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TTN/Economics & Cost Analysis Support
OAQPS Economic Analysis Resource Document

0.1 Table of Contents

1 Introduction
1.1 Regulatory Context
1.2 Different Levels of Economic Analysis in OAQPS
1.2.1 Stages of Analysis:  Proposal versus Final Rule
1.3 Scope of This Document
1.4 Organization of This Document
2 Regulatory Background
2.1 OAQPS’s Regulatory Authority
2.2 Statutory and Administrative Requirements for Economic Analysis of Regulations
2.2.1 Clean Air Act
2.2.2 Executive Order 12866
2.2.3 Statutes and Executive Orders Requiring “Impact Analysis” Impacts on State, Local, and Tribal Governments Small Entity Impacts Reporting and Recordkeeping Requirements Impacts on Children Impacts on Low-Income and Minority Population
2.3 Summary
3 The Regulatory Development Process
3.1 EPA Regulatory Development Process
3.1.1 Start Action Notice
3.1.2 Workgroup Formation
3.1.3 Early Guidance from Senior Management
3.1.4 Analytical Blueprint
3.1.5 Preliminary Analysis, Regulatory Options Development, and Selection of Alternatives
3.1.6 Rule Preparation and Workgroup Closure
3.1.7 OMB Review
3.1.8 Administrator's Signature and FR Publication of Proposed Rule
3.1.9 Public Comment, Rule Revision, and Signature and Publication of Proposed Rule
3.1.10 Rule Revision, Signature, and Publication of the Final Rule
3.2 Economic Analysis in Regulatory Development
3.2.1 Overview of Analysis Activity
3.2.2 A Note on Cost/Control Strategy Analysis for NAAQS
3.2.3 Structure and Content of ISEG Reports
3.3 Specific ISEG Tasks in the Regulatory Development Process
3.3.1 Initial Screening
3.3.2 Scoping Assessment and SBREFA Determination
3.3.3 Industry Profile
3.3.4 Analysis Plan
3.3.5 Analysis
3.3.6 Technical Support Documents
4 Industry Profile Development
4.1 Purpose and Use
4.2 Structure and Content
4.3 Data Sources
4.3.1 The Supply Side
4.3.2 The Demand Side
4.3.3 Industry Organization Market Structure Manufacturing Plants Firm Characterization Other Owning Entities
4.3.4 Markets
5 EIA Analytical Framework and Operational Issues
5.1 Alternative Approaches for Economic Impact Analysis
5.1.1 Behavioral vs. Nonbehavioral Models
5.1.2 Market Model Scope: Partial vs. General Equilibrium
5.1.3 Length-of-Run Considerations Very Short Run Long Run "Intermediate" Run
5.1.4 Static vs. Dynamic Models
5.1.5 Standard Approach for ISEG Industry-Level Analyses
5.2 PEIS Modeling Approach: Conceptual Framework
5.2.1 Facility-Level Effects
5.2.2 Market Effects
5.2.3 Facility-Level Response to Compliance Costs and New Market Prices
5.3 PEIS Modeling Approach: Operational Issues
5.3.1 Baseline Characterization Producer Characterization Market Characterization Characterizing Impacts Outside a Market Setting
5.3.2 Regulatory Control Costs
5.3.3 Modeling Economic Behavior Supply Characterization and Responses Demand Characterization and Responses Determine With-Regulation Equilibrium
5.4 Economic Impact Results
5.4.1 Market-Level Results
5.4.2 Industry-Level Results
5.4.3 Company-Level Impacts
5.4.4 Community-Level Impacts
5.4.5 Social Costs of the Regulation Producer and Consumer Surplus Measures Other Elements of Social Costs
6 Impact Analyses
6.1 The Unfunded Mandates Reform Act (UMRA)
6.2 The Regulatory Flexibility Act (RFA) and Small Business Regulatory Enforcement Fairness Act (SBREFA)
6.3 The Paperwork Reduction Act (PRA)
6.4 Distributional Impacts
6.5 Structural Impacts
7 Framework for Quantitative Benefits Analysis
7.1 Economic Benefits: An Overview
7.2 Steps in Conducting Benefits Analysis
7.2.1 Identifying Benefits
7.2.2 Quantifying Benefits Quantifying Health Benefits Quantifying Ecological Benefits Quantifying Benefits through Nonliving Systems
7.2.3 Monetizing Benefits Monetizing Health Benefits Monetizing Ecological Benefits and Benefits to Materials and Structures Benefit Values per Unit of Emissions
7.3 Benefits Transfer
8 General Methodological Issues
8.1 Specifying the Time Period of Analysis
8.2 Specifying a Baseline for Analysis
8.2.1 Forecasting Economic Activity in the Absence of the Regulation
8.2.2 Assessing the Rate of Compliance with Existing Regulations
8.2.3 Anticipating Future Regulatory Actions by Other Federal Agencies, by Other Offices within the Agency, and by State, Local, and Tribal Governments
8.2.4 Anticipating Nonregulatory Factors
8.2.5 Developing a Starting Point for the Baseline
8.3 Discounting Benefits and Costs
8.3.1 Basic Considerations in Discounting Discounting and Private Decisions Discounting and Public Policy Decisions
8.3.2 The Two-Stage Discounting Procedure
8.3.3 Discounting Issues Deserving Further Attention: Nonmonetized Benefits and Long Time Horizons
8.3.4 Discount Rates and the Capital Costs of the Regulation Conceptual Issues Estimating Capital Costs in Economic Impact Analysis Reconciling Social Costs in an EIA with "true" Social Costs Practical Concerns for the Policymaker and Analyst
8.3.5 Empirical Evidence on Discount Rates Consumption Rate of Interest Rate of Return on Private Capital
8.3.6 Discounting Recommendations
8.4 Addressing Uncertainty
9 Communicating the Results of the Economic Analysis
9.1 Communication Goals, the Audience, and Challenges
9.2 Key Principles of Clear and Effective Communication
9.3 A Note on Visual Communication

0 Contents

 0.0 Intro




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