REGULATORY

FLEXIBILITY ACT

Implementation in

EPA Program Offices

and Proposed Lead

Rule

United States General Accounting Office

GAO Report to the Chairman

Committee on Small Business

U.S. Senate

September 2000

GAO/GGD-00-193

United States General Accounting Office General Government Division

Washington, D.C. 20548

Page 1 GAO/GGD-00-193 Regulatory Flexibility Act

B-284265

September 20, 2000

The Honorable Christopher S. Bond

Chairman, Committee on Small Business

United States Senate

Dear Mr. Chairman:

On August 3, 1999, the Environmental Protection Agency’s (EPA) Office of

Prevention, Pesticides and Toxic Substances (OPPTS) published a

proposed rule in the Federal Register that would, upon implementation,

lower certain reporting thresholds for lead and lead compounds under the

Toxics Release Inventory (TRI) program from 25,000 pounds to 10

pounds.1

 OPPTS said the proposed lead rule would have positive effects

on health, safety, and the natural environment, but it did not assign a dollar

value to those benefits due to the lack of adequate methodologies. OPPTS

estimated that the rule would cost businesses $116 million during the first

year of implementation and that approximately 5,600 small businesses

would be affected by the rule. However, OPPTS said that none of these

small businesses would experience annual compliance costs above 1

percent of annual sales and that the proposed rule would, therefore, not

impose significant compliance costs on any of these small businesses. As

a result, OPPTS certified that the rule would not have a significant

economic impact on a substantial number of small entities (SEISNSE) and

did not trigger certain analytical and procedural requirements of the

Regulatory Flexibility Act (RFA), as amended.2

 Concerns were

subsequently raised regarding the methodologies that OPPTS used in its

analysis and its conclusions about the impact of the rule on small

businesses.

This report responds to your request that we review OPPTS’

implementation of the RFA and certain aspects of OPPTS’ economic

analysis of its proposed lead rule. Specifically, you asked us to

 

1

64 Fed. Reg. 42222 (1999). In this report, the rule will be referred to as “the proposed lead rule.”

2

The RFA is codified at 5 U.S.C. 601-612. Section 601 of the RFA defines a “small entity” as including

small businesses, small governmental jurisdictions, and other small organizations. The RFA

incorporates the generally accepted meanings of small business as established by the Small Business

Administration through size standards that define whether a business is small. For example, the size

standard is 500 employees for about 75 percent of the manufacturing industries, and either 750, 1,000,

or 1,500 for the remaining manufacturing industries.
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• describe the guidance that OPPTS and EPA’s three other major program

offices have used during the past 10 years to determine whether their

proposed rules could be certified as not having a SEISNSE;

• compare the rate at which OPPTS certified that its substantive proposed

rules published during calendar years 1994 through 1999 would not have a

SEISNSE with the rates in EPA’s other major program offices; and

• review the methodology that OPPTS used in the economic analysis for the

proposed lead rule and (1) describe key aspects of that methodology that

may have contributed to the Office’s conclusion that the rule would not

have a SEISNSE, (2) determine whether and, if so, how OPPTS has

changed its economic analysis since publication of the rule, and (3)

determine whether additional data or analysis could have yielded a

different conclusion about the rule’s impact on small entities.

Under the RFA, federal agencies have broad discretion regarding how key

terms in the act should be defined and how RFA certification decisions

should be made. Using that discretion, OPPTS and EPA’s other major

program offices have adopted three very different sets of guidance

documents during the past 10 years to determine if their proposed rules

could be certified as not having a SEISNSE. The current guidance was

implemented because of the enactment of the Small Business Regulatory

Enforcement Fairness Act (SBREFA) in 1996. The guidance includes

specific numerical guidelines to assist EPA program offices in determining

whether a rule should be certified as not having a SEISNSE. Those

guidelines focus on the magnitude of a rule’s impact (e.g., estimated

annual compliance costs as a percentage of estimated annual revenues)

and the number and percent of affected small entities that are expected to

experience that impact. For example, the guidance indicates that a rule

should be presumed eligible for certification if it does not impose a 1

percent economic impact on any number of small entities. However, this

guidance and the two preceding sets of guidance also give agency

personnel broad discretion in how they should be applied.

OPPTS certified 86 percent of the substantive proposed rules that it

published during calendar years 1994 through 1999—about the same rate

of rule certification as EPA’s three other major program offices. The RFA

certification rate in OPPTS and in each of the three other major program

offices increased after the implementation of SBREFA in 1996. By the end

of 1999, OPPTS and one other program office had certified all of their postSBREFA proposed rules as not having a SEISNSE. Two other EPA

program offices used the discretion afforded them in the guidance and did

not certify at least four proposed rules published during this period that

the numerical guidelines would have allowed them to certify.

Results In Brief
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OPPTS made a number of assumptions in the original economic analysis

for the proposed lead rule that contributed to its determination that no

small entities would experience significant economic effects. For

example, to estimate the annual revenues of companies expected to file

new reports for lead, OPPTS assumed that (1) the new filers would have

employment and economic characteristics similar to current TRI filers, (2)

different types of manufacturers would experience similar economic

effects, and (3) the revenues of the smallest manufacturers covered by the

proposed rule could be exemplified by the firm at the 25th percentile of the

Office’s projected revenue distribution for small manufacturers. As a

result of these and other assumptions, OPPTS estimated that the smallest

manufacturers affected by the proposed lead rule had annual revenues of

$4 million. Using that and other information, OPPTS concluded that the

rule would affect about 5,600 small businesses, but none of them would

experience first-year compliance costs of 1 percent or more of their annual

revenues. Therefore, OPPTS certified that the proposed lead rule would

not have a SEISNSE.

OPPTS revised these and other parts of the economic analysis for the

proposed lead rule before submitting it to the Office of Management and

Budget (OMB) for final review in July 2000.3

 According to a summary of

the draft revised economic analysis, OPPTS expected that the proposed

lead rule would affect more than 8,600 small companies, and as many as

464 of them would experience first-year compliance costs of at least 1

percent of their annual revenues. Nevertheless, OPPTS again concluded

that the rule would not have a SEISNSE. Using data that we obtained from

the Bureau of the Census, we estimated that as many as 1,098 additional

small manufacturing companies could experience compliance costs of at

least 1 percent of their annual revenues, and as many as 78 small

companies could experience a 3 percent economic impact. Therefore, if

OPPTS had used this analytic approach and the discretion permitted in

EPA’s RFA guidance, it could have chosen not to certify the rule.

However, the Office’s initial and draft revised analyses and the conclusions

that it based on those analyses were within the discretion permitted under

the RFA and the EPA guidance.

The RFA of 1980 requires federal agencies to examine the impact of their

proposed and final rules on small entities and to solicit the ideas and

comments of such entities for this purpose. Specifically, whenever

agencies are required to publish a notice of proposed rulemaking (NPRM),

 

3

Under Executive Order 12866, issued in September 1993, federal agencies must submit their significant

draft proposed and final rules to OMB before publishing them in the Federal Register.

Background
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sections 603 and 604 of the RFA require agencies to prepare an initial and a

final regulatory flexibility analysis (known as an IRFA and a FRFA,

respectively) when publishing a proposed and final rule. However,

subsection 605(b) of the RFA says that sections 603 and 604 do not apply

to any proposed or final rule if the head of the agency certifies that the rule

will not have a SEISNSE. The RFA took effect on January 1, 1981.

On March 29, 1996, Congress passed SBREFA to strengthen the RFA’s

protections for small entities. Among other things, SBREFA requires that

before publishing an NPRM that may have a SEISNSE, EPA must convene

a small business advocacy review panel for the draft rule.4

 Composed of

representatives from EPA and OMB’s Office of Information and Regulatory

Affairs (OIRA) and the Small Business Administration’s (SBA) Chief

Counsel for Advocacy, the panel must collect the advice and

recommendations of representatives of affected small entities about the

potential impact of the draft rule. The panel must report on the comments

that it receives from small entities and on the panel’s recommendations no

later than 60 days after the panel is convened. EPA then decides whether

to change the rule pursuant to the panel’s recommendations and to publish

the NPRM. SBREFA also amended the RFA to allow small entities that are

adversely affected by a rule to seek judicial review of the agency’s

compliance with certain provisions of the RFA, including the agency’s

certification determinations under subsection 605(b) of the act.

The RFA requires agencies to either certify that a proposed rule will not

have a SEISNSE or conduct an IRFA. It does not specifically require

agencies to determine whether or not the rule will have a SEISNSE.

Therefore, EPA officials said that the agency never determines that a

proposed rule will have a SEISNSE. The agency either certifies the rule

will not have a SEISNSE or prepares an IRFA. EPA officials emphasized

that preparing an IRFA does not mean that the agency has concluded that

the rule will have a SEISNSE.

We have issued several reports in recent years on the implementation of

the RFA and SBREFA.

• In our 1991 report on the RFA and small governments, we concluded that

each of the four federal agencies we reviewed had a different

 4

These requirements are codified at 5 U.S.C. 609. The Occupational Safety and Health Administration

within the Department of Labor is also required to convene advocacy review panels in these

circumstances.

Previous Reports on the

RFA and SBREFA
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interpretation of key RFA provisions.5 We said that the act allowed

agencies to interpret when they believed their proposed regulations

affected small governments. We recommended that Congress consider

amending the RFA to require SBA to develop criteria regarding whether

and how to conduct the required analyses.

• In our 1994 report on the RFA, we noted that the act required the SBA

Chief Counsel for Advocacy to monitor agencies’ compliance. However,

we also said that one reason for agencies’ lack of compliance with the

RFA’s requirements was that the act did not expressly authorize SBA to

interpret key provisions in the statute and did not require SBA to develop

criteria for agencies to follow in reviewing their rules.6

 We said that if

Congress wanted to strengthen the implementation of the RFA, it should

consider amending the act to (1) provide SBA with clearer authority and

responsibility to interpret the RFA’s provisions; and (2) require SBA, in

consultation with OMB, to develop criteria as to whether and how federal

agencies should conduct RFA analyses.

• In our 1998 report on the implementation of the small business advocacy

review requirements in SBREFA, we said that the lack of clarity regarding

whether EPA should have convened panels for two of its proposed rules

was traceable to the lack of agreed-upon governmentwide criteria as to

whether a rule has a SEISNSE.7

 We said that if Congress wished to clarify

and strengthen the implementation of the RFA and SBREFA, it should

consider (1) providing SBA or another entity with clearer authority and

responsibility to interpret the RFA’s provisions and (2) requiring SBA or

some other entity to develop criteria defining a SEISNSE.

• In 1999, we noted a similar lack of clarity regarding the RFA’s

requirements for the review of existing rules under section 610 of the act,

and we recommended that Congress and OIRA take action to clarify those

issues.8

To date, Congress has not acted on any of our recommendations to clarify

key terms in the RFA.

 

5

Regulatory Flexibility Act: Inherent Weaknesses May Limit Its Usefulness for Small Governments

(GAO/HRD-91-61, Jan. 11, 1991).

6

Regulatory Flexibility Act: Status of Agencies’ Compliance (GAO/GGD-94-105, Apr. 27, 1994). In this

report, we noted that the SBA Chief Counsel for Advocacy had repeatedly considered EPA to be in

compliance with the RFA.

7

Regulatory Reform: Implementation of the Small Business Advocacy Review Panel Requirements

(GAO/GGD-98-36, Mar. 18, 1998).

8

Regulatory Flexibility Act: Agencies’ Interpretations of Review Requirements Vary (GAO/GGD-99-55,

Apr. 2, 1999).
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Although EPA has numerous headquarters and regional offices, its four

major program offices issue most of the agency’s regulations. Those

offices are as follows:

• OPPTS, which develops national strategies for toxic substance control,

promotes pollution prevention, and evaluates the safety of pesticides and

chemicals;

• the Office of Air and Radiation, which oversees air and radiation

protection activities;

• the Office of Solid Waste and Emergency Response, which provides policy,

guidance, and direction for the land disposal of hazardous wastes,

underground storage tanks, solid waste management, encouragement of

innovative technologies, source reduction of wastes and the Superfund

program; and

• the Office of Water, which is responsible for water quality activities

including development of national programs, technical policies, and

regulations relating to drinking water, water quality, ground water,

pollution source standards, and the protection of wetlands, marine, and

estuarine areas.

Until October 1999, OPPTS was also primarily responsible for promoting

the public’s right to know about chemical risks.9

 One key element of this

responsibility is the TRI program, which is a database created to inform

the public about chemical hazards in their communities. TRI reporting is

required by Section 313 of the Emergency Planning and Community Rightto-Know Act of 1986 (EPCRA),10 which was enacted in response to serious

chemical releases by plants in Bhopal, India, and West Virginia. Section

313 of the act generally requires facilities to report the amounts of various

toxic chemicals that they release to the environment and requires EPA to

make this information available to the public. EPCRA originally required

that reports be filed by owners and operators of facilities that (1) had 10 or

more full-time employees; (2) were in Standard Industrial Classification

(SIC) codes 20 through 39 (manufacturing); 11 and (3) manufactured,

 

9

In October 1999, this responsibility was given to EPA’s new Office of Environmental Information.

However, OPPTS officials and staff remained involved in the proposed lead rule. To simplify the

presentation of this report, some of the actions taken after October 1999 by this new Office in relation

to the proposed lead rule are described as OPPTS actions.

1042 U.S.C. 11001-11050, 11023. Reporting is also required under the Pollution Prevention Act of 1990

(42 U.S.C. 13101-13109, 13106), which added reporting requirements to EPCRA’s reporting

requirements beginning in 1991.

11The SIC code classification system was used by the federal and state governments, trade associations,

and research organizations. On April 9, 1997, OMB decided to replace the SIC code system with the

North American Industry Classification System. However, the TRI program still uses the SIC code

EPA Program Offices

The TRI Program
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processed, or otherwise used any chemical listed in the act in quantities

greater than the established thresholds in the course of a calendar year.

EPCRA gave EPA the authority to add other industries that have to report,

to add chemicals for which reports have to be filed, and to change

reporting thresholds. Starting with reporting year 1998, EPA added seven

nonmanufacturing industries to the program’s coverage.12 Previously, EPA

had also added nearly 300 toxic substances to the more than 300 that were

originally listed in EPCRA.13

The specific industries covered by the TRI program are identified by SIC

code. In the SIC code system, major groups of industries are coded with 2

digits, and additional digits are used hierarchically to classify different

industries within the major group. For example, SIC code 36 is for

manufacturers of “electronic and other electrical equipment and

components,” which includes all companies in SIC codes starting with 36,

such as SIC code 367 “electronic components and accessories.”

Correspondingly, SIC code 367 contains all companies in the more

narrowly defined SIC code 3672 for “printed circuit boards.”

The TRI report, known as a Form R, must be at least five pages in length,

and consists of both facility identification information and chemicalspecific information. The chemical-specific information that must be

included in the report includes (1) the quantity of the chemical entering

each environmental medium on-site (e.g., fugitive or nonpoint air

emissions, discharges to each receiving stream or water body,

underground injection on-site into wells, and disposing to land on-site); (2)

transfers of the chemical in wastes to off-site locations (e.g., publicly

owned treatment works); (3) on-site treatment methods and efficiency

(e.g., waste treatment methods sequence and range of influent

concentration); and (4) source reduction and recycling activities (e.g., the

quantity released, used for energy recovery, recycled on-site, and treated

off-site). Facilities must keep a copy of each report filed for at least 3

years from the date of submission and must also maintain those

documents, calculations, worksheets, and other forms upon which they

 categories because EPCRA specifically references SIC codes 20 through 39. All of the data in this

report use the 1987 SIC code definitions.

1262 Fed. Reg. 23834 (1997). The added industries were metal mining (SIC 10), coal mining (SIC 12),

electric services (SIC 4911), electric and other services combined (SIC 4931), combination utilities (not

elsewhere classified) (SIC 4939), refuse systems (SIC 4953), chemicals and allied products (not

elsewhere classified) (SIC 5169), petroleum bulk plants and terminals (SIC 5171), and solvent recovery

services (SIC 7389). The TRI program covers only certain types of facilities in some of these SIC

codes.

1359 Fed. Reg. 61432 (1994).
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relied to gather information for prior reports. EPA may conduct data

quality reviews of Form R submissions, and the agency said that a “partial

list” of records, organized by year, that a facility should maintain includes

• previous years’ reports,

• engineering calculations and worksheets,

• purchase records from suppliers,

• inventory data,

• monitoring records and flowmeter data,

• pretreatment reports filed with local governments,

• invoices from waste management companies,

• manufacturers’ estimates of treatment efficiencies,

• process diagrams that indicate emissions and other releases,

• EPA permits and monitoring reports,

• hazardous waste generator’s reports and manifests under the Resource

Conservation and Recovery Act, and

• records for those EPCRA Section 313 chemicals for which they did not file

TRI reports.

However, section 313(b) of EPCRA states that facilities “may use readily

available data (including monitoring data) collected pursuant to other

provisions of law, or, where such data are not readily available, reasonable

estimates of the amounts involved.” In 1994, EPA established a less

burdensome substitute for reporting Form R information based on an

alternate threshold for facilities with low amounts of EPCRA Section 313

chemicals in waste. However, EPA said that the Form A was not

applicable to the proposed lead rule.

The first objective of our review was to describe the guidance that OPPTS

and EPA’s other major program offices have used during the past 10 years

to determine whether their proposed rules could be certified as not having

a SEISNSE. To address this objective, we obtained and reviewed the three

sets of guidance documents that EPA had in effect at different times

during those 10 years. We also obtained explanations from EPA officials of

how the guidance documents were used, why the guidance was changed,

and whether the current guidance would be changed.

Our second objective was to compare the rate at which OPPTS certified

that its substantive proposed rules published during calendar years 1994

through 1999 would not have a SEISNSE with the rates in EPA’s other

major program offices. To address this objective, we first developed a list

of proposed rules published by each of the four major program offices

from January 1, 1994, through December 31, 1999. We identified the

Objectives, Scope, and

Methodology
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proposed rules for this list by searching the LEXIS-NEXIS database of the

Federal Register for any notices involving proposed rules issued by these

program offices during this period. EPA officials also identified some

proposed rules that had not been identified by LEXIS-NEXIS. We excluded

from our list of proposed rules a number of actions that were not

substantive proposed rules. For example, we excluded advance notices of

proposed rulemakings and notices that primarily announced meetings or

the availability of data. We included proposals to add, streamline, or

amend existing regulations and earlier proposed rules. We then reviewed

the content of the Federal Register notices for each of the substantive

proposed rules that we identified for the 1994 through 1999 period to

determine whether the relevant EPA program office certified the rule as

not having a SEISNSE. We considered a rule to be certified when the

language in the notice either specifically stated that the program office was

certifying the rule or more generally indicated that the rule would not have

a SEISNSE.

Our third objective had multiple parts: (1) to describe key aspects of the

methodology that OPPTS used in the economic analysis for the proposed

lead rule that may have contributed to the Office’s conclusion that the rule

would not have a SEISNSE; (2) to determine whether and, if so, how

OPPTS had changed its economic analysis since publication of the rule;

and (3) to determine whether additional data or analysis could have

yielded a different conclusion about the rule’s impact on small entities. To

address the first part of this objective, we reviewed the economic analysis

that OPPTS prepared for the proposed lead rule and discussed the analysis

with OPPTS officials and staff. To address the second part of this

objective, we interviewed these officials and staff to determine how the

economic analysis had changed since the publication of the proposed rule

and obtained draft copies of documents summarizing those changes.

However, neither OPPTS nor OIRA officials would provide us with the

draft final rule or the revised economic analysis that OPPTS submitted to

OIRA on July 13, 2000. An OIRA official cited section 6(b)(4)(D) of

Executive Order 12866, which says that OIRA must make available to the

public all documents exchanged between OIRA and the agency “(a)fter the

regulatory action has been published in the Federal Register or otherwise

issued to the public, or after the agency has announced its decision not to

publish or issue the regulatory action.” To address the third part of this

objective, we obtained and analyzed unpublished data from the 1997

Census of Manufactures and reviewed OPPTS’ initial economic analysis of

the proposed lead rule and a summary of the draft revised economic

analysis. The specific methodology and assumptions that we used in this

part of our review are described later in this report.
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We conducted this review from November 1999 until August 2000 in

accordance with generally accepted government auditing standards. We

provided a draft of this report to the OMB Director and the EPA

Administrator for their review and comments. OMB said they had no

comments on the report. EPA’s comments are discussed at the end of this

letter and reproduced in appendix I.

Under the RFA, federal agencies have broad discretion regarding how key

terms in the act should be defined and how certification decisions should

be made. OPPTS and the other EPA program offices have adopted three

very different sets of guidance documents during the past 10 years to

determine if their proposed rules could be certified as not having a

SEISNSE. The current guidance was implemented in 1996 because of the

enactment of SBREFA. The guidance focuses on the magnitude of a rule’s

impact (e.g., estimated annual compliance costs as a percentage of

estimated annual revenues) and the number and percent of affected small

entities that are expected to experience that impact. However, this

guidance (and its predecessors) gives agency personnel broad discretion in

how it should be applied.

The RFA does not define what Congress meant by the terms “significant

economic impact” or “substantial number of small entities” and does not

give SBA, OMB, or any other entity the authority or responsibility to define

these terms governmentwide. Neither does the act prescribe how federal

agencies should determine whether a proposed or final rule could be

certified as not having a SEISNSE. Subsection 605(b) of the act simply

says that any certification must be published in the Federal Register with

the rule “along with a statement providing the factual basis for such

certification.” Therefore, agencies have broad discretion to determine how

these terms should be defined and how they should reach certification

decisions. EPA has used that discretion to develop three different sets of

RFA guidance documents.

EPA issued its first guidance document for assessing whether a proposed

rule could be certified as not having a SEISNSE in 1982—the year after the

RFA took effect. According to the guidance, a proposed rule was to be

considered to have a “significant economic impact” on small entities

whenever any of the following guidelines were satisfied:

• The annual cost of complying with the proposed rule would increase the

total costs of production by more than 5 percent.

EPA’s Guidance for

RFA Certification Have

Changed Over Time

EPA Has Used Three

Different Sets of RFA

Guidance Documents

EPA’s 1982 RFA Guidance

Document
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• The annual cost of complying with the proposed rule as a percentage of

annual sales for small entities is at least 10 percent higher than compliance

costs as a percentage of sales for large entities.

• Capital costs of compliance with the proposed rule represent a significant

portion of capital available to small entities, considering internal cash flow

plus external financing capabilities.

• The requirements of the proposed rule are likely to result in closures of

small entities.

The 1982 guidance document generally defined “a substantial number of

small entities” as more than 20 percent of all small entities affected by the

proposed rule. Therefore, using the first of the “significant economic

impact” guidelines above, if the relevant program office expected that a

proposed rule would raise the cost of production by more than 5 percent

for more than 20 percent of the small entities affected by the rule, the

program office should not certify the rule and should conduct an IRFA.

However, the 1982 guidance document gave the program offices

substantial discretion in how these guidelines should be applied. For

example, the guidance document said that the program office could

consider other, similar definitions for the term “significant economic

impact” if the above guidelines were not appropriate. It also said that the

program office should “use its best judgment on a case-by-case basis” in

deciding whether to certify proposed rules that do not strictly meet the

conditions shown in the guidance document.

This flexibility notwithstanding, EPA said that applying this guidance was

sometimes difficult and time consuming. Therefore, in April 1992, EPA

issued a new guidance document instructing agency program offices that

they should prepare an IRFA for any draft rule that the agency expected to

have any impact on any small entities. According to EPA, the change to

what was later referred to as the agency’s “any/any” policy was intended to

shift agency resources from determining whether a regulatory flexibility

analysis was required to “the more productive consideration of regulatory

options for small entities that are subject to the rule.”

The 1992 guidance document stated that program offices “have wide

latitude in determining the level of analysis that is appropriate for

individual rulemakings.” They also said that the offices could use factors,

such as “the quality and quantity of available data” and “the severity of a

rule’s anticipated impacts on small entities,” in deciding how much effort

they needed to expend on the analysis. In addition, the 1992 guidance gave

EPA’s 1992 “Any/Any” RFA

Guidance Document
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program offices the option of continuing to follow the 1982 guidance for

rulemakings that had been initiated before the 1992 guidance was issued.

When the advocacy review panel requirements in SBREFA became

effective in June 1996, EPA instituted a new RFA policy that used the

magnitude of the proposed rule’s economic impact (e.g., estimated annual

cost of compliance as a percentage of estimated annual revenues) and the

number and percent of small entities expected to experience that impact

to help the program offices determine whether rules could be certified.

The new procedures were published as written agency guidance in 1997.

According to EPA officials, the agency changed its RFA guidance because

the SBREFA requirement to convene an advocacy review panel for any

proposed rule that was not certified made the continuation of the any/any

policy too costly and impractical. One EPA official also said the SBREFA

provision allowing judicial review of regulatory flexibility analyses meant

that EPA would have to make sure that all of its IRFAs could withstand

judicial scrutiny. Therefore, he said, EPA no longer had the option of

doing a limited analysis on rules that it believed would have a minimal

impact on small entities. The 1997 guidance document stated that the new

approach would allow EPA to “manage its scarce resources such that the

Agency can continue considering the potential small entity impacts of all

its rules while preparing full regulatory flexibility analyses for those rules

warranting such analyses under the RFA.”

The 1997 guidance document was updated in 1999, but the numerical

guidelines relating to the certification of rules as not having a SEISNSE

were essentially unchanged. However, the 1999 guidance document

emphasized that it “is not a binding agency procedural rule. In determining

and mitigating impacts on small entities, we anticipate that there will be

many situations in which agency staff and management must exercise

considerable judgment.” It also explicitly continued EPA’s policy “that

program offices should assess the direct impact of every rule on small

entities and minimize any adverse impact to the extent feasible, regardless

of the magnitude of the impact or the number of small entities affected.”

Nevertheless, the guidance document said that it was intended to provide

agency staff and management with an “analytic and sequential structure

that should be sufficient for most covered rulemakings.”

As figure 1 illustrates, EPA’s current guidance identifies different mixes of

economic impacts and the number and percent of affected small entities.

All of these factors are intended to help program offices determine when

to certify a rule as not having a SEISNSE, when not to certify a rule, and

EPA’s 1997 and 1999 RFA

Guidance Documents
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when to seek further guidance from EPA’s small business advocacy chair

(who is responsible for implementing the agency’s SBREFA small business

advocacy panel requirements).

Compliance costs

as a percent of

revenues of small

entities

Number of

small entities

affected

Percent of

small entities

afftected

Program office's

presumption

about proposed

rule

+ + =

Less than 1 percent

Any percent

Any number

3 percent or more

1 percent or more

Less than 100

100 to 999

Less than 100

Any percent

Less than 20

percent

Any percent

Can certify rule

as having no

SEISNSE

(presumed eligible

for certification)

1 percent or more

3 percent or more

1,000 or more

100 to 999

100 to 999

Must consult

EPA's small

business advocacy

chair in order to

certify rule (no

presumption)

20 percent or

more

Any percent

Must prepare

IRFA analysis and

convene a panel

(presumed

ineligible for

certification)

20 percent or

more

Less than 20

percent

Any percent

3 percent or more

1,000 or more

100 to 999

Source: GAO analysis of EPA’s 1999 Revised Interim Guidance on the RFA as amended by

SBREFA.

To illustrate how these numerical guidelines are applied, if a proposed rule

is expected to affect 1,000 small entities, and for 200 of those small entities

the rule’s compliance costs represent 3 percent of their annual sales, the

program office should presume that the rule cannot be certified. On the

other hand, if the rule affects 10,000 small entities but their compliance

costs never rise above 1 percent of their annual revenues, the guidance

Figure 1: EPA Numerical Guidelines to

Help Determine Whether a Proposed

Rule Has a SEISNSE
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Page 14 GAO/GGD-00-193 Regulatory Flexibility Act

indicates that the program office should presume that the rule can be

certified as not having a SEISNSE.

Although EPA’s current guidance document provides specific numerical

guidelines that program offices should use in determining whether a

proposed rule should be certified under the RFA, the guidance also gives

agency program offices substantial discretion regarding their application.

For example, the guidance indicates that program offices should consider

not certifying a rule if “the extent of the impact (measured in quantitative

or qualitative terms) is particularly severe, even though the number of

affected small entities totals fewer than 100 or 20% of all affected small

entities.” The guidance also says that “as the number of small entities that

will be affected by a rule by more than 1% of sales or revenues approaches

1000 in number, the substantial number guidelines of 20% of affected small

entities may become less relevant in determining whether a regulatory

flexibility analysis or a certification should be prepared.”

An EPA official told us that the agency is currently reevaluating its RFA

guidance document because it is concerned about how the numerical

guidelines could be viewed outside of the agency. For example, he said,

the guidance makes it appear that EPA believes a rule that would cost 99

small entities 100 percent of their annual sales would not have a SEISNSE.

He said that EPA is examining the feasibility of using compliance costs as

a percentage of profit margins (instead of annual sales) to measure

economic impacts on small businesses. However, he noted that EPA has

not used profit margins to measure the economic impacts of its rules in the

past because valid data on companies’ profit margins are often not readily

available.

OPPTS certified 86 percent of the substantive proposed rules that it

published during calendar years 1994 through 1999—about the same rate

of rule certification as EPA’s three other major program offices. The RFA

certification rate in OPPTS and in each of the three other major program

offices increased after the implementation of SBREFA in 1996. By the end

of 1999, OPPTS and one other program office had certified all of their postSBREFA proposed rules as not having a SEISNSE. Two other EPA

program offices used the discretion afforded them in the guidance and did

not certify at least four proposed rules published during this period that

the numerical guidelines in EPA’s guidance document would have allowed

them to certify.

Guidance Document Provides

Discretion in How Numerical

Guidelines Should be Applied

EPA’s RFA Guidance May Be

Revised Again

RFA Certification

Rates Increased After

SBREFA

Implementation
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EPA’s four major program offices published at least 654 substantive

proposed rules in the Federal Register during calendar years 1994 through

1999. Of these, 249 (38 percent) were tolerance actions or significant new

use rules (SNURs) issued by OPPTS. Tolerance actions are rules that

establish maximum levels for the amount of a pesticide residue that is

allowed on food or feed crops, or establish an exemption from the

statutory requirement for a tolerance. SNURs require anyone who intends

to manufacture, import, or process a chemical substance in a manner

designated in the SNUR as a “significant new use” to notify EPA before

beginning those actions. OPPTS said that these types of rules are unlikely

to have adverse economic impacts on entities (and may have positive

economic impacts) because tolerance actions allow, instead of prohibit,

the use of pesticides, and SNURs apply only when and if someone decides

to engage in a significant new use. Both of these types of actions are

issued on a chemical-by-chemical basis or for groups of chemicals.

Because the impacts of each type of action are basically the same from

chemical to chemical, EPA conducted a general analysis for each type and

established, in consultation with SBA’s Office of Advocacy, a generic

certification for both types of actions.14

We excluded these 249 tolerance actions and SNURs from our analysis

because we wanted to include only proposed rules that possibly could

have had a SEISNSE. We also excluded nine rules from the Office of Solid

Waste that proposed changes to EPA’s National Priorities List for

Uncontrolled Hazardous Waste Sites. EPA said that any economic impact

that results from these rules would occur only indirectly through

enforcement and cost-recovery actions, and case law indicates that the

RFA applies only to direct regulatory impacts.15 Therefore, our analysis

focused on the remaining 396 substantive proposed rules that the 4 major

program offices published during calendar years 1994 though 1999.

Table 1 shows the number and percent of these substantive rules that

EPA’s four major program offices proposed and certified between January

1, 1994, and the implementation of SBREFA (June 28, 1996); between

implementation and December 31, 1999; and for the full 1994 through 1999

period.

 

14For the blanket certifications for tolerance actions and SNURs, see 46 Fed. Reg. 24950 (1981) and 62

Fed. Reg. 29684 (1997), respectively.

15For a discussion of these cases, see Clean Water Act: Proposed Revisions to EPA Regulations to

Clean Up Polluted Waters (GAO/RCED-00-206R, June 21, 2000).

All EPA Program Offices

Certified Most of Their

Proposed Rules
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Pre-SBREFA

(Jan. 1, 1994 - June 27, 1996)

Post-SBREFA

(June 28, 1996 - Dec. 31, 1999)

Total

(Jan. 1, 1994 – Dec. 31, 1999)

Number of rules Number of rules Number of rules

EPA program office Proposed Certified

Percentage

of rules

certified Proposed Certified

Percentage

of rules

certified Proposed Certified

Percentage

of rules

certified

OPPTS 30 22 73 % 26 26 100 % 56 48 86 %

Office of Air and

Radiation

82 70 85 151 147 97 233 217 93

Office of Solid Waste 27 20 74 21 21 100 48 41 85

Office of Water 19 12 63 40 35 88 59 47 80

Total 158 124 78 238 229 96 396 353 89

Source: GAO analysis of EPA’s proposed rules for calendar years 1994 through 1999.

Overall, the four program offices certified the vast majority (89 percent) of

the proposed rules that they published during this period. OPPTS’ rate of

RFA certification throughout this period (86 percent) was within the range

of certification rates in the three other EPA program offices (80 percent to

93 percent). Notably, the rate of RFA certification in all four program

offices was substantially higher during the post-SBREFA period (96

percent) than before the act took effect (78 percent).16 OPPTS and the

Office of Solid Waste certified all of their proposed rules after the

implementation of SBREFA. EPA officials told us that the change in the

agency’s certification guidelines (from the “any/any” policy to the policy

adopted in 1996) led to the increase in the frequency of RFA certification

from what they described as the “artificially low” levels during the preSBREFA period.

Two of EPA’s program offices did not certify (i.e., they conducted an IRFA

and held an advocacy review panel) 9 of the 191 proposed rules that they

published during the post-SBREFA period of our review.17 The Office of

Water issued five of these nine rules, and the Office of Air and Radiation

issued four of the rules. For at least 4 of these 9 rules, the relevant program

 

16Our review of the NPRMs indicated that the program offices made RFA determinations for at least 30

of the proposed rules published before SBREFA using EPA’s 1982 guidelines rather than the 1992

guidelines. As noted previously, EPA’s 1992 guidelines expressly allowed the use of this earlier

guidance in rules that were under development before 1992.

17The Office of Air and Radiation and the Office of Water convened other advocacy review panels

during this period but had either not published a proposed rule by the end of 1999 or certified that the

rules would not have a SEISNSE.

Table 1: Number and percentage of proposed rules certified as having no SEISNSE by four EPA program offices between 1994

and 1999

EPA Program Offices Could

Have Certified More PostSBREFA Rules
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offices estimated that fewer than 100 small entities would experience

compliance costs of 1 or 3 percent of their annual revenues. 18

• The Office of Air and Radiation published two proposed rules on October

21, 1998, dealing with the transport of ozone.19 The Office estimated that

one of these rules would impose at least a 1 percent economic impact on

42 of the 153 affected small entities, and 22 small entities would

experience economic impacts of greater than 3 percent. The Office of Air

and Radiation estimated that the other ozone transport rule would impose

economic impacts of at least 1 percent on 39 of the 145 affected small

entities, and 22 would experience greater than 3 percent economic

impacts.

• The Office of Water published a proposed rule on June 25, 1998, dealing

with transportation equipment cleaning.20 The Office estimated that the

rule would impose at least a 1 percent economic impact on 75 of the 87

affected small entities, and 64 of these small entities would experience at

least a 3 percent economic impact. The Office of Water published another

rule on January 13, 1999, dealing with centralized waste treatment.21 The

Office estimated that the rule would impose at least a 1 percent economic

impact on 45 of the 63 affected small entities, and 23 of them would

experience at least a 3-percent impact.

Applying EPA’s numerical guidelines (1-percent or 3-percent impacts on

fewer than 100 small entities) to each of these rules, the Office of Air and

Radiation and the Office of Water could have presumed that the rules

would not have a SEISNSE. Instead, the program offices used the

discretion afforded them in the guidance documents, decided not to certify

the rules, prepared IRFAs for the rules, and convened advocacy review

panels. The preambles to the proposed rules did not indicate why these

offices decided not to certify the rules, and the RFA does not require the

offices to provide these explanations. However, EPA officials told us

during this review that in making their certification decisions, the offices

considered factors other than just the number of companies expected to

 

18One of the other five proposed rules met the numerical guidelines for being presumed ineligible for

certification, and two other rules had impacts that fell into the guidelines’ middle category—no

presumption about whether they should be certified as not having a SEISNSE. The Federal Register

notices for two rules did not contain enough information about the impacts of the proposed rules for

us to determine whether the rules met the numerical guidelines for being presumed eligible for

certification.

1963 Fed. Reg. 56292 (1998) and 63 Fed. Reg. 56394 (1998).

2063 Fed. Reg. 34686 (1998).

2164 Fed. Reg. 2280 (1999).
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experience 1 percent and 3 percent economic impacts. For example, in the

centralized waste treatment rule, EPA said that the range of impacts ran so

high above 3 percent for a number of firms that the office considered the

size of the impact more important than just the number of small firms

affected.

OPPTS made a number of assumptions in the original economic analysis

for the proposed lead rule. As a result of those assumptions, OPPTS

estimated that small manufacturers had annual revenues of $4 million.

These and other assumptions and methods led OPPTS to conclude that

although the rule would affect more than 5,600 small businesses, it would

not have a SEISNSE. OPPTS recently revised some of the assumptions in

its economic analysis, estimated that the rule would affect more than 8,600

small companies, and said that as many as 464 of them would experience

first-year compliance costs of between 1 and 3 percent of their annual

revenues. Nevertheless, OPPTS again concluded that the rule would not

have a SEISNSE. Using data that we obtained from the Bureau of the

Census, we estimated that as many as 1,098 additional small

manufacturing companies could experience compliance costs of at least 1

percent of their annual revenues, and as many as 78 small companies could

experience a 3 percent economic impact. If OPPTS had used this analytic

approach and applied the flexibility afforded in EPA’s RFA guidance, it

could have chosen not to certify the rule and conducted an advocacy

review panel. However, the Office’s initial and draft revised analyses and

the conclusions that it based on those studies were within the discretion

permitted agencies under the RFA and the EPA guidance.

In April 1998, the Vice President announced three initiatives designed to

expand the amount of information available to the public about the health

effects of chemicals. In one of those initiatives, he said that some

chemicals accumulate in our bodies and that some substances linked to

significant public health concerns were not subject to TRI reporting or are

reported only at levels far exceeding those linked to health effects.

Therefore, he said that EPA would review these “persistent

bioaccumulative toxics” (PBTs) and determine if they should be subject to

TRI reporting or lower reporting thresholds. The Vice President said any

regulatory changes would be finalized by December 1999 and would be

“fashioned in a way that minimizes cost and other burdens on business.”

In January 1999, OPPTS published an NPRM adding a number of PBT

chemicals to the TRI program and lowering the reporting thresholds for

Different Assumptions,

Data, and Analysis

Yield Different

Estimates of Lead

Rule’s Effects

Development of the

Proposed Lead Rule
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other PBT chemicals already covered by the TRI program.22 According to

OPPTS, the rule had an expedited development schedule in order to meet

the Vice President’s committed final issuance date. OPPTS said that it

received more than 35,000 public comments on its January 1999 PBT

proposal, many of which requested that the Office include lead and lead

compounds as PBT chemicals to be covered by the rule.

Rather than delay the issuance of the final PBT rule, OPPTS decided to

publish a separate proposed rule covering lead and lead compounds. At

the time of the proposal, a facility had to report under the TRI program if it

manufactured or processed 25,000 pounds of lead, or if it “otherwise used”

10,000 pounds of lead. The NPRM, published in August 1999, proposed

lowering the TRI reporting threshold for lead and lead compounds to 10

pounds. During the development of the rule OPPTS also considered

reporting thresholds of 1,000 pounds, 100 pounds, and 1 pound.

A number of the public comments on the proposed lead rule questioned

OPPTS’ conclusion that the rule would not have a SEISNSE. On November

15, 1999, OPPTS announced three public meetings to obtain comments on

issues relating to the proposed lead rule and requested comments on

specific issues related to its RFA certification. OPPTS held those public

meetings in November and December 1999, at which several of the

participants questioned the Office’s conclusions regarding the effect of the

rule on small entities. On July 13, 2000, OPPTS sent the draft final lead rule

and a revised economic analysis to OIRA for final review under Executive

Order 12866. OPPTS officials told us that they hoped to publish the final

rule in the Federal Register by the end of October 2000.

The methodology that OPPTS used to conclude that the proposed lead rule

would not have a SEISNSE was extremely complicated, involving

numerous steps and a variety of assumptions within each step. However,

the overall process essentially involved (1) estimating the number of

companies that would have to file new TRI reports at the new 10 pound

reporting threshold, (2) estimating the cost of complying with the rule in

the first year and in subsequent years, and (3) estimating the revenues of

the companies that would have to file the new reports.

Data are generally not available on the amount of lead and lead

compounds that individual facilities and companies manufacture, process,

or otherwise use each year. Therefore, OPPTS used six different methods

 

2264 Fed. Reg. 688 (1999). OPPTS published the final PBT rule on October 29, 1999, at 64 Fed. Reg.

58666 (1999).

OPPTS’ Economic Analysis

for the Proposed Lead Rule

Estimating the Number of

Companies Filing New Reports
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to develop SIC code-specific estimates of the number of facilities and

companies that would have to file additional TRI reports for lead and lead

compounds. Different methods were used in different industries. For

example, in the “air emission factor” method, OPPTS used lead and lead

compound air emissions as a proxy for minimum lead and lead compound

use in the pulp mill, asphalt paving, iron foundry, and primary and

secondary metals smelting industries.

Each of these estimation methods involved a number of assumptions. For

example, in many of the methods, OPPTS used the number of employees

to approximate a distribution of lead use within an industry. OPPTS also

assumed that lead use was proportional to the cost of materials or the

value of shipments and that certain facilities in each industry manufacture,

process, or otherwise use lead in their operations. In three of the six

methods, OPPTS used lead emissions as a proxy for minimum lead use—a

process that OPPTS said in the economic analysis underestimates the total

amount of lead used by a facility. However, OPPTS told us during this

review that in practice, this method generally does not result in

underestimates of the number of facilities that will use 10 pounds of lead.

They said that affected facilities generally appear to emit more than 10

pounds of lead, so their lead use would be above that level.

As a result of these methods and assumptions, OPPTS estimated that

15,043 facilities from 27 SIC codes and SIC code groupings would have to

file additional TRI reports at the proposed 10 pound reporting threshold—

a nearly 800-percent increase from the 1,902 facilities that reported for

lead and lead compounds in 1998 at the 25,000 and 10,000-pound

thresholds.23 OPPTS also estimated that these 15,043 facilities were in 8,175

parent companies, of which 6,874 (84 percent) were manufacturers (SIC

codes 20 through 39). (See fig. 2.) The other 1,301 companies that OPPTS

said would be affected by the rule were in 7 other SIC codes.

 

23Twenty-four individual SIC codes were at the 2, 3, and 4-digit levels, and three SIC code groupings

were for coal, oil, and wood-fired combustion in SIC codes 20 through 39.
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Note 1: OPPTS estimated that a total of 8,175 parent companies would be affected by the proposed

lead rule at the 10 pound reporting threshold.

Note 2: The petroleum bulk stations and terminals sector is SIC code 5171, and coal mining is SIC

code 12. “Other” includes electric services (SIC code 4911), electric and other services combined

(SIC code 4931), combination utilities not elsewhere classified (SIC code 4939), refuse systems (SIC

code 4953), and business services not elsewhere classified (SIC code 7389) .

Source: GAO analysis.

OPPTS also estimated that 5,620 (69 percent) of the 8,175 affected

companies were small companies. Several of the public comments that

OPPTS received on the proposed rule maintained that the Office’s

estimates of the number of affected facilities and companies, and the

number of small entities affected, were too low.

In addition to the 15,043 new TRI reports that OPPTS estimated would

come from companies in these 27 SIC codes and code groupings, the

Office identified 42 other 4-digit SIC codes in the economic analysis that it

said might also be affected by the proposed rule. Forty of these 42 SIC

codes each had more than 5 facilities reporting lead or lead compounds at

the current thresholds, which OPPTS said “may indicate that additional

facilities in these SIC codes use lead or lead compounds at levels below

current thresholds but above the proposed thresholds.”24 However, OPPTS 

24The other two SIC codes were listed on the basis of lead consumption data from the U.S. Geological

Survey (SIC code 3443—fabricated plate work) or because of the sector’s potential for processing

chemical products that contain lead as a trace constituent (SIC code 5169—wholesale distribution of

chemicals).

Figure 2: Most of the Parent Companies

Affected by the Proposed Lead Rule

Were Manufacturers
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Page 22 GAO/GGD-00-193 Regulatory Flexibility Act

did not estimate the number of additional lead TRI reports that it expected

to be filed from facilities in these 42 SIC codes because of “lack of data on

lead consumption or emissions at the facility and sector level.”

OPPTS developed its estimate of the average annual cost of filing a TRI

report for lead and lead compounds by multiplying an estimate of the

average number of hours needed to complete the form (111 hours in the

first year for new TRI filers) times an estimated average hourly wage rate

(about $69 per hour across managerial, technical, and clerical occupational

categories).25 As a result, OPPTS estimated that first-year compliance

costs for small manufacturers who had never filed a TRI report would be

about $7,500.26 OPPTS estimated that first-year reporting costs for

companies currently filing TRI reports for other substances would be

about $5,200, and that lead reporting costs in subsequent years would be

about $3,600.

OPPTS used a variety of methods and assumptions to estimate the annual

revenues of the companies that would have to file the new TRI reports for

lead and lead compounds. However, three of these methods and

assumptions appeared to be key to this portion of the analysis and were

the subject of several of the public comments.27

• OPPTS assumed that small manufacturing companies filing their first TRI

reports under the proposed lead rule would be similar in terms of revenues

and employment to small manufacturing companies that already filed TRI

reports under other rules. OPPTS officials said that it used this assumption

because (1) many small businesses that were expected to file under the

proposed lead rule already filed other TRI reports; and (2) small

businesses that did not already file TRI reports were likely to come from

capital-intensive industries, which were the types of industries that already

filed TRI reports. Therefore, OPPTS constructed revenue profiles for these

new filers using revenue data from parent companies of existing filers who

were manufacturers. Some of the comments on the proposed rule

 

25OPPTS estimated that for first time TRI filers, the paperwork burden associated with the first year of

reporting for the PBT rule would be nearly 140 hours.

26In the original economic analysis for the proposed lead rule, OPPTS estimated small manufacturers’

average first-year compliance costs at about $7,400, assuming that parent companies have some

facilities that are current filers and some that are first-time filers. In its draft revised analysis, OPPTS

estimated those costs at $7,700, assuming that the parent company has one facility that is a first-time

filer. To simplify the presentation of this report, we used a uniform $7,500 reporting figure.

27OPPTS used similar assumptions in its economic analysis of the PBT rule and in earlier TRI rules.

However, EPA officials said that the proposed lead rule was the first time EPA received significant

adverse comments on these issues.

Estimating the Cost of

Complying With the Proposed

Rule

Estimating Company Revenues
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indicated that businesses that would have to report under the new 10-

pound threshold were likely to be smaller than those filing for lead and

other substances at the 25,000 and 10,000 pound reporting thresholds. As a

result, they suggested that OPPTS had overestimated the annual revenues

of new filers under the proposed lead rule and that OPPTS’ certification

that the rule would not have a SEISNSE may be incorrect.

• As noted in figure 2, OPPTS estimated that 84 percent of all companies

affected by the proposed lead rule would be manufacturers (SIC codes 20-

39), with the other 16 percent representing seven nonmanufacturing

industries. Although OPPTS estimated the impact of the rule on each of

these seven nonmanufacturing groups separately, it did not examine

whether the rule would have different impacts on the different types of

manufacturers that were expected to comprise the bulk of new filers.

Some of the comments that were submitted to OPPTS on the proposed

rule said that the various industries within the 20 major groups in the

manufacturing sector are unrelated in most aspects and, therefore, should

not have been analyzed as a group. Doing so, they said, may mask variation

in small business impacts within the manufacturing industries.

• OPPTS modeled the revenues of affected small businesses on the basis of

revenue quartiles for the manufacturing industries. To do so, OPPTS first

arrayed from lowest to highest the revenues of all the small manufacturing

companies currently filing TRI reports. It then selected the revenues of

companies at the 25th, 50th, and 75th percentiles to represent the revenues

of companies in the lowest third, middle third, and highest third revenue

level, respectively. OPPTS officials said that prior economic analyses had

used only one revenue level—averages or medians—to represent the

revenues of expected TRI filers, and using three revenue levels was

intended to better reflect the variation of revenues in the group.

Nevertheless, in the November 15, 1999, announcement of the public

meetings, OPPTS specifically asked for comments on whether the 25th

revenue quartile was an appropriate revenue level for considering the

potential impacts on the smallest of the small businesses affected by the

proposed rule.

As a result of these and other methods and assumptions, OPPTS estimated

that small manufacturing companies filing new TRI reports for lead would

have annual revenues of $4 million. To determine whether the economic

impact of the proposed lead rule on small businesses was significant,

OPPTS divided the average annual cost of filing a TRI report (e.g., about

$7,500 for first-time TRI filers in the manufacturing sector) by the

estimated annual revenue level of filers (e.g., $4 million for the smallest

manufacturers). The results of these calculations (0.2 percent for small

manufacturers) caused OPPTS to conclude that no small entities would
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experience a 1 percent economic impact from the rule. Using this

information in concert with EPA’s RFA guidance, OPPTS certified the rule

as not having a SEISNSE.

OPPTS revised its economic analysis for the proposed lead rule earlier this

year in response to the concerns raised in the public comments. In June

2000, we obtained a summary of the changes that OPPTS made in a draft of

the revised analysis and a summary of the results of the draft revised

analysis. On July 13, 2000, OPPTS sent the draft final lead rule and the

revised economic analysis to OIRA for final review. OPPTS officials said

they could not provide us with a copy of the economic analysis that they

sent to OIRA because of restrictions on the distribution of documents

related to a rule undergoing final review. OIRA officials also said that,

under Executive Order 12866, they could not provide us with a copy of the

revised economic analysis until the final rule was published in the Federal

Register. OPPTS officials said that the results of the analysis that they

provided to OIRA were only marginally different from the summary that

they provided to us, but they cautioned that the results may change due to

OIRA’s review.

According to the summary of the draft revised analysis, OPPTS changed its

analytic approach in a number of ways. For example, to determine the

number of affected facilities, OPPTS contacted more trade organizations

and potentially affected businesses and used additional information

sources that had been identified as a result of public comments received

on the proposed rule.

OPPTS also changed several of the key assumptions that it used in the

initial analysis to estimate the annual revenues of filers. Those changes

included the following:

• OPPTS did not assume that new filers under the lead rule would be similar

to current TRI filers in terms of revenues and employment. Instead, OPPTS

used the revenues of companies that did not already file under the TRI

program to characterize the revenues of small manufacturing companies

that would be required to file a TRI report for the first time under the

proposed lead rule.

• OPPTS examined whether the rule would have different impacts on

different types of manufacturers. Specifically, OPPTS developed revenue

profiles for each of the 20 2-digit SIC code groupings within the

manufacturing category (SIC codes 20 through 39) and used those SIC

code-specific values to estimate the rule’s impact.

OPPTS’ Draft Revised

Economic Analysis for the

Lead Rule

OPPTS Changed Key

Assumptions to Estimate

Companies’ Annual Revenues
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• OPPTS used more revenue levels from the population of representative

small entities to characterize the revenues of small manufacturing

companies that will have to file under the lead rule. For the draft revised

analysis, OPPTS used every 10th percentile level (10th through 90th) and

the 95th percentile to represent 10 different levels of revenues. For

example, it used the revenues at the 10th percentile to represent the

revenues of the bottom 10 percent of the companies expected to file.

Changes in these and other methods and assumptions resulted in very

different data being used in the revised economic analysis. As previously

noted, in the original economic analysis, OPPTS estimated that the

smallest manufacturers (represented by companies at the 25th revenue

percentile of current small manufacturing TRI reporters) had annual

revenues of $4 million. However, as table 2 illustrates, revenues of small

manufacturing companies not currently reporting were quite different

from the revenues of those companies currently reporting at the 25th

revenue percentile, and even more different at the 10th revenue percentile.

There were also substantial differences in annual revenues among the

different SIC codes within the manufacturing sector. 
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Annual revenues of small manufacturing companies

SIC codes

Reporting to TRI

 at the 25th revenue

percentile

Not reporting to TRI

at the 25th revenue

percentile

Not reporting to TRI

 at the 10th revenue

percentile

20 15,721,258 1,156,884 620,000

21 a 822,512 470,000

22 8,542,745 1,071,000 688,823

23 12,541,717 871,328 500,000

24 6,000,000 850,000 560,000

25 9,238,569 970,181 610,000

26 15,000,000 1,700,000 1,000,000

27 6,698,920 790,000 500,000

28 4,914,041 1,500,000 1,000,000

29 5,800,000 2,400,000 1,400,000

30 2,367,047 1,300,000 800,000

31 8,200,000 790,000 500,000

32 6,000,000 1,000,000 680,000

33 5,000,000 1,300,000 830,000

34 3,300,000 1,000,000 710,000

35 9,199,323 1,000,000 680,000

36 5,950,000 1,300,000 810,000

37 7,000,000 1,200,000 800,000

38 6,000,000 1,200,000 800,000

39 4,850,000 870,000 570,000

a

Insufficient data.

Source: OPPTS.

In the draft revised economic analysis, OPPTS estimated that the lead rule

would affect 14,586 facilities in 10,133 companies. As table 3 illustrates,

OPPTS said that 8,637 small companies—up from 5,620 in the initial

analysis—would be affected by the proposed rule. OPPTS also said that as

many as 464 of those small companies (about 5 percent of all affected

small companies) could experience compliance costs of at least 1 percent

of their annual revenues in the first year of implementation--up from zero

in the initial analysis.28 However, OPPTS said that no small company would

experience compliance costs of 3 percent. After evaluation of the revised

economic analysis, OPPTS officials said that they still believed the rule

would not have a SEISNSE, and therefore they planned to certify that the

final rule would not have a SEISNSE. 

 

28OPPTS said that 273 (59 percent) of these 464 companies were in SIC Code 36 (electrical equipment).

Table 2: Differences in Data Used in

OPPTS Economic Analyses of Revenues

of Small Manufacturing Companies

OPPTS Revised Its

Estimates of Rule’s Impact
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Number of small companies

affected

Number of small companies

with economic impacts of

 at least 1 percent of revenues

in the first yearb

Type of

affected

small

companies Initial analysis

Draft revised

analysis Initial analysis

Draft revised

analysis

Manufacturing 4,673 7,952 0 458

Othera 947 685 0 6

Total 5,620 8,637 0 464

a

Other small companies include metal mining, coal mining, electrical utilities that combust coal and/or

oil, hazardous waste treatment and disposal facilities, chemicals and allied products wholesale

distributors, petroleum bulk plants and terminals, and solvent recovery services.

b

In both the initial and draft revised economic analyses, OPPTS estimated that no companies would

experience economic impacts of 1 percent of annual revenues in subsequent years of the rule’s

implementation.

Source: OPPTS.

OPPTS officials and staff said that their revised estimates of the number of

small entities that would experience at least a 1 percent economic impact

from the lead rule were probably higher than the number of entities that

would actually experience those impacts. In particular, they said that firstyear compliance costs in a small company could reasonably be expected to

be less than the cost of reporting at a larger facility because (1) reporting

in the smallest facilities may take only half as long as the average of all

facilities (111 hours), and (2) wage rates in those facilities may be less than

the $69 per hour average used. Therefore, OPPTS estimated that the firstyear cost of compliance in small firms could be $3,360 (56 hours times $60

per hour)—well below the $7,500 estimate for all companies that was used

to estimate the impacts on affected small entities. OPPTS officials and

staff also noted that on the basis of a review of actual reporting, their

estimates of the number of additional reports and affected facilities for

previous TRI rules had been overestimates.

The 464 small companies that OPPTS indicated in its draft revised

economic analysis could experience compliance costs of at least 1 percent

of their annual revenues were primarily in the 27 SIC codes and code

groupings for which OPPTS developed estimates in the original economic

analysis. In that analysis, OPPTS said that companies in 42 other 4-digit

SIC codes could also be affected by the proposed rule, but lack of data

prevented it from estimating how many additional TRI reports for lead

would be filed by companies in those SIC codes. As previously noted, 40 of

these 42 SIC codes each had more than 5 facilities reporting lead or lead

compounds at the current thresholds. In the revised analysis, OPPTS

developed estimates for 9 of these 42 SIC codes on the basis of information

Table 3: Comparison of the Results of

OPPTS’ Initial and Draft Revised

Economic Analyses of the Proposed

Lead Rule

Hundreds of Other Small

Manufacturers Could

Experience a 1 Percent

Economic Impact From the

Lead Rule
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Page 28 GAO/GGD-00-193 Regulatory Flexibility Act

received during the public comment period.29 Therefore, OPPTS did not

estimate the economic impact of the rule on companies in 33 SIC codes

that it said could be affected.

All but 1 of the 33 SIC codes in which OPPTS did not estimate the lead

rule’s economic effects were in SIC codes 20 through 39—manufacturing.

We attempted to provide a more complete picture of how the lead rule

might affect small manufacturing companies by estimating how many

companies in these 32 manufacturing SIC codes could experience a firstyear economic impact of at least 1 percent of revenues. To do so, we first

obtained unpublished data from the Bureau of the Census’ 1997 Economic

Census of Manufactures on the number of companies in SIC codes 20

through 39 that had 10 to 499 employees and annual revenues (shipments)

of $750,000 or less.30 We used the 10 to 499 employee size limitation

because the TRI program applies only to facilities with at least 10 full-time

employees, and any company with fewer than 500 employees is considered

“small” according to SBA’s size categories.31 We selected the $750,000

revenue threshold because (1) OPPTS estimated that the proposed lead

rule would impose average first-year compliance costs for new TRI filers

of about $7,500, and (2) EPA’s current RFA guidance indicates that a rule

that imposes compliance costs of less than 1 percent of annual revenues

on any number of companies should be presumed not to have a SEISNSE.

In order for a company’s cost of compliance with the lead rule in the first

year to represent 1 percent of its revenues, the company would have to

have annual revenues of $750,000 or less.

The Bureau of the Census data indicated that nearly 18,000 manufacturing

companies had 10 to 499 employees and annual revenues of $750,000 or

less.32 Of these, 1,108 were in the 32 manufacturing SIC codes that OPPTS

said might be affected by the rule but for which it did not provide an

estimate of how many companies could be affected. OPPTS told us that 10

companies in the 32 SIC codes with 10 to 499 employees and annual

 

29OPPTS concluded that 85 small companies in these 9 SIC codes would experience a first-year

economic impact of at least 1 percent of revenues.

30The Economic Census of Manufactures is conducted every 5 years on the universe of businesses in

the manufacturing industry. It is to collect facts about the structure and functioning of the economy

and features unique to this industry, such as materials consumed, inventories held, the number of

establishments, payroll, and geographic location.

31The SBA size standard for “small” businesses is 500 for about 75 percent of manufacturing industries;

and either 750, 1,000, or 1,500 for the other industries. Therefore, the use of the 500-employee limit is a

conservative measure of the number of small manufacturing companies.

32About 99 percent of the nearly 18,000 companies had fewer than 50 employees, and about 84 percent

had fewer than 20 employees.
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Page 29 GAO/GGD-00-193 Regulatory Flexibility Act

revenues of $750,000 or less filed TRI reports in 1998. As previously noted,

OPPTS estimated that first-year compliance costs for companies that

already filed reports for some other TRI-covered substance would be

about $5,200. Therefore, these companies would have to have annual

revenues of $520,000 or less in order for the proposed lead rule to have a 1

percent economic impact on them in the first year. Although some of the

1,108 companies may have had annual revenues that low, we eliminated 10

companies from the total to ensure that all of the resultant 1,098

companies were first-time TRI reporters.33

Two other adjustments to the data may also be necessary before the rule’s

effects on small entities are estimated.

• As implemented by OPPTS, the TRI program covers companies with 10 or

more “full-time equivalent” (FTE) employees, not just 10 employees.34

Although the Bureau of the Census data reflects companies with at least 10

employees, some of those employees could be part-time workers. As a

result, the number of employees in some of the smaller firms could fall

below the 10 FTE threshold for the TRI program. For example, if a

company had 12 employees but 6 of them worked only 20 hours per week,

the company would have only 9 FTE employees. In order to account for

this possibility, we also developed estimates of the number of companies

that could experience a 1-percent impact assuming that three-quarters,

one-half, and one-quarter of the companies in the 32 SIC codes met the 10

FTE threshold.

• Although OPPTS indicated that the companies in these 32 SIC codes may

use lead in their manufacturing processes and could be affected by the

proposed rule, it is not clear how many of these companies use at least 10

pounds of lead each year—the proposed reporting threshold. We were

unable to locate any data identifying the amount of lead used by each

company or within each SIC code. In order to account for the possibility

that some of the companies in these 32 SIC codes use less than 10 pounds

of lead each year, we developed estimates of the number of companies

that could experience a 1 percent economic impact assuming that annual

lead use in three-quarters, one-half, and one-quarter of the companies

within these SIC codes met the 10-pound threshold.

 

33Therefore, we assumed that all 33 TRI filers in these 32 SIC codes had annual revenues of between

$520,000 and $750,000.

34EPCRA (the statute creating the TRI program) states that the TRI program covers facilities with 10 or

more full-time employees. OPPTS has defined the program as including facilities with 10 FTEs, even

though some facilities with 10 FTEs may not have 10 full-time employees.
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The results of these possible adjustments to the Census data are presented

in table 4. If no adjustments are made to the Census data (i.e., assuming

that all of the companies in the 32 manufacturing SIC codes have 10 FTE

employees and all use 10 pounds of lead annually), then all 1,098

companies in these SIC codes with 10 to 499 employees and annual

revenues of $750,000 or less could experience a 1-percent impact from the

lead rule.35 On the other hand, if we assume that half of the companies in

these 32 SIC codes have 10 FTE employees and that half of those

companies use 10 pounds of lead annually, we estimated that 275

additional companies could experience a 1-percent impact in the first year

of implementation.

All companies

have 10 FTE

employees

Three-quarters

of companies

have 10 FTE

employees

One-half of

companies

have 10 FTE

employees

One-quarter of

companies

have 10 FTE

employees

All companies use 10

pounds of lead

1,098 824 549 275

Three-quarters of

companies use 10

pounds of lead

824 618 412 206

One-half of

companies use 10

pounds of lead

549 412 275 137

One-quarter of

companies use 10

pounds of lead

275 206 137 69

Note: The estimates in this table were developed assuming no interrelationships between companies'

lead usage and their FTEs. The estimates could be higher or lower depending on the strength or

nature of any relationships.

Source: GAO analysis of Bureau of the Census data.

We also used Bureau of the Census data to estimate the number of

companies in these 32 SIC codes that could experience first-year

compliance costs equal to 3 percent of their annual revenues. To do so, we

focused on companies with 10 to 499 employees and annual revenues of

$250,000 or less. The data indicated that 78 companies in the 32 SIC codes

met that employment and revenue profile. Because we could not presume

that all 78 companies had 10 FTE employees or used 10 pounds of lead in

the course of the year, we again adjusted the data assuming that threequarters, one-half, and one-quarter of the companies met those

 

35Even this number could be an underestimate. As previously noted, EPA estimated that 85 companies

in 9 other SIC codes could experience 1 percent economic impacts; however, the Bureau of the Census

data indicated that up to 544 companies in those 9 SIC codes could experience 1 percent economic

impacts.

Table 4: Estimated Number of Small

Companies Experiencing a 1 Percent

Economic Impact From the Lead Rule in

32 Manufacturing SIC Codes During the

First Year of Implementation
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Page 31 GAO/GGD-00-193 Regulatory Flexibility Act

parameters. The results, presented in table 5, indicate that between 5 and

78 companies in these 32 SIC codes could experience a 3 percent

economic impact from the lead rule.36

All companies

have 10 FTE

employees

Three-quarters

of companies

have 10 FTE

employees

One-half of

companies

have 10 FTE

employees

One-quarter of

companies

have 10 FTE

employees

All companies use 10

pounds of lead

78 59 39 20

Three-quarters of

companies use 10

pounds of lead

59 44 29 15

One-half of

companies use 10

pounds of lead

39 29 20 10

One-quarter of

companies use 10

pounds of lead

20 15 10 5

Note: The estimates in this table were developed assuming no interrelationships between companies'

lead usage and their FTEs. The estimates could be higher or lower depending on the strength or

nature of any relationships.

Source: GAO analysis of Bureau of the Census data.

Neither our estimates of the number of small companies that could be

affected by the rule nor the estimates that OPPTS developed take into

account behavioral changes that may occur as a result of the rule’s

implementation. For example, a company might change its manufacturing

processes in order to reduce the amount of lead it manufactures,

processes, or otherwise uses below the 10 pound reporting threshold.

Also, a company might reduce its employment below the 10-FTE threshold

and avoid the rule’s requirements. We also did not attempt to determine

the effects of the rule after the first year of implementation or to identify

impacts above the 3 percent level.

The numerical guidelines in EPA’s current RFA guidance document

establish what appears to be a high threshold for what constitutes a

SEISNSE. For example, an EPA rule can impose $10,000 in compliance

costs on 10,000 small businesses, but the guidelines indicate that the

program office issuing the rule can presume that the rule does not have a

SEISNSE as long as those costs do not represent at least 1 percent of the

businesses’ annual revenues. The numerical guidelines also suggest that a

 36We again assumed that all 33 TRI filers in these 32 SIC codes had annual revenues of between

$520,000 and $750,000. Because table 5 only includes companies with revenues of $250,000 or less, no

adjustments were made to this table for current filers.

Table 5: Estimated Number of Small

Companies Experiencing a 3 Percent

Economic Impact From the Lead Rule in

32 Manufacturing SIC Codes During the

First Year of Implementation

Conclusions
B-284265

Page 32 GAO/GGD-00-193 Regulatory Flexibility Act

rule can be presumed not to have a SEISNSE if as many as 99 small

businesses experience compliance costs amounting to 100 percent of their

annual revenues—essentially putting them out of business.

However, EPA’s current RFA guidance document also gives the agency’s

program offices substantial discretion regarding how those numerical

guidelines should be applied. The guidance suggests that those offices not

certify proposed rules in which the extent of a rule’s expected impact is

severe or widespread, even if, according to the numerical guidelines, the

rule can be presumed not to have a SEISNSE. Some EPA program offices

have used that discretion and have conducted IRFAs and held advocacy

review panels for proposed rules that met the conditions in the numerical

guidelines for being presumed not to have a SEISNSE. However, by the

end of 1999, OPPTS and the Office of Solid Waste had certified all 47 of the

proposed rules that they published after the implementation of the

SBREFA advocacy review panel requirements. It is impossible to

determine with certainty whether EPA program offices are implementing

RFA requirements in a consistent manner without a detailed examination

of the circumstances surrounding each of the four offices’ rules.

One of the 26 proposed rules that OPPTS certified after the

implementation of SBREFA was its August 1999 lead rule. In both the

original and draft revised economic analysis, the Office estimated that the

lead rule would result in about 15,000 new TRI reports for lead and lead

compounds—an increase of nearly 800 percent from reporting at the

current 25,000 pound and 10,000 pound reporting thresholds. However,

the actual increase in TRI lead reports as a result of the rule could be more

than 800 percent. The Office’s estimate of the number of new reports did

not include any companies in 32 manufacturing SIC codes that OPPTS said

might be affected by the rule. We did not estimate the total number of new

TRI reports for lead that could come from companies in these 32 SIC

codes. However, it is reasonable to presume that the number will be

greater than zero—the number that OPPTS implicitly assumed in both its

original economic analysis and its draft revised analysis.

OPPTS initially estimated that no small entities would experience 1

percent economic impacts from its proposed lead rule. However, using

new assumptions and new data, OPPTS estimated in the draft revised

analysis that as many as 464 small entities could experience those impacts.

OPPTS believes that 464 is the maximum number of small companies that

will experience 1 percent economic impacts and that 464 is likely to be an

overestimate. However, that estimate—like the office’s estimate of the

number of additional reports—does not include companies in 32
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Page 33 GAO/GGD-00-193 Regulatory Flexibility Act

manufacturing SIC codes that OPPTS said could be affected by the rule.

Using data from the Bureau of the Census, we estimated that as many as

1,098 small manufacturing companies in these 32 SIC codes could face

first-year compliance costs of at least 1 percent of their annual revenues.

Although it is unclear exactly how many companies in these SIC codes will

experience 1 percent economic impacts, it is reasonable to presume that

the number will be greater than zero—the number that OPPTS implicitly

assumed in both its original and its draft revised analysis. By combining

the OPPTS estimate and our estimate, we believe that the lead rule could

have a 1 percent economic impact on as many as 1,500 small companies.

We also estimated that as many as 78 companies in these 32 manufacturing

SIC codes could experience 3 percent economic impacts from the rule.

According to EPA’s current guidance, if a proposed rule has a 1 percent

economic impact on 1,000 or more small entities, the program office

should consult with EPA’s small business advocacy chair if the office

wants to certify the rule. The guidance also indicates that a program office

can conclude that a rule has a SEISNSE if it has a 1 percent economic

impact on nearly 1,000 small entities—regardless of whether it has that

impact on 20 percent of all affected small entities. As previously noted,

some EPA program offices did not certify proposed rules that had at least

a 1 percent economic impact on less than 100 companies. Therefore, if

OPPTS had used our analytic approach and applied the flexibility allowed

in the guidance (and that other EPA program offices have used), it could

have concluded that the rule should not be certified, prepared an IRFA,

and convened an advocacy review panel for the proposed lead rule.

Nevertheless, we believe that the analytic methods that OPPTS used in

both the original economic analysis and the draft revised economic

analysis, as well as the conclusions that the Office drew as a result of those

analyses, were within the discretion provided by both the RFA and EPA’s

guidance. As we have said previously, concerns about the RFA

compliance are often traceable to differences in those interpretations and

the fact that no federal agency is responsible for developing uniform

definitions. During the past 10 years we have recommended that Congress

either define what it intended these key RFA terms to mean or consider

giving some other entity the authority and responsibility to define them.37

 

37Regulatory Flexibility Act: Inherent Weaknesses May Limit Its Usefulness for Small Governments

(GAO/HRD-91-61, Jan. 11, 1991); Regulatory Flexibility Act: Status of Agencies’ Compliance

(GAO/GGD-94-105, Apr. 27, 1994); Regulatory Reform: Implementation of the Small Business

Advocacy Review Panel Requirements (GAO/GGD-98-36, Mar. 18, 1998); and Regulatory Flexibility Act:

Agencies’ Interpretations of Review Requirements Vary (GAO/GGD-99-55, Apr. 2, 1999).
B-284265

Page 34 GAO/GGD-00-193 Regulatory Flexibility Act

Congress has thus far not acted on those recommendations. We continue

to believe that clarifying what Congress intends the term “significant

economic impact on a substantial number of small entities” to mean would

make the implementation of the RFA more consistent and help to prevent

concerns about how agencies are implementing the act.

We provided a draft of this report to the Director of OMB and the

Administrator of EPA for their review and comments. OMB officials said

they did not have any comments on the draft report. We obtained

technical comments on the draft report from EPA officials and staff on

August 30, 2000, and September 1, 2000, and we made changes to the

report where appropriate. We also eliminated a section of the draft report

in which we used information from Federal Register notices for proposed

rules to conclude that the RFA had been inconsistently applied among

EPA’s four major program offices. EPA officials indicated that the program

offices’ RFA determinations were sometimes based on qualitative factors

that were not always clearly reflected in the Federal Register notices. We

therefore concluded that it was impossible to determine with certainty

whether EPA program offices were implementing RFA requirements in a

consistent manner without a detailed examination of the circumstances

surrounding each of the four offices’ rules. We will address the

transparency of EPA’s RFA determinations in separate correspondence

with the Administrator of EPA.

On September 1, 2000, the Acting Assistant Administrator of OPPTS

provided written comments on the draft report, which are reproduced in

appendix I. The Acting Assistant Administrator said that EPA takes its

responsibilities under the RFA very seriously, and that the agency

appreciated the report’s conclusion that its determinations were within the

discretion permitted under the RFA. In addition, the Acting Assistant

Administrator noted that EPA had twice extended the public comment

period and conducted a series of public meetings on the proposed lead

rule. She stated that this process allowed small business representatives

to present their concerns directly to EPA and to submit information that

EPA used to improve its assessment of potential small business impacts.

We agree that EPA’s actions after the proposed lead rule was published

helped the agency improve its estimate of the rule’s impact on small

businesses. However, if EPA had determined that the proposed lead rule

could have a SEISNSE, it would have been required by SBREFA to

convene a small business advocacy review panel. During the panel

process, small businesses would have been afforded the opportunity to

provide their views on the proposed lead rule before it was published in

Agency Comments and

Our Evaluation
B-284265

Page 35 GAO/GGD-00-193 Regulatory Flexibility Act

the Federal Register. This early involvement of small businesses was what

Congress envisioned when it enacted the advocacy review panel

requirements in 1996. Nevertheless, EPA’s determination that the lead rule

did not have a SEISNSE (and thus was not required to convene an

advocacy review panel) was within the broad discretion that federal

agencies have under the RFA. EPA’s revised economic analysis and the

agency’s exclusion of certain SIC codes from both its original and revised

analysis demonstrate that choices made in exercising the discretion

available to agencies can have a significant and even determinative effect

on SEISNSE determinations.

As arranged with your office, unless you publicly announce the contents of

this report earlier, we plan no further distribution until 30 days after the

date of this report. At that time, we will send copies of this report to

Senator John F. Kerry, Ranking Minority Member of the Senate Committee

on Small Business; Representatives James M. Talent and Nydia M.

Velazquez, Chairman and Ranking Minority Member, respectively, of the

House Committee on Small Business; the Honorable Jacob J. Lew, Director

of OMB; and the Honorable Carol M. Browner, Administrator of EPA. We

will make copies available to others on request.

If you have any questions regarding this report, please contact me or Curtis

Copeland on (202) 512-8676. Key contributors to this assignment were

Ellen Grady and Kathy Peyman.

Sincerely yours,

Michael Brostek

Associate Director, Federal Management

and Workforce Issues
Appendix I

Comments From the Environmental

Protection Agency

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Page 37 GAO/GGD-00-193 Regulatory Flexibility Act
Page 38 GAO/GGD-00-193 Regulatory Flexibility Act
Page 39 GAO/GGD-00-193 Regulatory Flexibility Act
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