Laws, Regulations, Guidance and Dockets

A number of laws and executive orders (E.O.s) direct us to consider issues of concern to the President, Congress, and the American public when developing regulations. For example, they direct us to analyze:

• economic benefits and costs,
• small businesses and small communities, and
• environmental justice and child safety.

A description of EPA's major laws and E.O.s can be found on this site. Furthermore, the Preamble of most regulations discusses how that particular rule complies with applicable laws and E.O.s.

Economic Benefits and Costs

Before drafting a regulation, we assess the expected benefits and costs. Consistent with E.O. 12866 (PDF) (10 pp, 36K, About PDF), we perform economic analyses using a set of principles that make the regulatory system work well for the American people. These analyses call for EPA to assess the benefits and costs of the regulatory alternatives available, including the alternative of not regulating. EPA regulation writers use quantitative (numerical) and qualitative (descriptive) measurements to gauge the benefits and costs of imposing a regulation.

But how do you put a dollar value on the benefits of nature? If wetlands are filled in because there is no regulation to protect them, what is the loss to society? How do you fully measure the cost that society incurs from some degree of exposure to a cancer-causing chemical? As difficult as these questions seem, economists have developed methods to make prudent estimates about the benefits and costs of environmental regulations.

We estimate benefits in several ways. Human health benefits might include reduced mortality rates or fewer incidences of cancer and chronic illness. Ecological benefits might include the restoration of degraded habitats or increases in the populations of certain species. Quality-of-life factors might include improving the taste and odor of drinking water.

We estimate the cost of a regulation by looking at the cost of compliance. A new regulation often requires that businesses, communities, non-profit organizations, or government agencies buy new pollution control equipment or adopt new practices. Other costs include social welfare losses, such as higher consumer and product prices, and transitional social costs, such as business closings and unemployment.

EPA's Guidelines for Preparing Economic Analysis provide a sound and consistent framework for measuring benefits and costs of regulatory options. Recognizing the need to focus our analytical efforts where they are most useful, EPA applies its most rigorous analyses to the "economically significant" regulations - those that we expect to beneift and/or cost society more than $100 million a year or more.

Although estimates of benefits and costs are ordinarily essential to our work, occasionally some laws prescribe an approach that actually prevents EPA from taking costs into account. For example, the Clean Air Act does not allow EPA to consider the economic costs of implementation when developing National Ambient Air Quality Standards. These standards define the maximum allowable levels of certain pollutants in our atmosphere, and when Congress amended the Clean Air Act in 1970, it directed EPA to act without considering how much it would cost or even whether it was technologically feasible.

Small Businesses and Small Communities

We routinely look closely at how rules might affect small businesses, small governmental jurisdictions, and small nonprofit organizations (i.e., small entities). Compared to larger entities, these small entities often do not have the resources needed to completely manage their environmental responsibilities. Therefore, under the Regulatory Flexibility Act (as amended by the Small Business Regulatory Enforcement Fairness Act), Congress directs EPA to take the impacts of its proposed regulations on small entities into account. Unless the EPA Administrator can certify that a regulation will not have a significant economic impact on a substantial number of small entities, we must:

• Convene a Small Business Advocacy Review Panel. The Panel examines the economic impact of the proposed regulation on small entities, reaches out to small entities for comments, and prepares a report summarizing both the comments and the Panel's recommendations. The comments become part of the official record, and EPA factors the recommendations into its decision-making.
• Prepare a regulatory flexibility analysis. This analysis describes the impact of the proposed regulation on small entities. It also outlines any significant alternatives that could accomplish the objectives of the rule while minimizing the significant economic impacts on small entities.
• Prepare a Small Entity Compliance Guide. This small entity compliance guide is
  published to help small entities understand their obligations and responsibilities under
  the rule.

Together these actions ensure that EPA fully considers the impacts of its actions on small entities and ways to minimize those impacts as much as possible. The Panels, conducted in partnership with the Small Business Administration's Office of Advocacy and the Office of Management and Budget's Office of Information and Regulatory Affairs, ensure meaningful small entity input during the early stages of the rulemaking process. As of June 2007, we have completed 30 Panels with over 475 small business, small government, and small non-profit representatives. Over 260 Panel recommendations have been made to address the particular concerns of small entities and in each case, the Panel produced a report with recommended changes to the rule that would reduce impacts on small entities.

One example of how this affects our regulations is the national emissions standards rule for lime manufacturing. We identified lime manufacturing as a major source of hazardous air pollutants (HAP) emissions including hydrogen chloride (HCl) and other metals classified as particulate matter (PM). The matter was found to cause adverse health effects such as cancer, kidney damage, and irritation to the lungs, skin, and central nervous system.

When developing the emissions standards rule for lime manufacturing, we found that small businesses represented approximately 42% of the lime manufacturing industry. The promulgated final rule included all the major recommendations of the SBREFA panel, including evidence that further regulation of HCl emissions was not required, and saved affected small businesses about $4.2 million annually.

Environmental Justice and Child Safety

Protecting public health means protecting the health of all Americans, including those segments of society that might need more attention than others. In recent years, public concern that some populations were bearing an uneven share of environmental health risks led to E.O. 12898 (PDF) (5 pp, 20K, About PDF) which requires us to identify and address impacts on minority and low-income populations when we develop our regulations. EPA's Office of Environmental Justice (OEJ) helps our workgroups consider these environmental justice concerns when writing regulations, and OEJ can help you with your environmental justice questions, too.

Additionally, EPA considers how regulations might impact children. In relation to their body size, children breathe more air, drink more water, and eat more food than adults, so their exposure to environmental health risks is greater. In the past, our regulations considered health risks to adults almost exclusively. But as new information emerged suggesting that children are more vulnerable to health risks, we began altering our approach to risk analyses. E.O. 13045 (PDF) (6 pp, 69K, About PDF) strengthened our focus on children; we now analyze whether certain regulations could have disproportionate impacts on their health. The Office of Children's Health can provide more information.

 

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