection Process
  Currently Available Guidance
   Forthcoming Guidance
   The goal of the options selection process is
to present the Administrator with decision pack-
ages which clearly present and analyze realistic
alternatives. The analytical support for these
alternatives, which was anticipated in the de-
velopment plan, is further developed during the
options selection process.
   Are the analyses based on the best data a-
   vailable within the constraints of decision
   schedules, taking  into consideration:
   o   uncertainties  in the data;
   o   other technically sound scientific stud-
       ies based on adequate peer review;
   o   anticipated requirements for  further  re-
       search; and
   o   adequate and appropriate statistical
       data?

   Do the analyses consider all relevant health
   and environmental  impacts, not only  in quali-
   tative terms, but  — where possible  — in
   quantitative and monetized terms  as  well?

   Do the analyses consider all relevant econom-
   ic impacts, including:
   o   the effect on  product prices, output
       (i.e.,demand and response);
   O   the impact on  foreign trade  (e.g., GATT);
   o   potentially disproportionate  effects  on
       small businesses; and
   o   potential effects on plant closures or
       employment

   Do the analyses take account of  the  reporting
   and recordkeeping  burdens entailed by each
   of the options under consideration?
Survey Management Handbook; Guide-
 lines for Planning and Managing a
 Statistical Survey (Office of Stan-
 dards and Regulations, Vol.I,11/83)

EPA Chemical Activities Status Re-
 port (op.cit.)

Interim procedures and Guidelines
 for Health Risk and Economic Im-
 pact Assessments of Suspected Car-
 cinogens (Office of Health and En-
 vironmental Assessment,ORD,5/76:

Appendix I:  Interim Guideline for
             Carcinogen Risk As-
             sessment
Appendix II: lnterim~Guideline for
             Economic Impact Ana-
             lysis of Proposed Reg-
             ulatory Actions to
             Control Carcinogenic
             Pesticides
Method for Determining the Unit Risk
 Estimate for Air Pollutants DRAFT
 (Office of Health and Environmental
  Assessment, ORD, fi/80)
                                                   Water  Quality  Criteria  Documents
                                                    (Criteria  and Standards  Division,
                                                     OW,  11/80):
                                                     Appendix  A:  Summary of  Water  Qual-
                                                                 ity  Criteria
Survey Management Handbook;
 Guidelines for Planning and
 Managing a Statistical Sur-
 vey (Office of Standards and
 Regulations, Vol.II, 1/84)

Quality Assurance Manual (Of-
 fice of Monitoring and Qual-
 ity Assurance, ORD, Chapter I,
 10/84)

Procurement and Grants Data
 Base (EPA Information Clear-
 inghouse, ARM, 4/84)

Report of the Administrator's
 Task Force on Toxics Integra-
  tion;
  Guidelines for Risk Assess-
   ment
  Guidelines for Risk Manage-
   ment
  Uniform Reporting Format for
   Risk Management Information

 Risk Assessment for RCRA Reg-
  ulations (Office of Policy
  Analysis, OPPE, 12/83)

Risk Evaluation and Management
 Procedure Manual (office of
 Policy and Program Management,
 OSWER, 7/84)

-------
C. The Options Selection Process  (Continued)

o  Do the analyses consider all relevant econom-
   ic impacts, including:
   o   the effect on product prices, output
       (i.e., demand and response);
   o   the impact on foreign trade  (e.g., GATT);
   o   potentially disproportionate effects on
       small businesses; and
   o   potential effects on plant closures or
       employment?

o  Do the analyses take account of  the reporting
   and recordkeeping burdens entailed by each
   of the options under consideration?

o  Do the analyses assess the  resources required
   for implementation and enforcement, and the
   degree to which the options allow for flexi-
   bility in achieving compliance?

o  Do the analyses assess impacts on other regu-
   latory programs — both within and beyond  •
   the Agency — and overall consistency with
   Agency policy and regulatory strategy?
   Currently Available Guidance
 Appendix B:
 Appendix C:
Guidelines for Deriving
Water Quality Criteria
for the protection of
Aquatic Life and Its
Uses
Guidelines and Methodo-
logy Used in the Prepa-
ration of Health Effect
             Assessment Chapters of
             the Consent Decree Wa-
             ter Criteria Documents

Proposed Guidelines for Mutagenicity
 Risk Assessments (Office of Health
 and Environmental Assessment, ORD,
 10/80)

Assessment of Risks to Human Repro-
 duction and to the Development of
 the Human Conceptus from Exposure
 to Environmental Substances (Office
 of Health and Environmental Assess-
 ment, ORD, 10/80)

Guidance for the Preparation of Ex-
 posure Assessments DRAFT (Office of
 Health and Environmental Assess-
 ment, ORD, 9/83)
             Water Quality Criteria
             for the Protection of
             Aquatic Life and Its~
             Uses
             Guidelines and Method-
                                                    Appendix  C;
                                                                ology  Used  in  the  Pre-
                                                                paration  of  Health Ef-
                                                                fect Assessment  Chap-
                                                                ters of the  Consent De-
                                                                cree Water Criteria
                                                                Documents

                                                   Guidelines  for  Performing  Regulatory
                                                    Impact  Analyses  (op.cit.)
  Forthcoming Guidance

Risk Evaluation and Manage-
 ment Procedure Manual (Of-
 fice of Policy and Program
 Management, OSWER, 7/84)

Draft Policy on Small Business,
 (OPPE, 2/84)

Agency Guidelines for Imple-
 menting the Paperwork Reduc-
 tion Act Requirements (Office
 of Standards and Regulations,
 OPPE,   /84)

Guidelines for Evaluation
 Planning (Office of Standards
 and Regulations, OPPE,   /84)

Guidance on Meeting the Func-
 tional Equivalency Require-
 ments of the National Environ-
 mental Policy Act (NEPA~j
 (Office of Federal Activities,
  OEA, 2/84)

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D. The Decision Package
  Currently Available Guidance
  Forthcoming Guidance
   The decision package is the Agency brief for
the options it presents, and is based on the
suppporting documents.  To be effective, the
package must clearly present the results of
these analyses.

o  Does the package neutrally present the most
   recently considered major options from the
   selection process, including:
   o   the pros and cons of each of these op-
       tions; and
   o   the comments of the AAs who were involved
       in the decision, along with their prefer-
       ence among the options?

o  Does the package briefly summarize when and
   why major options were rejected earlier in
   the process?

o  Does the package clearly present:
   o   the costs, risks, and benefits of the'op-
       tions considered;
   o   comparable costs and benefits based on
       comparaole assumptions (e.g., comparable
       baselines, or interest and  inflation
       rates); and
   o   a comparison of the options' cost-effec-
       tiveness with that of any similar regula-
       tory actions?

o  Does the package adequately analyze  reporting
   and recordkeeping burdens, including:
   o   the uses of required information; and
   o   effective means to control  the quality
       of the  information and data processing?

o  Does the package assess resources required
   for implementing and enforcing  the rule,
   i nclucl iny :
   o   plans for enforcement, implementation,
       and follow-up actions; and
   o   resource needs, particularly regional
       requ i rements?
Procedures for Regulation and De-
 velopment and Review (op.cit.)

Regulatory Options Selection/Rejec-
 tion Process (op.cit.)

Guidelines for Performing Regulatory
 Impact Analyses (op.cit.)

Survey Management Handbook, Vol.1.
 (op.cit.)
Appendices to the Guidelines
 for Performing Regulatory Im-
 pact Analyses;
 A. Analysis of Benefits
 B. Analysis of Costs
 C. Analysis of the Discount
    Rate
 D. Analysis of Economic Im-
    pacts
 (Office of Policy Analysis,
  OPPE, 1/84)

Agency Guidelines for Imple-
 menting Paperwork Reduction
 Act Requirements (op.cit.)

Survey Management Handbook,
 Vol.11 (op.cit.)

Quality Assurance Manual
 (op.c i t.)

Guidelines for Evaluation
 Planning (op.cit.)

-------
0. Decision Package (Continued)
  Currently Available Guidance
  Forthcoming Guidance
   Has the package met the requirements of Exe-
   cutive Order 12291, the Paperwork Reduction
   Act, the Regulatory Flexibility Act, and
   EPA's "functional equivalency" requirements
   for compliance with the National Environmen-
   tal policy Act (NEPA), including:
   o   analytical requirements;
   o   public participation requirements;
   o   OMB review requirements; and
   o   preamble requirements for appropriate
       statements and certifications?

   Has the package met Federal Register require-
   ments, including vocabulary and format con-
   straints?

   Does the package comply with Agency procedure
   for Steering Committee and Red Border review?

   Does it incorporate a "communication plan"
   for the action?

   Is the action presented adequately, both  in
   internal documents and in the published rule
   and preamble?  Does it include:
   o   a clear statement of the problem;
   o   clear conclusions flowing logically from
       the basic information;
   o   a clear, consistent, and logical ration-
       ale for the Agency action;
   o   clear justification for any departures
       from the environmentally preferable
       option; and
   o   a clear and consistent presentation of
       any risk analysis information?
Procedural Requirements of Execu-
 tive Order 12291 (op.cit.)

Regulatory Options Selection/Rejec-
 tion Process (op.cit.)

Compliance with the Regulatory
 Flexibility Act (op.cit.)

Guidance on Information Clearance
 Requirements (Memo from Ron Smith,
 5/83)

Procedures for Regulation Develop-
ment and Review (op.cit.)

Document Development Handbook (Of-
 fice of the Federal Register)

Federal Register Thesaurus Guidance
 (Office of Standards and Regula-
  tions, OPPE, 11/81).

Background Information for Develop-
 ment of Communications Strategy
 (op.cit.)
Guidance on Meeting the Func-
 tional Equivalency Require-
 ments of the National Environ-
 mental Policy Act (NEPA)
 (op.cit.)

-------
n. Decision Package (Continued)
Currently Available Guidance
Forthcoming Guidance
   Does the action include a mechanism for de-
   cision follow-through, including plans for:
   o   evaluating the effectiveness of the
       action;
   o   correcting data gaps identified during
       the rule development process;
   o   identifying statutory restrictions
       against various actions and analyzing
       these restrictions for possible correc-
       tive action?
                                    Guidelines for Evaluation
                                     Planning (op.cit.)

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            UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
            •            WASHINGTON, D.C.  20460

                             FEB 2 1 1984
MEMORANDUM
                                                          OFFICE OF
                                                       THE ADMINISTRATOR
SUBJECT:  Procedures for Regulation Development  and Review
FROM:     Alvin L. Aim
          Deputy Administrator

TO:       Assistant Administrators
          General Counsel
          Inspector General
          Associate Administrators
          Regional Administrators
          Staff Office Directors

     This memorandum revises a number of the Agency's current
rulemaking procedures set out in the April 30,  1982 memorandum
on this same subject.  The purposes are:

       o  to incorporate the options selection/rejection process
          announced in my memorandum of November 4, 1983;

       o  to provide the mechanisms for ensuring that Agency
          rulemaking conforms to the criteria and guidelines
          set out in my memorandum of January 30, 1984.

       o  to make the rulemaking process as consistent, predic-
          table, efficient, and accountable as  it can be given
          its inherent complexity.

This memorandum — taken together with those setting out the options
selection/rejection process, and the criteria and guidelines--
replaces the April 30, 1982 memorandum referenced above.

     In presenting the revised procedures, this memorandum will:

     1.  Set out the classification scheme that will apply to
         regulatory actions;

     2.  Describe the primary participants in regulatory
         development and review;

     3.  Outline the procedures themselves; and

     4.  Explain the mechanisms for making the process accountable,
         including the Action Tracking System (ATS) .

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                                -2-
The memorandum will  devote  a  section  to  each  of  these, and then
append:  (i)  a  matrix relating the  classification scheme  to elements
of the procedures,  (ii)  a matrix diagram summarizing the structure
of formal  reviews  associated  with  regulatory  development, and
(iii) a  table  listing the specific changes that  this memorandum
makes in current Agency  practice.


I.   Classification  of Agency Regulations

     The Agency must establish priorities among  its regulations
that allow us  to allocate our program, analytical, and management
resources  efficiently.   Regulations that  have major program im-
plications,  that involve especially significant  effects on the
environment  or the economy, or that are  the subject of contro-
versy or widespread  public  concern deserve a  proportionately
greater  share  of the Agency's time and resources.  I therefore
want to  continue the three-level classification  scheme of major,
significant, and minor rules.

     Major rules are those  meeting the definition of "major" in
section  one  of Executive Order. 12291.  A  rule is  significant if
it is not  major but  nonetheless will  have important effects on
the environment, public  health, or the economy,  will present
intermedia issues, or will  affect  th£ administration or operation
of several Agency offices.  Minor  rules are those that are neither
major nor  significant.   They  include  the more specialized and
routine  rules  that affect only one program or sector of the
economy, or  that simply  implement  established Agency policy.

     This  classification bears on  major elements of the procedures
outlined in  this memorandum,  including the process for options
reviews.   All  major  or significant regulations will be covered by
either the Level I or the Level II options review process, while
minor rules  will be  subject to neither.  Attachment (i) summarizes
the relation between the classification scheme and elements of the
procedures.


II.  Participants and Role


     This  section describes the Agency participants who play
important  roles in preparing  or reviewing the regulation packages
that reach me  and the Administrator for our decision.

     A.     Lead  Office

           The  lead office for  a regulation initiates,  and has
     program responsibility for, the  rulemaking.  The four environ-
     mental  program  offices—OAR,  OPTS, OSWER, and OW—have lead
     responsibility  for  nearly all of the regulations covered by
     these procedures.

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                           -3-
     The Assistant Administrator (AA) of the lead office and
his/her designee (the project officer) manage the development
of the regulation.  The lead office organizes the Agency-wide
work group and notifies the designated representatives, and
the project officer chairs the work group sessions.  The lead
office is the primary source of technical expertise, drawing
on other offices to complement its analytical resources.  In
addition, the lead office sets the schedule for the rulemaking
and elicits the participation of other Agency offices and the
public.

B.   Assistant Administrators and the General Counsel

     1.   Program Assistant Administrators

          In addition to heading the lead offices for regulatory
     development, the program AAs review other regulations to
     offer their views and expertise, and to assure the neces-
     sary integration of our programs.  They are represented
     in all Steering Committee reviews.  In addition, they
     participate in options selection reviews, and in Red
     Border reviews that are of interest to them.

     2.   Assistant Administrator for Policy, Planning
          and Evaluation

          The Assistant Administrator for the Office of Policy,
     Planning and Evaluation (AA/OPPE) manages the process
     outlined in this memorandum, supported by his staff in
     the Office of Standards and Regulations (OSR).  As part
     of this,  he oversees the Agency's compliance with such
     external requirements as Executive Order 12291, the Paper-
     work Reduction Act, and the Regulatory Flexibility Act.

          In addition, the AA/OPPE heads the policy review
     of Agency regulations, both directing the Steering Commit-
     tee process, and participating in each Red Border review.
     Supported by a lead OPPE analyst assigned to each regu-
     lation and work group, the AA/OPPE focuses especially
     on analytical quality, program integration, cost-
     effectiveness, and scientific and statistical validity.
     I also rely on the AA/OPPE to promote thorough consider-
     ation of  options and to provide an independent assessment
     of proposed rules for me and the Administrator.

     3.    General Counsel

          The  Office of General Counsel (OGC) reviews regulatory
     packages  to advise the Administrator, Deputy, and Assistant
     Administrators on the legal aspects of each rulemaking.
     OGC lawyers help draft the regulations and their preambles,
     working closely with the lead offices.  The General Counsel
     is represented in Steering Committee reviews, and partici-
     pates in  all Red Border reviews.

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                            -4-
      4.    Other  Assistant  Administrators  and the Regional
           Administrators

           The Assistant Administrators  for Enforcement and
      Compliance  Monitoring,  Research and  Development, Exter-
      nal Affairs,  and  Administration and  Resources Management
      have  lead office  responsibility for  a select number of
      rulemakings generated by  their offices.  In addition,
      these AAs,  and  the Regional Administrators  (RAs), are
      represented in  all Steering Committee reviews and parti-
      cipate  in Red Border  reviews of packages that are of
      specific interest to  them.


C.    Work  Group

      The lead office first convenes the work group shortly
after the  SAR is approved, to  draft the development plan.
The AA for OPPE  and  the General Counsel always send a
representative.  Almost all work groups  also include repre-
sentatives of at least one RA  and of the  AAs for Research
and Development, Enforcement and Compliance Monitoring, and
External Affairs.  Other offices participate when there are
issues involved  that concern them.

      The work group  continues  to meet throughout the
regulatory development process, until the final decision
package is submitted for Agency-wide review.  These meetings
provide a  forum  for  sharing expertise on  the regulation
under development.   Full work  group participation helps
resolve conflicts  at the start, thus enhancing the quality
of Steering  Committee  review.  Full participation also
helps ensure that  all  necessary analyses  are integrated
and that resources are efficiently allocated.


D.    Steering Committee

      The core Steering Committee membership includes a
representative for each of the nine Assistant Administra-
tors  (AAs),  for  the  General Counsel, and  for each of the
Associate  Administrators for Regional Operations and Inter-
national Liaison.  These representatives  should: {1) be
at or above  the  Office Director's level,  (2) be located in
the immediate office of their  AAs (or General Counsel) or
report directly  to their AAs,  and (3) have general respon-
sibilities covering  the entire range of regulatory issues
within the offices that they represent.   Ideally, these
representatives  are  either Deputy AAs or  persons of similarly
senior status.   They speak for their AAs  or General Counsel
and are directly accountable to them.  Regional Adminis-
trators are  included in all Steering Committee Reviews and
are encouraged to  attend meetings on regulations in which
they  have  sufficient interest.  The Director of OSR chairs
the Steering Committee.

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                                -b-
III. Procedures for Developing a Regulatory Action

     In terms of work products, the process of developing a
regulatory action can be divided into four stages:

     o   submission of a start action request  (SAR);

     o   preparation of the development plan;

     o   review and selection of options;

     o   submission of the proposed/final regulatory decision
         package.

     For each of these stages, the procedures consist of certain
requirements that the lead program office must satisfy together
with an associated review process.  The following sections describe
the requirements and review processes at each stage, and their
applicability.  If you are unsure whether a particular requirement
applies in a given case, check with the Chief of the Regulation
Management Staff, in the Office of Standards and Regulations (OSR).

     A.  Submission of Start Action Request (SAR)

     Applicability.  SAR requirements apply to ail rulemaking
subject to OMB review under Executive Order 12291* — except for
approvals of State plans in the various programs (including State
Implementation Plans), pesticide tolerances, Significant New Use
Rules and other routine; high-volume categories of actions.

     Requirements.  Before starting work on a regulation, the lead
office must submit a Start Action Request (SAR) to OSR for the
approval of the AA/OPPE.  No action can enter internal Agency
review without an approved SAR.

     The SAR must:

       o  describe the proposed action and its purpose;

       o  state the statutory authority for the action and
          propose its classification as either major, signi-
          ficant,  or minor;

       o  explain the reason(s) for proposing to initiate the
          action,  and the consequences of not doing so;

       o  certify that the action's relation to other relevant
          programs has been investigated,- and justify any pro-
          jected conflict,  duplication,  or failure to pursue
          possibilities for integration;

       o  explain why developing the action now will be an
          appropriate use of our time and resources.
   See  Attachment fi)

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                                 -6-


      The Review.   OPPE review normally takes  at most  three  weeks,
 which includes a week for review by Steering  Committee  members.
 An approval will bear the signature of the AA/OPPE.   In reviewing
 the SAR, OPPE will determine, in consultation with the  lead office,
 whether the action is major,  significant,  or  minor.

 B.    Preparation of the Development Plan


      Applicability.  Development plan  requirements apply to all
 rulemakings that are classified as major or significant.  However,
 for some significant rulemakings,  OPPE may waive  the  development
 plan requirements when it approves the SAR.

      The Requirements.  The  lead office must  submit the development
 plan to the Steering Committee within  60 days after OPPE approves
 the SAR.   Typically, the lead office prepares the  plan  in consul-
 tation  with the  work group.   As appropriate,  the  plan must  cover
 the points spelled out under  the heading "The Development Plan" in
 my  Criteria and  Guidelines memorandum.

      It is especially important that the plan present a broad array
 of  options for management to  co'nsider  in determining  the most effec-
 tive way  to meet  our regulatory obligations.    Where  the rulemaking
 is  subject to the options selection process,  the  lead program office
 must begin this  process as a  part  of preparing  the development plan.
 Other affected programs,  ORD,  OGC,  and OPPE all participate.

      The  Review.   Development Plans are reviewed  by the Steering
 Committee;  this  normally  takes two  weeks.   The  Chairman of  the
 Steering  Committee must approve all required  development  plans.
 In  the  case of major regulations,  the  AA/OPPE must also approve
 the  plans.   In addition,  where the  plan is  for  a  Level  I  rule, it
 will normally be  reviewed by  the first formal options review meeting
 on  that rule,  which I or  the  lead  program  AA  will  chair.

      Where there  is an accompanying ANPRM,  it receives  Steering
 Committee  review  together with the  Development  Plan.  The ANPRM
must also  undergo Red Border  review, and normally  must  be signed
 by  the  Administrator.


C.    Review and Selection of  Options


 1.    Level  I  Process

      Applicability.   All  Level I rules.

      The Requirements.  At least 10  days before a  scheduled options
review  meeting, the  lead  office must circulate  an  options paper
 for  the rule  in question.  The options paper  should be  based on
the  analyses  specified under  the heading "The Options Selection
Process"  in my Criteria and Guidelines memorandum.

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                                 -7-


      The Review.   The  options  review meetings are chaired by me
 (or,  if I so choose,  the  lead  program AA).   At these meetings,
 the lead AA briefs the participants on the  options,  and the parti-
 cipants attempt to agree  on  which  options  to retain  for further
 development and which  to  reject.   If no agreement can be reached
 on specific options,  the  participating AAs  and RAs present their
 recommendations in writing within  a week after the meeting.  OPPE
 documents results  of  options review meetings, and issues closure
 memos (which serve as  vehicles  for raising  disagreements to me
 for resolution  when necessary).

 2.    Level II Process

      Applicability.  All  Level  II  rules.

      Requirements.  Typically,  the work group serves as the forum
 for the Level II options  selection process  — beginning with its
 first meeting,  which  is convened after the  SAR is approved, to
 draft the development  plan.  The lead  program office calls this
 meeting,  as well as subsequent  meetings at  which  the options are
 refined and selected/rejected for  further development.   When it
 submits the decision package for Steering Committee  and Red Border
 reviews,  the lead  office  must include  a summary of the  options
 considered and  rejected,  stating why and when each was  rejected.

      Where participating  offices believe that options with merit
 are not being investigated,  or  have  been wrongly  or  prematurely
 rejected,  they  must make  reasonable  attempts  to resolve their
 concerns  by working with  the lead  program AA.   If differences
 persist,  they must  then communicate  their concerns to the
 Steering  Committee  Chairman.

      The  Review.  The  OPPE lead- analyst for the rule in question
 reports periodically to the  Steering Committee  Chairman,  outlin-
 ing work  group  progress and  the options considered and  retained
 or  rejected.

      Where  work group  participants are  unable  to  resolve  differences
 over  options  with the  lead program AA,  Steering Committee  options
 meetings  are  convened  — either at the  request of  the Steering
 Committee  representatives or by decision of  the Steering  Committee
 Chairman.   In such cases, the Steering  Committee  determines the
 options for  consideration—or,   if  i.t  is unable to achieve  closure,
 it  identifies disagreements to be raised to me and to the  affected
 AAs.  OPPE  documents the results of  such meetings  and the  options
 selected  or  rejected,   the Steering Committee  Chairman signing the
 closure memo and circulating it to the  participants  and  the AA/OPPE.

 D.   The Decision Package

     Applicability.  All rules, with qualifications  as  noted.

     The Requirements.  The lead office must  prepare  a  decision
package to be submitted for Steering Committee and Red  Border
reviews.  The package  must satisfy the  applicable  guidelines  under

-------
                                 -8-
the heading  "The  Decision Package"  in my  Criteria  and Guidelines
memorandum.   Before  it  is submitted for Steering Committee  review
(or Red Border  review,  in the  case  of minor  rules),  the package
must be circulated  to all members of the  work group  for review
and comment,  and  then approved by the lead program AA.

     In addition  to  the preamble and the  rule itself, the decision
package must  include:

       o  an  action  memorandum signed by  the lead  office AA;

       o  for Level  I and II rules, a summary of:  (1) the options
          considered and rejected,  and (2) why and when each was
          rejected;

       o  for Level  I and II rules, the written comments of any
          Assistant  Administrators  or Regional Administrators
          who were  involved in the  options selection process,
          reflecting their preference among the options;

       o  any Information Collection Requests (ICRs) associated
          with  the rule.   This must be submitted at the time of
          Steering Committee review unless the requirement  is
          waived.  In the case of a waiver, the ICR must be sub-
          mitted  at  the  time of Red Border review; and

       o  any other  important  support documents.

The Chairman  of the  Steering Committee may refuse  to schedule a
Steering Committee review for  any package that does not satisfy
the above requirements.   OPPE  may correspondingly  refuse to begin
Red Border review.

     The Reviews.  Both  proposed and final decision packages
undergo the following sequence  of reviews:

       o  Steering Committee Review.  All major and significant
          rules undergo  Steering Committee review, which normally
          requires two weeks.   For major and many  significant
          rules,  a meeting of  Steering Committee representatives
          is  scheduled.   However, some significant rules undergo
          Consent Calendar review.in lieu of a meeting.  In these
          cases,  OPPE circulates the package to the Steering Com-
          mittee  for comments  in writing, normally due in two
          weeks.

               The Steering Committee determines whether the
          package is ready to  go on to Red Border  review.  This
          includes identifying  the  issues that require resolution
          by  the  AAs, me, or the Administrator.   The Steering
          Committee  recommends  resolutions for those of the issues
          on which the representatives can reach agreement.  The

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                         -9-
   Steering Committee Chairman, the lead office represen-
   tative, and representatives from the affected offices
   then present at least the more important of the issues—
   together with any Committee recommendations—to their
   AAs and to me for decision.  Especially where there are
   disagreements arising from the Steering Committee review,
   the Steering Committee Chairman must ensure that I have
   the views of all the offices concerned.

        OPPE prepares a summary of important issues, comments,
   and agreements arising from Steering Committee review.
   In addition, before the package enters Red Border review,
   the lead office must prepare a summary of important changes
   in the package since Steering Committee review.  The lead
   office summary must address Steering Committee comments.
   Both the OPPE and the lead office summaries accompany
   the package through Red Border review.

o  Red Border Review.  This is the formal senior management
   review of all decision packages, normally limited to the
   AA/OPPE and the General Counsel.  Other non-lead AAs and
   RAs may be included if they have identified issues or
   concerns at the Steering Committee stage and ask to par-
   ticipate in the Red Border review.

        The normal period for a Red Border review is three
   weeks.  If a reviewing office fails to respond by the
   review deadline,  i may ask that the review be terminated
   without their comments.

o  OMB Review.

        Executive Order 12291 requires that all proposed
   and final rules (except those that OMB has exempted) be
   sent to the Office of Management and Budget (OMB) for
   review under the  Order.  Minor and significant rules
   are submitted to  OMB for a 10-day review.  Proposals of
   major rules and a draft regulatory impact analysis are
   submitted to OMB  for a 60-day review.  Final major rules
   and a final regulatory impact analysis are submitted
   for a 30-day review prior to signature.

        The AA/OPPE  must approve Agency documents (except
   SIPs)  for transmittal to OMB before they are sent for
   OMB review under  the Executive Order.  Normally OPPE
   will grant this approval only for documents that have
   completed Red Border review.  However, Red Border and
   OMB reviews may sometimes proceed at the same time if
   OPPE determines that no significant unresolved issues
   remain.  OPPE will continue to have complete responsibi-
   lity for managing the OMB review, including that for SIP
   actions.

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                                 -10-


                In the course of its review,  OMB may comment on the
           rule, or deem it to be "inconsistent with the Executive
           Order."  In either of these cases,  the action memo must
           be revised to explain the issues involved and detail any
           resulting changes to the package.

                OMB also reviews any information collection requests
           (ICRs)  associated with a rule,  under the authority of
           the Paperwork Reduction Act.   This  review begins when
           the proposed rule is sent to  the Federal Register, and
           generally takes 60-90 days.  If OMB has problems with
           an ICR, or if there are changes, the ICR may have to be
           resubmitted when the final decision package is prepared.
           Consult OPPE's memorandum entitled  "Integrating Paperwork
           Review  into the Agency's Regulation Review Procedures"
           for details on timing in this case.

       o   Administrator and Deputy Administrator Review

                The Office of Standards  and Regulations in OPPE
           presents the decision package to the Office of the Admin-
           istrator through AX once the  Red Border and OMB reviews
           are complete.   My staff or the  Administrator's staff may
           raise questions or issues before the decision package is
           presented for final approval  and signature.

                The Administrator and I  will often have reviewed a
           regulation before it reaches  us at  this stage, through
           either  the options selection  process or special briefings
           or decision memoranda.   This  means  that—especially for
           significant and major regulations—we will probably be
           aware of important policy choices and issues before the
           package is presented to us in the form of a final draft.

     Once  the Administrator signs a rule  it is returned through AX
to the Office of  Standards and Regulations, which arranges for
publication  in the Federal Register.


IV.  Scheduling and Accountability

     I have  established  an Agency-wide  Action Tracking System (ATS)
that allows  me to monitor the progress  of many of the rules covered
by these procedures.   The biweekly ATS  reports inform me regularly
of problems  or delays and are designed  to ensure that there is ade-
quate review  time in the development process  for each regulation.

     Each  lead AA must allow adequate time for analysis and review
of each regulation within his or  her program.   This must include
time for the  procedures  in this memorandum, including the options
selection/rejection process,  and  for products specified in my
Criteria and  Guidelines  memorandum.   Lead AAs must also allow suf-
ficient time  for  final review by  me  and by the Administrator.   In
turn, OPPE, OGC,  and other reviewing offices  have an obligation to
complete reviews  in a timely manner.

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Attachment (i)
                     SAR
Development
   Plan
Options
Review
 Analytical
Requirements
Steering
Committee
Review
 Red
Border
 OMB
Review
MAJOR






SIGNIFICANT




MINOR




Yes






Yes




Yes
( unless
specifi-
cally
exempted
Yes,
with approval
by AA/OPPE



,
Yes,
with approval
by Steering
Committee
Chairman
No



1

Covered by
Level I or
Level II
process.


Covered by
Level I or
Level II
process.

Not covered
by the formal
options
process

RIA




No RIA, but
usually sub-
stantial
analytical
support.


Minimal or
generic
analytical
support.

Yes






Yes




No




Yes






Yes




Yes
(unless
specifically
delegated or
exempted )
Yes — for 60-day
(proposal) or
30-day (final)
period.



Yes — for
10-day
period.


Yes — for
10-day
period,
unless
exempt.

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Attachment (ii):
Required Documents and Formal Reviews at the Four Stages of Regulatory Development
                    Symbols "o" = review and approval required
REQUIRED
DOCUMENTS
I. Start Action Request
(SAR)* (Required for
all rulemakings and
policy documents
subject to OMB review
under Executive Order
12291)
I la. Development Plan
[Required for (a) all
major rules, (b) all
significant rules not
specifically exempted
by the AA/OPPE, and
(c) some policy
documents]
lib. Accompanying ANPRM
[Optional]
I I I. Opt ions Papers
[Require for all major
and significant rules]
IV. Proposed and Final
Decision Packages

Vtork Group


o
[all Level II
rules]
o
Steering
Committee
(SO
o
o
[approval of
chairman
required]
o
[Level II
rules, if
there are
unresolved
issues in the
work group]
o
[all major and
significant
rules]
AA/OPPE
o
o
[required for
major rules]


Deputy Adminis-
trator/AA
Options Review
Meeting .


o
[all Level I
rules]

1. In sane cases OPPE will send documents for OMB review before Red Border review fonr
2. Time periods for CMS review are: proposed major; 60 days; proposed non-major; 10 da
final non-major: 10 days.
AA/OPPE, General
Counsel and other
participating AAs
("Red Border")
3 weeks max.

o
[required for
ANPRM]

o
OMB l'»,^)
10-60 days



o
Deputy
Administrator

o
[normally
required for
ANRPM]
o
[if there are
unresolved
issues in SC
or Options
Review Com-
mittee]
o
[except
delegated
actions]
Administrator

o
[normally
required for
ANRPM]

o
[except
delegated
actions]
ally ends.
ys; final major: 30 days;
.


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  Changes  from  the April  30, 1983 Procedures Memorandum to  the
  New  Procedures Memorandum
         PAST
            PRESENT
SAR two-week review period,
SAR three-week review period;
new SAR form  (presently being
prepared) covers additional
points.
Red Border standard two-week
review.
Red Border standard three-week
review; Deputy Administrator
can terminate at deadline.
Enforcement review of all
Red Border packages as part
of OLEC.
Office of Enforcement and
Compliance Monitoring review of
selected Red Border packages with
enforcement issues.
No specific requirements on
submission of Information
Collection Requests associated
with rules.
Requirement that ICR's associated
with rules be submitted at
Steering Committee entry point.
Occurrence of OMB review after
completion of Red Border
Allowance for parallel OMB/Red
Border review under prescribed
circumstances.
                                  Participation of the AA External
                                  Affairs,  and the Associate Admin-
                                  strators  for Regional Operations
                                  and International Liaison in the
                                  review process through Steering
                                  Committee representations
                                  and selected Red Border
                                  reviews.
                                  Incorporation of options
                                  selection/rejection process.
                                  Incorporation of Criteria and
                                  Guidelines Document.

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                                                               1/9/84
               PROGRAM OFFICE COMMENTS AND RESPONSES
I.   Steering Committee

    1.   Comment;   The Steering Committee should be chaired by
        a disinterested party - not  an  advocate like OPPE.  As
        an alternative, the  Steering Committee chair could be
        rotated among the  program offices.

        Response:   Rotating  the Steering Committee chair would
        badly compromise its responsibilities  for  managing the
        ongoing process of Agency-wide  review  of regulatory actions,
        Since the  chair must reside  with one office, then, OPPE
        is the most appropriate choice—for at least two reasons:

             First, OPPE is  more likely to  be  detached  from the
        actions under review than any of the program offices,  since
        OPPE very  rarely has lead responsibility for such actions.
        This helps ensure  that the independence and integrity of
        the  review process will be maintained.  (Of course, OPPE
        does also  play an  advocate's role.)

             Second,  OPPE  is,  after  all,  the office charged with
        the  responsibility for managing both Agency-wide review
        and  the regulatory development  process generally.


    2.   Comment;   Steering Committee representation should be
        at a higher level, possibly  including  the  Assistant
        Administrators.

        Response;

        The  document  provides  for representation by "Qeputy
        Assistant  Administrators or  persons of similarly senior
        status."   Assistant  Administrators  are welcome  to par-
        ticipate in any Steering Committee  activities.


    3.   Comment;   The  document should define in more detail
        the  role of the Steering Committee.

        Response;   Page 8  gives a brief explanation of  the
        Steering Committee's  role; specific aspects of  this
        role are discussed elsewhere in the document.   If  addi-
        tional  description would be  useful, we would welcome
        specific suggestions.


    4.   Comment:   OPPE  should  circulate more Steering Committee
        consent calendars  and  conduct fewer meetings.

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                               -2-


         Response:   Currently  about  three=fourths  of  the  Steering
         Committee's reviews are consent  calendar.  We  try  to  limit
         meetings  to those  cases where  a  meeting is needed  to  help
         resolve outstanding issues.  In  view of this practice,
         we don't  think  we  can make  the proportion of reviews  that
         involve a  meeting  any smaller  than  it already  is.   In fact,
         on previous occasions program  offices have suggested  that
         we hold more meetings.


     5.  Comment:   If the Steering Committee decides  that the work
         group has  not done a  thorough  job, OPPE should send the
         regulation back.

         Response;   In some cases, regulations have been  sent
         back to the work group for  substantial revision or addi-
         tional analysis.  That practice  would continue under the
         new document.


     6.  Commenti    OPPE should assume  automatic concurrence when
         the two-week Steering Committee  review period  is over on
         routine regulations and "a reviewing office has not responded.

         Response:   We do assume concurrence unless we have been
         informed that an office intends  to submit comments.
         Even in those cases,  we agree  that a program should not
         delay its  work to respond to comments submitted well
         past the deadline.


II.  Work Group

     1.  Comment;   OPPE analysts should issue reports on work group
         effectiveness.

         Response;   OPPE now assigns a  lead analyst to each regu-
         lation, and  part of that lead  analyst's responsibilities
         is to report  periodically on work group effectiveness.


     2.  Comment;   Who is responsible for work group effectiveness?
         Specifically what role should OPPE, OECM,  and the lead
         office play  in regulation development?

         Response;   Each office is responsible for ensuring the
         effectiveness of its  representation on work groups.  The
         work  group chairman from the lead office should contact
         the Steering Committee representative from any other
         office that does not  provide effective representation.
         This  draft  includes more detail on the work group and
         on the role of various offices,  including  reviewing and
         lead  offices.

-------
                                   -3-


      3.  Comment;   Work group members should have an appropriate
          policy or technical background and should be able to
          represent management's viewpoint.

          Response:  Agreed.   This is not a  matter we thought should
          be addressed in the document itself.   However,  each office
          has a clear responsibility for seeing that it is appropri-
          ately represented on the work group.


III.  General

      1.  Commentt   How does  the options selection/rejection process
          relate to or differ from the Development Plan?

          Response;  The development plan is the initial  specifica-
          tion of options that will be considered, and of analyses
          the Agency will conduct to assess  and compare those options.
          Under the options selection/rejection process,  formal options
          reviews normally would begin when  the development plan enters
          Agency review,  and  would continue  as  necessary  beyond that
          point.  The options process would  not replace the develop-
          ment plan.   Pages 5-7 of" the procedures  document describe
          this in more detail.


      2.  Comment;   There should be less stringent review require-
          ments for minor actions.

          Response;   Minor rules do not require a  formal  development
          plan,  do  not receive a Steering Committee review, and are
          not covered by  the  formal options  selection process.   In
          addition,  OPPE  has  adopted streamlined internal procedures
          for Red Border  reviews of many minor  rules.


      3.   Comment;   There should be more flexibility in how the pro-
          cedures are applied.   There should also  be clear criteria
          for exceptions  from standard requirements.

          Response;   The  document provides for  waivers from or excep-
          tions  to  many requirements.   In practice,  exceptions to
          the rules  have  always been available  when there has been
          good  reason not to  follow standard procedures.   It is
          difficult  to specify criteria for  exceptions, because we
          cannot  always anticipate  the special  circumstances that
          make  exceptions appropriate.


IV.  QPPE Management

     1.   Comment;   Delegate  responsibility  for signing Red Borders
          to  the  OPPE  Office  Directors on more  routine actions.

-------
                         -4-
    Response;  Agreed.  OPPE has adopted this practice for
    several categories of actions.


2.  Comment;  Prompt and high-quality Red Border reviews should
    be an element of OPPE performance standards.

    Response;  Agreed.  This is an element for most OPPE managers,


3.  Comment;  OPPE should streamline its review chain.

    Response;  OPPE has taken steps to streamline its reviews.
    Several classes of regulations are delegated to office
    directors for approval and formal memoranda have been
    eliminated for many such actions.


4.  Comment;  OPPE should reallocate its assignments, taking
    resources from Air and Water to sufficiently cover OSWER
    and OPTS.

    Response;  OPPE has increased the resources available
    for review of OPTS rules, and for regulation review
    generally.


5.  Comment;  OPPE should aggressively manage the review
    process.  It should provide regular feedback on status
    of regulations.

    Response;  OPPE monitors Red Border performances care-
    fully, and will continue to do so.  In addition, OPPE
    has designated a lead analyst for each regulation under
    development to provide a source of information on issues,
    problems, or delays.   The list of lead analysts will be
    sent to program offices.  By way of feedback, OPPE pre-
    pares a Red Border Status Report, updated every day and
    sent through electronic mail, as well as a comprehensive
    monthly report on all regulations under review.

-------