|
Issue
Paper
Environmental Protection Agency
1974 Budget
Issue #1: Quality of Life Review
Statement of Issue
During the past year, OMB, through the
Quality of Life Review process has managed the interagency review of
air pollution control regulatory actions which will result in
non-Federal expenditures of approximately $65 billion by 1977. What
should OMB's policy be toward the Quality of Life Review process in
the next twelve months? Should the Quality of Life Review process
be:
-
Terminated?
-
Continued, as it is currently
implemented, falling short of the October 5 memorandum
requirements?
-
Continued, but with an increase in
the data and analysis requirements necessary to support proposed
agency regulatory actions?
Background
-
On October 5, 1971, the Director signed
a memorandum to all Federal agencies (Appendix A) which set forth
the requirement that agency standards, regulations and guidelines
in the following program areas:
-
Environmental Quality;
-
Consumer protection;
-
Occupational and public health and
safety;
-
be reviewed by other Federal agencies
if they could be expected to:
-
Have a significant impact on the
policies, programs and procedures of other agencies; or
-
Impose significant costs on
non-Federal sectors; or
-
Increase the demand for Federal
funds for programs of Federal agencies beyond the funding levels
provided for in the most recent budget requests submitted to the
Congress.
-
OMB was given the task of managing the
interagency review process. Among the tasks which OMB performs
are:.
-
Collection and distribution of
agency proposals.
-
Collection of agency comments on
regulatory proposals.
-
Negotiation and arbitration of
differences between proposing and commenting agencies.
-
Appendix B lists regulations, standards
and guidelines reviewed through the Quality of Life process as of
this date.
-
In the course of the interagency
reviews of EPA's proposed air pollution control proposals, the
following types of issues have arisen:
-
Economic impact of the
standards.
-
Technological feasibility of the
standards.
-
Justification for stringency of the
standards.
-
Measurement capabilities to monitor
compliance with standards.
-
Jurisdictional disputes
among:
-
Federal agencies
-
Between the Federal Government and
the States.
-
Impact of regulations, standards on
other Federal policies, e.g.:
-
Fuels policy.
-
Transportation policy.
-
Environmental consequences to be
faced as a result of the imposition of the standards,
e.g.:
-
More rapid consumption of scarce
natural resources, e.g., natural gas.
-
The Quality of Life Review has been
criticized by environmentalists for the following reasons:
-
The review is not conducted in
public.
-
The review permits OMB to weaken the
standards.
-
Reviews are excessively time
consuming, causing EPA to miss statutorily determined
deadlines.
-
Through the first year, the Quality of
Life Review has fallen short of the requirements of the October 5
memorandum. For example:
-
EPA has not fully developed, for
each regulation or standard it has proposed:
-
Alternatives to the proposed
actions.
-
Comparisons of the expected benefits
or accomplishments and the costs (Federal and non-Federal)
associated with alternatives considered; and
-
The reasons for selecting the
alternative proposed.
-
Absence of definitive OMB criteria
for review of proposed regulatory actions has resulted in uneven
and non-comparable agency comments and analyses.
-
The October 5 memorandum requires
OMB to conduct the review and settle interagency disagreements
within thirty days.
-
On several occasions, EPA has
appealed to OMB to shorten the process, or exempt certain
standards or regulations completely from the requirement on the
grounds that the standards needed to. be announced at the
earliest possible date.
Alternatives
-
As outlined in the issue statement,
there are three alternatives:
-
Terminate the Quality of Life Review
process.
-
Continue the process without change.
This would maintain its basically ad hoc character.
-
Continue the Quality of Life Review
process but increase the data and analysis requirements
necessary to support proposed agency regulatory actions. This
would be accompanied by a corresponding increase in the data and
analysis requirements placed upon reviewing, and commenting
agencies.
Analysis
-
EPA's regulatory actions cause
non-Federal resource allocations which are many times larger than
EPA's budget.
-
EPA's FY 1973 budget is $2.4
billion.
-
As stated earlier, regulatory
actions developed during the past year under the Clean Air Act
will result in non-Federal expenditures of $65 billion by 1977
(see Appendix D).
-
Under the recently passed water
bill, EPA would be required to set standards and guidelines
which will cause non-Federal expenditures of $62 billion by 1977
(see Appendix D).
-
EPA's regulatory actions can have major
impacts on the programs and policies of other Federal agencies.
These impacts can shift expenditures, and cause the demand to
increase for Federal funds, e.g.:
-
Agency requests for budget authority
for pollution abatement expenditures at Federal facilities will
increase as EPA's standards become more stringent.
-
Communities, in attempting to meet
ambient air quality standards, may be forced to rely upon mass
transit alternatives to automobile transportation. This could
increase the demand for Federal subsidies for capital and/or
operating subsidies.
-
The demand for low sulfur fuels can
be expected to grow significantly in the next four years as
regions attempt to comply with ambient air standards. This will
cause stripmining in Western States to capture low sulfur coal,
and increase oil imports. This will have measurable impact upon:
funds for land reclamation, U.S. balance of payments.
-
Land use regulations and
transportation controls to be developed by EPA and States will
have major impacts upon future land development and growth
patterns.
-
Would speed up the standard setting
process, stop criticism of White House-OMB involvement in
environmental standard setting.
-
Would preclude participation of
concerned and affected Federal agencies in the development of
EPA's regulatory actions before the actions are made public.
Opportunity to participate in the action would still exist,
however, during the public comment period.
-
Alternative #1 would preclude the
opportunity to discover high cost, untenable and/or unworkable
proposals before actions are made public.
-
Once regulatory actions are made
public, it is extremely difficult to soften or change proposals
without appearing to have buckled under to special
interests.
-
Environmentalists will continue to
criticize OMB for weakening EPA's standards.
-
Offers little assurance that the
financial burden imposed upon the private sector is offset by
resulting environmental improvements.
-
Offers little assurance that all
industries are treated equitably in terms of the pollution
abatement costs they must bear.
-
Would require OMB to develop
expanded and more detailed data and analytical requirements for
agencies to fulfill in support of their regulatory
actions.
-
Would require Director, OMB, to send
a new letter to agency heads:
-
Reiterating the Quality of
Life Review requirement.
-
Laying out in some detail the
newly defined data and analysis requirements.
-
Would require EPA and commenting
agencies to devote more resources and effort to the
development and review of regulatory actions.
-
Would ensure, to a greater degree
than would Alternative #2, that financial burdens will be
commensurate with benefits to be gained, and that all
affected industries will be treated equitably.
-
Would invite attacks by
environmentalists that OMB is attempting to thwart intent of
Congress, weaken EPA's regulations.
OMB Recommendation:
Alternative #3. Would require development of new data and analysis
requirements for agencies to comply with in order to support proposed
regulatory actions. Would also require that the Director inform
affected agency heads of these new requirements in a letter
reiterating and reaffirming the Quality of Life Review process.
In the event these requirements are not
met by proposing or commenting agencies, OMB would return the
proposals for further analysis and additional supporting data. This
would mean that the Director would be subject to both agency pressure
and external criticism for intervening in and delaying the rule-making
processes of the affected agencies
Appendix A
EXECUTIVE OFFICE OF THE
PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
October 5, 1971
MEMORANDUM FOR THE HEADS OF DEPARTMENTS
AND AGENCIES
|
SUBJECT:
|
Agency regulations, standards,
and guidelines pertaining to environmental quality, consumer
protection, and occupational and public health and
safety
|
This memorandum is to establish a
procedure for improving the interagency coordination of proposed
agency regulations, standards, guidelines and similar materials
pertaining to environmental quality, consumer protection, and
occupational and public health and safety. This procedure will apply
to all such materials proposed for issuance by any executive
department or agency other than the regulatory boards or commissions
listed in the attachment which could be expected to:
-
have a significant impact on the
policies, programs and procedures of other agencies; or
-
impose significant costs on, or
negative benefits to, non-Federal sectors; or
-
increase the demand for Federal funds
for programs of Federal agencies
which are beyond the funding levels provided for in the most
recent budget requests submitted to the Congress.
To implement this procedure, agencies
covered by this procedure are to submit to the Office of Management
and Budget by October 25, 1971:
-
a schedule, classified where possible
according to the above criteria, covering the ensuing year showing
estimated dates of future announcements of all proposed and final
regulations, standards, guidelines or similar matters in the
subject areas shown above;
-
the name of an agency official who will
be responsible for your agency's participation in the coordination
process and who will serve as the primary contact point with the
Office of Management and Budget and other agencies for all matters
pertaining to this procedure.
Schedules described above should be
updated monthly and submitted by the first of each month beginning
December 1, 1971. Schedules should indicate whether the proposed
actions are specifically required by statute and whether the scheduled
announcement date is set by statute.
Proposed and final regulations, standards,
guidelines, and similar actions meeting the criteria outlined above
should be submitted to the Office of Management and Budget at least 30
days prior to their scheduled announcement. The regulations should be
accompanied by a summary description indicating:
-
the principal objectives of the
regulations, standards, guidelines, etc.;
-
alternatives to the proposed actions
that have been considered;
-
a comparison of the expected benefits
or accomplishments and the costs (Federal and non-Federal)
associated with the alternatives considered; and
-
the reasons for selecting the
alternative that is proposed.
As a part of its role in the interagency
coordination process, the office of Management and Budget will receive
copies of proposed regulations and similar materials from departments
and agencies, distribute those materials to other agencies affected,
collect comments and provide them to the agency proposing the
regulation for its information.
A continuing effort will be needed to
simplify the reporting and coordination procedures called for in this
memorandum and to focus upon the most significant actions. It may be
possible, for example, to eliminate certain categories of regulations,
standards or guidelines that would otherwise be included in the
criteria outlined above. In this regard, and in implementing the
general provisions of this memorandum, agencies are to work with the
OMB Assistant Directors and Program Divisions with which they normally
deal on program and budget matters.
|
|
George P.
Shultz
Director
|
|
Memorandum,
Office of Management and Budget, October 5, 1971
|
Attachment
|
Civil Aeronautics
Board
Federal Communications Commission
Federal Maritime Commission
Federal Power Commission
Federal Trade Commission
Federal Tariff Commission
Interstate Commerce Commission
Securities and Exchange Commission
Appendix
B
Quality of Life Reviews conducted since
the signing of the October 5 memorandum, by OMB Division
|
OMB Division
|
Number of Quality of Life
Reviews
|
|
Economics, Science, and Technology
Programs Division
|
0
|
|
General Government Programs
Division
|
0
|
|
Human Resources Program
Division
|
0
|
|
Natural Resources Program
Division
|
18
|
Appendix C
Regulations Expected Under the Clean Air
Act, Federal Water Quality Act
|
Clean Air Act
Regulation, Standard or
Guideline
|
Proposal or
Promulgation
|
|
National Emission Standards
for Hazardous Air Pollutants
|
Promulgation
|
|
New Source Performance
Standards Group II:
Likely to include Standards for:
|
Proposal
|
-
Petroleum refineries
-
Asphalt batch plants
-
Iron and steel mills
-
Non-ferrous smelters
-
Pulp and paper mills
-
Aluminum reduction plants
-
Phosphate fertilizer
plants
-
Phosphorous reduction
plants
-
Animal feed defluorination
plants
-
Secondary lead smelters
-
Rendering plants
|
New Source Performance
Standards Group III:
Likely to include standards for:
|
Proposal
|
-
Petrochemical plants
-
Ferro-alloy plants
-
Grey iron foundries
-
Lime plants
-
Grain milling and handling
-
Soap and detergent plants
-
Coal cleaning plants
-
Phosphoric acid plants
-
Cotton gins
-
Paint and varnish plants
-
Graphic arts plants
-
Brass and bronze refining
-
Chlorine and caustic acid
plants
-
Hydrochloric acid plants
-
Industrial-size fuel burning
units
|
Aircraft and Aircraft Engine
Emission Standards
|
Proposal
|
|
Regulations on Lead and
Phosphorous as Fuel Additives
|
Proposal
|
|
Regulations on Registration of
Fuel Additives
|
Proposal
|
|
Regulation, Standard or Guideline
|
Proposal or Promulgation
|
|
Motor Vehicle Certification Regulations
|
Proposal
|
|
Motor Vehicle Maintenance
Regulations
|
Proposal
|
|
National Emission Standards
for Hazardous Air Pollutants: Cadmium, Lead,
Arsenic
|
Proposal
|
Federal Water Quality Bill
Selected Regulations Standards, Guidelines
|
Proposal or Promulgation
|
|
Effluent Limitations for Point
Sources: Best Practicable Control Technology
(set on a source category basis)
|
Proposal
|
|
Secondary Treatment Standards,
Publicly Owned Treatment Works
|
Proposal
|
|
Effluent Limitations for Point
Sources: Best Available Technology
|
Proposal
|
|
Pretreatment
Regulations
|
Proposal
|
|
Water Quality Standards for
Navigable Waters
|
Proposal
|
|
Toxic and Pretreatment
Effluent Standards
|
Proposal
|
|
National Standards of
Performance for New Sources
|
Proposal
|
|
Hazardous Substance
Regulations
|
Proposal
|
|
Federal Standards of
Performance for Marine Sanitation Devices
|
Proposal
|
|
Thermal Effluent
Limitations
|
Proposal
|
|
Regulations Respecting
Discharge of Aquaculture Related Pollutants
|
Proposal
|
|
1/
|
Department of Commerce
has requested that OMB conduct a Quality of
Life Review for proposed
effluent standards for 43 industries.
|
|
Appendix D
Estimates of Aggregated Economic
Impact: EPA Regulations Proposed or Promulgated to Date under
Authority of the Clean Air Act Which Have Gone Through the Quality
of Life Review Process.
($000,000)
|
Standard, Regulation
Guideline
|
1972-77
Capital Costs
|
1972-77
Operating Costs
|
Current Status
|
|
Requirements for preparation, adoption, and submittal of
implementation plans. (Designed to achieve compliance with
National Ambient Air Quality Standards which did not go
through the Quality of Life Review.)
|
21,000 1/
|
30,000 1/ ($6 billion/ annually) 2/
|
Promulgated
|
|
National Emission Standards for Hazardous Air
Pollutants
|
16
|
30
|
Proposed
|
|
Regulations affecting the use of lead and phosphorous
additives in gasoline
|
2,000
|
1,302
|
Proposed
|
|
Standards of Performance for New Stationary Sources:
Group I
|
3,200
($640M/year)
|
900
($180M/year) 2/
|
Promulgated
|
|
Control of Air Pollution from New Motor Vehicles and New
Motor Vehicle Engines: Heavy Duty Engines
|
--
|
10
|
Final
|
|
Control of Air Pollution from New Motor Vehicles and New
Motor Vehicle Engines: Proposed Modification to allowable
maintenance on light duty vehicles
|
--
|
6,750 2/
($1.35 billion /
annually)
|
To be proposed
|
|
Administration of the Clean Air act with respect to
Federal contracts, grants, or loans
|
n.a.
|
n.a.
|
To be proposed
|
|
Control of Air Pollution from Aircraft and Aircraft
Engines
|
150
|
n.a.
|
To be proposed
|
|
Approval and Promulgation of state Implementation Plans:
Sulfur Oxide Limitations for Nonferrous smelters
|
500
|
n.a.
|
Proposed
|
|
Total
|
$26,866
|
$38,992
|
|
|
Total Capital and Operation Costs
|
$65,858
|
|
|
|
1/ Includes first year costs of 1975,
1976 automobile emission standards.
2/ Operating costs at this level will continue beyond
1977.
|
|
|
Appendix D:
|
Estimate of Costs to be
Incurred as a Result o the Requirements of the Federal
Water Pollution Control Act of 1972
|
|
Municipal Costs
$ billions
|
|
Level of removal
|
Capital investment
expenditures
1/ 2/
|
Operating
costs
|
Total
Expenditures
|
Annualized costs in 1981
3/
|
|
80% at 95-99 and 20% at 100% (zero discharge goal)
|
4/
|
29.0
|
43.4
|
72.4
|
7.0
|
|
95-99% (best available technology)
|
21.3
|
33.6
|
54.9
|
4.2
|
|
85-90% (current program)
|
10.6
|
16.2
|
26.8
|
2.0
|
|
1/
|
Assumes investment put in place by 1981.
|
|
2/
|
Includes only treatment costs.
Interceptors and other facilities related to treatment and
eligible for Federal grants would raise each of the
figures in this column by $12.0 billion.
|
|
3/
|
Depreciation over 25-year
life, interest at 6.0 percent, and operating costs in
1981.
|
|
4/
|
Interpretation of zero
discharge goal.
|
|
|
|
|
|
Industrial Costs
$ billions
|
|
Level of removal
|
Capital investment
expenditures
1/ 2/
|
Operating
costs
|
Total
Expenditures
|
Annualized costs in 1981
3/
|
|
80% at 95-99 and 20% at 100% (zero discharge goal)
|
3/
|
18.2
|
66.7
|
84.9
|
5.4
|
|
95-99% (best available technology)
|
14.0
|
49.9
|
63.9
|
4.2
|
|
85-90% (current program)
|
7.0
|
27.0
|
34.0
|
2.1
|
|
1/
|
Assumes investment put in place by 1981.
|
|
2/
|
Depreciation for 25 years,
interest at 8.0 percent, and operating costs in
1981.
|
|
3/
|
Interpretation of zero
discharge goal.
|
|
|
|
|
|