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OAQPS Economic Analysis Resource Document

3.1 EPA Regulatory Development Process

EPA’s regulatory development process (outlined in Figure 3-1) is designed to ensure that all statutory and administrative requirements for rulemaking are met. The process is also intended to allow for all EPA offices and regions with an interest in a rule to participate in development of and to approve of that rule.

The Agency’s Regulatory Policy Council (RPC) is responsible for overseeing the Agency’s regulatory development process and ensuring that the process conforms with Administration policy and addresses cross-cutting analytical issues. The RPC also monitors the system to identify and implement any needed changes.


3 Regulatory

 3.0 Intro

 3.1 EPA Regulatory
   Development Process

 3.2 Economic Analysis in
   Regulatory Development

 3.3 Specific ISEG Tasks    in the Regulatory
   Development Process
Figure 3-1
The regulatory development process is initiated by the semi-annual submission of anticipated regulatory actions for tiering assignment by senior Agency staff. Each regulatory action is assigned one of three tiers:
  • Tier 1:  Administrator’s Priority Actions—Involves the few top actions that demand ongoing involvement of the Administrator and extensive involvement of Assistant Administrators (AAs) and Regional Administrators (RAs) across the Agency.
  • Tier 2:  Cross-Agency Actions—Actions have extensive cross-media effects, requiring extensive cross-Agency involvement.
  • Tier 3: Lead-Office Delegation—Actions with little or no need for cross-Agency participation.

This tiering process both prioritizes actions in terms of their potential for large and multimedia effects and ensures early involvement of key Agency personnel. The formal regulatory process outlined in Figure 3-1 and discussed below is required of all Tier 1 and Tier 2 actions. Tier 3 actions are dealt with less formally but can involve many or all of the procedural steps outlined here. While the tiering process imposes a hierarchy for Agency actions, there is no direct relationship between the tiering process and the designation of “significant regulatory actions” for OMB purposes ( Browner, 1994).

   3.1.1    Start Action Notice

Once the regulatory action has been assigned a tier, a Start Action Notice (SAN) is prepared by the lead AA/RA and is distributed to all AA and RA offices across the Agency. This notice serves to solicit workgroup membership and other input from offices across the Agency.

   3.1.2    Workgroup Formation

After the SAN is approved by the RPC, the Agency workgroup is officially formed. The Agency workgroup is an EPA-wide, staff-level group formed to develop a regulatory action and supporting materials. The workgroup's primary responsibilities are to

  • identify and assess principal policy issues and options;
  • conduct technical and analytical work, including risk assessment work and economic analysis;
  • resolve issues or elevate them for upper management resolution; and
  • ensure the quality and completeness of regulatory packages, including the Federal Register (FR) notice.

Workgroup members are expected to represent the policy positions and perspectives of their management as well as to contribute their technical and analytic expertise.

During the regulatory development process, one of the key responsibilities of each workgroup member, including the economist, is to communicate key issues and results to workgroup members and senior management. Without proper interpretation and communication of results from the economic analysis, decisions might be made without proper understanding of the rule's economic implications. For more discussion on methods to communicate analytical results more effectively, see Section 9 of this document.

   3.1.3    Early Guidance from Senior Management

Early involvement by senior management is one of the hallmark objectives of the 1994 reforms to the EPA regulatory development process. The purpose is to clarify, for the workgroup, the objectives of the rulemaking and to identify the issues of significant concern to senior management.

   3.1.4    Analytical Blueprint

Consistent with the goal of having all regulatory actions be based on sound science, an analytical blueprint is prepared to guide all forms of analysis throughout the process—economic, scientific, legal, and institutional.  The blueprint outlines the scope of the action and requirements for analysis.  The blueprint is considered a “living document” so that the analysis plan can be modified if the situation warrants.

Once the blueprint is prepared, it is distributed to senior management across the Agency for review and approval. The workgroup may need to revise the blueprint based on cross-Agency review. The level and extent of review may differ slightly between Tier 1 and Tier 2 actions.

   3.1.5    Preliminary Analysis, Regulatory Options Development, and Selection of Alternatives

In these stages, the workgroup analyzes and evaluates regulatory options to narrow the scope of regulatory alternatives considered and then selects the regulatory alternative from among the group of alternatives. This process is typically iterative, with the elimination of some alternatives, possible addition of others, and ultimate selection of a final proposed alternative. Senior management approval is an essential part of the iterative process. Senior managers must accept that the options development process and final selection are based on sound analysis of the alternatives.

The analysis/options development/selection process is the venue in which solid economic (and other) analysis can make substantial contributions to the rulemaking process. The lead economic analyst's responsibility is to ensure that the economic analyses are technically strong and that the results of the analysis are communicated effectively to workgroup members and senior management to help inform their decisions.

   3.1.6    Rule Preparation and Workgroup Closure

Once the analyses have been performed and the regulatory alternative selected, the workgroup must prepare the regulatory package for subsequent review and approval.  The regulatory package includes the FR notice for the proposed rule and all supporting documentation.

The workgroup closure meeting occurs when the workgroup has prepared the regulatory package and the management of the lead office has approved the notice and analyses. The purpose of the workgroup closure meeting is to confirm that

  • the workgroup has successfully completed its job, resolving as many issues as possible and clearly defining others;
  • the rulemaking package is ready for review at the AA, RA, and Deputy Administrator levels; and
  • Agency and external requirements have been met.

Members of the workgroup participate in the workgroup closure meeting as representatives of their AA/RA. Therefore, positions presented should be approved by the respective AA/RA prior to the meeting. Although OAQPS workgroup members attend the meeting, issues within OAQPS and Office of Air and Radiation (OAR) are not the focus of the meeting, because these issues will have been addressed prior to the meeting as a condition of package approval by the Office Director and the AA. Instead, the focus is on input provided by the workgroup members from other EPA offices or regions.

   3.1.7    OMB Review

The period for OMB review is 90 days for a proposed rule and 45 days for a final rule if no material changes have been made since proposal; OMB can, however, extend this period when it needs more time or when issues are unresolved. In virtually all cases, rules do not go forward for final signature in EPA until the program office addresses OMB concerns and resolves outstanding issues. Court-ordered deadlines and stringent statutory deadlines may occasionally require that EPA publish a rule before OMB has finished its analysis and comment or be given less time to review.

Once workgroup closure has been attained and the package has been cleared for submittal by the Administrator's office, the package is sent to OMB's Office of Information and Regulatory Affairs (OIRA) for review. Under EO 12866, each proposed significant regulatory action that the Agency issues must be sent to OMB for review before it is signed by the Administrator. Again, the determination of significance for OMB purposes is not directly related to EPA's tiering hierarchy. OIRA and the Agency will have determined in advance whether a rule is deemed significant. The purpose of OMB review is to ensure that the Agency's regulatory actions "are consistent with applicable law, the President's priorities, and the principles set forth in [Executive Order 12866] and do not conflict with the policies or actions of another agency" [EO 12866, Section 6(a)(4)].

Rules not considered significant can go straight to the Administrator for signature and FR publication without OMB review.

   3.1.8    Administrator’s Signature and FR Publication of Proposed Rule

Recommended changes in the rule brought forth by OMB’s review must generally be addressed by the Agency before the rule can go forward.  Once these issues are addressed, the proposed rule is ready for the Administrator’s signature.  Once obtained, the signed rule is forwarded to the Agency’s FR liaison for final review and submission to the FR for publication.

   3.1.9    Public Comment, Rule Revision, and Signature and Publication of Proposed Rule

Publication of the proposed rule is followed by a public comment period, typically lasting 60 days, in which any interested party has the opportunity to comment on the proposed rule or the supporting analyses.

   3.1.10    Rule Revision, Signature, and Publication of the Final Rule

After the public comment period closes, the workgroup is reconvened to review and respond to the public comments and to prepare the final rule.  The process for development of the final rule is the same as for the proposed rule:  analysis, senior management review, workgroup closure, OMB review, Administrator’s signature, and publication in the FR.


1 For more detail on EPA's regulatory development process, see Browner, Carol M. Memorandum on Initiation of EPA's Regulatory and Policy Development Process. U.S. Environmental Protection Agency, Office of the Administrator. July 1, 1994.
2 See Section 2 of this guidance document for further discussion of E.O. 12866 and OMB review.

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