REGULATIONS: House panel says EPA ignores law, mistreats small businesses

REGULATIONS: House panel says EPA ignores law, mistreats small businesses

E & E News
Jean Chemnick, E&E reporter

Published June 28, 2012

U.S. EPA under President Obama has frequently given short shrift to the needs and concerns of small businesses when crafting regulations, business-sector critics of the agency told the House Small Business Committee yesterday.

The hearing was attended almost exclusively by Republican committee members and came after the House passed two bills last year that would dramatically change the way agencies craft regulation — H.R. 527 http://www.eenews.net/bills/112/House/281111150628.pdf> , the “Regulatory Flexibility Improvement Act of 2011,” and H.R. 10 ” http://www.eenews.net/bills/112/House/210111165217.pdf> , the “Regulations from the Executive in Need of Scrutiny Act.” The bills are stalled in the Senate.

Panel Chairman Sam Graves (R-Mo.) said at the top of the hearing that the Obama administration was “apathetic and out of touch” with small businesses, which he said “are disproportionately burdened by the cost of regulations in comparison to their larger counterparts by virtue of their size and resources.”

The Regulatory Flexibility Act (RFA), which was enacted in 1980 with bipartisan support, is meant to ensure that an agency considers the effect individual regulations will have on small businesses.

But Graves said EPA is not meeting its legal obligations under the law. “By failing to comply with the RFA, the EPA imposes unnecessary burdens on small business instead of using small business input to craft better tailored regulations that address specific problems,” he said.

The 1980 law requires an agency to seek input from a panel of small business stakeholders before promulgating a rule that would significantly affect a large number of small entities.

Witnesses told the panel that EPA appeared to be taking a “check the boxes” approach to the law, either finding some reason not to convene a panel to advise on a rule, or assembling one but not giving adequate consideration to its recommendations.

“They don’t do panels when they’re supposed to do them,” said Keith Holman, legal policy counsel for environmental and regulatory issues with the U.S. Chamber of Commerce.

For example, he said that EPA had refused to convene a panel to consider the effect on small businesses of its 2009 endangerment finding for greenhouse gases and the rules that followed that finding.

David Doniger, who works on greenhouse gas issues for the Natural Resources Defense Council, said in an email last night that the RFA provision probably wouldn’t apply to the endangerment finding.

“It wouldn’t be a basis for judicial review,” he said.

The panel process generally extends the rulemaking process by several months, so EPA has frequently claimed it does not have time to complete it because it is under court order to put out a rule by a certain date, Holman said. He gave as an example EPA’s proposed carbon dioxide rule for new power plants, which was written under the terms of a settlement agreement. The agency released the proposed rule in March, months after its original deadline.

“This is a critical problem for the process,” Holman said.

Even when the agency does convene a small business advocacy review panel to consult on the rule, industry witnesses complained that the panel’s recommendations are not adopted.

Jeff Brediger, director of utilities for Orrville Utilities in Ohio said this was the case with EPA’s mercury rule for industrial boilers and incinerators.

After its first Boiler MACT rule was scrapped, EPA convened a small business stakeholder panel ahead of rewriting the rule. But Brediger said it did not incorporate the panel’s recommendations, including one that would have allowed certain boiler owners to avoid installing hydrogen chloride scrubbers.

“In our view, the process failed,” Brediger said.

James Pew, an attorney for the environmental law firm Earthjustice, said in an email that he was not familiar with the panel’s recommendations.

“In general, EPA already sets its MACT [maximum achievable control technology] standards at the minimum possible stringency known as the floor,” he said. “It is difficult to imagine how any alternative less stringent than the floor would be lawful.”

Brediger, Holman, and David Merrick, who owns and runs a remodeling business in Kensington, Md., told the committee they wanted Congress to intervene for them by enacting legislation giving lawmakers more direct control over EPA rulemaking.

“We think it is Congress’ job to stop some of these things before they come out,” Brediger said.

The so-called “REINS Act” would require Congress to approve any new regulation before it takes effect.

But Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce, told the committee that this requirement would “shut down all future regulation.”

He said that if EPA is not meeting its obligations under RFA it might be for lack of resources.

“While there are voices we hear in Washington critical of the EPA, and calls for cutting back or freezing the regulatory process, the reality is that it can work better for small businesses and the public if EPA was better funded,” he said.

Knapp, who testified on behalf of the American Sustainable Business Council, was roundly criticized by members of the committee.

Rep. Richard Hanna (R-N.Y.) said members of the committee were wondering if Knapp was “really a businessman.” Rep. Mick Mulvaney (R-S.C.) spent his allotted time seeking to link Knapp, the hearing’s only witness who was invited by Democrats, to left-leaning business groups like the Main Street Alliance and Small Business Majority.

Graves promised that Congress would continue to exercise oversight over EPA. Administrator Lisa Jackson was set to testify before the House Science, Space and Technology today, but the hearing was postponed late yesterday. Graves said his panel would submit a letter to her detailing its concerns.

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