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1.2 Different Levels of Economic Analysis in OAQPS

Economic analysis of proposed rulemakings in OAQPS can be viewed as part of a hierarchical process:
  • preliminary screening assessment,
  • EIA, and
  • EA
The information generated by each of these analyses is summarized in Table 1-1.

1 Introduction

 1.0 Intro

 1.1 Regulatory Context

 1.2 Different Levels of
   Economic Analysis
   in OAQPS

 1.3 Scope of This

 1.4 Organization of
   This Document

Table 1-1

The purpose of the preliminary screening assessment is to obtain an initial read on the potential magnitude of the regulation’s economic impact.  This assessment may be somewhat qualitative in nature or may employ relatively limited data and other information to provide first-order quantitative estimates of impacts.  When the initial assessment suggests a relatively small impact, ISEG can use this information to direct its analytical resources toward other regulations that are likely to have a larger impact.  Those regulations will move up to the next tier and be targeted for a full EIA, which will provide a broader and deeper assessment of cost impacts of the rule.   For “significant regulatory actions” as stipulated under EO 12866, a full EA is conducted.  For all intents and purposes, an EA may employ the EIA as the basis for its cost estimates and augment the analysis with a benefits assessment and comparison of benefits and costs and evaluation of their distribution as required under EO 12866 and other mandates and legislation.

1.2.1    Stages of Analysis:   Proposal versus Final Rule

Prior to rule proposal, the analysis will compare costs, impacts, and—in the case of an EA—benefits of the different regulatory alternatives being proposed.   This is often referred to as the “proposal” draft.  After taking into consideration public comments, the Agency may narrow the focus to the selected regulatory alternative.  Consequently, the analysis that is prepared at the final stage rule (promulgation) will typically produce analytical results to support the selected regulatory option.  This is often referred to as the “final” draft.  EO 12866, however, does require the analysis to address the reasons for selecting the final rule over alternative regulatory and nonregulatory approaches.  Therefore, some elements of the earlier analyses may be incorporated in the final draft to address these concerns.  While not explicitly required in the EIA provisions of the CAA, some discussion of the selected regulatory option versus its alternatives in the final EIA report may help demonstrate how economic analysis was used to inform the rule selection decision.

The purpose of the final EA for significant regulatory actions is to demonstrate that the rule selected by EPA decisionmakers complies with the requirements of EO 12866.   The final EA (RIA) must present the economic rationale for the proposed rule, the justification for regulatory intervention, the rationale for the particular regulatory requirements being proposed, the benefits and costs of the selected regulatory option, and the impacts of the proposed rule on specific entities or population groups.  The final EA draws heavily from the preliminary EA to justify the proposed rule.

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