United States General Accounting Office

GAO Report to Congressional Requesters

March 1998 REGULATORY

REFORM

Implementation of the

Small Business

Advocacy Review

Panel Requirements

GAO/GGD-98-36

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-277946 

March 18, 1998

The Honorable Christopher Bond

Chairman, Committee on Small Business

United States Senate

The Honorable Roscoe G. Bartlett

Chairman, Subcommittee on Government

 Programs and Oversight

Committee on Small Business

House of Representatives

The Honorable Sue W. Kelly

Chairman, Subcommittee on Regulatory

 Reform and Paperwork Reduction

Committee on Small Business

House of Representatives

The Honorable Pete V. Domenici

United States Senate

Small businesses are a significant part of the nation’s economy, accounting

for about 50 percent of the gross domestic product and 53 percent of

private industry’s workforce. Small governments make up 97 percent of all

of the local governments in the United States. However, small businesses

and governments can be disproportionately affected by federal agencies’

regulatory requirements, and agencies may inadequately consider the

impact of those requirements on small entities when the requirements are

implemented.1

In response to concerns about the effect that federal regulations may have

on small entities, Congress passed the Regulatory Flexibility Act (RFA) of

1980 (5 U.S.C. 601-612). The RFA requires federal agencies to analyze the

anticipated effects of rules they plan to propose on small entities unless

they certify that the rules will not have a “significant economic impact on a

1

Thomas D. Hopkins, A Survey of Regulatory Burdens, June 1995 report to the Small Business

Administration, and Senate Report on the Unfunded Mandate Reform Act of 1995, Report 104-1,

January 11, 1995, Committee on Governmental Affairs.

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substantial number of small entities.”2 The Small Business

Administration’s (SBA) Office of Advocacy is responsible for monitoring

federal agencies’ compliance with the RFA and for reviewing federal rules

for their impact on small businesses.

On March 29, 1996, Congress passed the Small Business Regulatory

Enforcement Fairness Act (SBREFA) to strengthen the RFA’s protections for

small entities. Among other things, SBREFA requires that, before publishing

a notice of proposed rulemaking that may have a significant economic

impact on a substantial number of small entities, the Environmental

Protection Agency (EPA) and the Occupational Safety and Health

Administration (OSHA) is to convene a small business advocacy review

panel for the draft rule3

 (5 U.S.C. 609). During the advocacy review panel

process, the panel must collect the advice and recommendations of

representatives of affected small entities about the potential impact of the

draft rule. SBREFA requires that the panel is to consist of employees from

the regulatory agency responsible for the draft rule (EPA or OSHA), the

Office of Management and Budget’s (OMB) Office of Information and

Regulatory Affairs (OIRA), and SBA’s Chief Counsel for Advocacy. The

statute also requires the regulatory agencies, the Chief Counsel, and the

panels themselves to undertake certain actions within specified

timeframes. SBREFA’s advocacy review panel requirements took effect on

June 28, 1996.

This report responds to your request that we examine EPA’s and OSHA’s

implementation of SBREFA’s advocacy review panel requirements. As

agreed with your offices, our specific objectives were to (1) determine

whether EPA and OSHA had applied the advocacy review panel requirements

to all rules that they proposed between June 28, 1996, and June 28, 1997,

that may have a significant economic impact on a substantial number of

small entities; (2) determine whether the EPA and OSHA panels, the

regulatory agencies themselves, and SBA’s Chief Counsel for Advocacy

followed the statute’s procedural requirements for panels convened

2

The RFA defines “small entities” as small businesses, small organizations, and small governmental

jurisdictions. The RFA incorporates the generally accepted meanings of a small business as

established by the SBA through size standards that define whether a business entity is small. The RFA

defines a small organization as any not-for-profit enterprise that is independently owned and operated

and is not dominant in its field. The RFA defines a small governmental jurisdiction as governments of

cities, counties, towns, townships, villages, school districts, or special districts with a population of

fewer than 50,000 citizens. These definitions hold unless an agency establishes, after an opportunity

for public comments, an alternative definition(s) that is appropriate to the activities of the agency and

publishes the definition in the Federal Register. This requirement only applies to rules for which the

agency must publish a general notice of proposed rulemaking.

3

In this report, we use “draft rule” to indicate a rule that is being developed by an agency but has not

yet been published in the Federal Register under a notice of proposed rulemaking.

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between June 28, 1996, and November 1, 1997, and whether there were

differences among the panels in how the statute’s requirements were

implemented; (3) identify the changes, if any, that EPA and OSHA made to

notices of proposed rulemaking as a result of the panels’

recommendations; and (4) identify any suggestions that agency officials

and small entity representatives may have regarding how the advocacy

review panel process could be improved. Because of the volume of rules

that EPA proposed between June 28, 1996, and June 28, 1997, we limited

our review of EPA rules in our first objective to those that were subject to

review by OIRA pursuant to Executive Order 12866.4

Results in Brief During the first year of the SBREFA advocacy review panel requirements’

implementation, OSHA convened a panel for one draft rule and published

two other proposed rules for which panels were not held. SBA’s Chief

Counsel for Advocacy agreed with OSHA’s certification that neither of these

two proposed rules required an advocacy review panel. As of November 1,

1997, EPA had convened advocacy review panels for four draft rules. EPA

published 17 other proposed rules during the first year of the panel

requirements that were reviewed by OIRA and for which panels were not

held because EPA certified that the proposed rules would not have a

significant economic impact on a substantial number of small entities. The

Chief Counsel said that EPA should have convened panels for 2 of these 17

proposed rules—the national ambient air quality standards for ozone and

for particulate matter. Some of the small entity representatives that we

contacted also said that EPA should have convened advocacy review panels

for these two proposed rules. EPA said that there is nothing it could do in

setting the ambient air quality standards to tailor state implementation

measures as they apply to small entities because any effect on small

entities would occur only when the states specifically determine how to

implement these rules. It is unclear whether EPA should have convened

panels for these two rules because there are no governmentwide criteria

for determining whether a draft rule will have a significant economic

impact on a substantial number of small entities. In particular, it is unclear

whether federal agencies can separate the establishment of a rule from the

4

Executive Order 12866 permits OIRA to review certain agencies’ regulatory actions that are likely to

result in rules that may (1) have an annual effect on the nation’s economy of $100 million or more or

adversely affect, in a material way, the economy, a sector of the economy, productivity, competition,

jobs, the environment, public health or safety, or state, local, or tribal governments or communities;

(2) create a serious inconsistency or otherwise interfere with an action taken or planned by another

agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or

the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of

legal mandates, the president’s priorities, or the principles set forth in the executive order.

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subsequent implementation of that rule by state governments or other

entities.

The EPA and OSHA panels, the regulatory agencies themselves, and the SBA

Chief Counsel for Advocacy generally followed SBREFA’s advocacy review

panel procedural requirements in the five panels that had been convened

as of November 1, 1997. However, the panels did not meet some of the

specific deadlines that SBREFA established. For example, three of the five

panels took a few days longer than the SBREFA-mandated 60-day period to

issue their reports (i.e., the period beginning on the date the panel is

convened until the panel’s final report is issued). The EPA panels’ decisions

to make the panel reports publicly available only when the proposed rules

were published, although consistent with the intent of SBREFA, was of

concern to some small entity representatives.

There were some differences in how the five panels were conducted,

including the amount of contact that agency officials had with the small

entity representatives before the panels were convened, how the

regulatory agencies and SBA’s Chief Counsel for Advocacy identified

potential small entity representatives, the availability of the materials that

EPA and OSHA provided for the panels and the small entity representatives

to review, and how the panels obtained comments from the small entity

representatives. Some of these differences appeared to occur because the

panel process is new and evolving; however, the panels have made

adjustments to their procedures as they have gained experience.

The five panels’ recommendations to the regulatory agency heads focused

on the agencies’ consideration of additional regulatory alternatives and

clarification of what the draft rules would require. As of November 1, 1997,

EPA and OSHA each had published one notice of proposed rulemaking for

which they had convened advocacy review panels. The agencies primarily

responded to the panels’ recommendations in the preambles of those

notices, soliciting public comments on issues that the panels had

recommended. OSHA also made some changes to the text of its draft rule.

However, because the rulemaking process has not been completed, it is

unclear whether the panels’ recommendations will result in any changes to

the final rules.

Many of the small entity representatives that we interviewed suggested

ways to improve the panel process. These suggestions primarily focused

on the following four issues: (1) adjusting the time frames in which the

panels are conducted, (2) ensuring that there is an adequate mix of

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representatives from the small entities that could be affected by the rule,

(3) enhancing the methods that the panels used to gather comments, and

(4) improving the background materials provided by the regulatory

agencies. Agency officials also offered suggestions and observations

regarding the panel process.

Background The Administrative Procedure Act (5 U.S.C. 553) generally requires federal

agencies to publish notices of proposed rulemaking in the Federal Register

and to permit interested individuals to participate in the rulemaking

process by submitting written data, views, or arguments. Notices of

proposed rulemaking may include a preamble that contains supplementary

information providing a context for the proposed rule and the text of the

proposed rule representing the agency’s preferred regulatory option.

Agencies are to consider the comments received during the public

comment period and then publish the final rule in the Federal Register.

Agencies may incorporate suggested changes in the text of the final rule or

provide other insights into their consideration of public comments in the

rule’s preamble. After publication in the Federal Register as a final rule,

the text of the rule is then to be codified in the Code of Federal

Regulations.

The RFA requires agencies to prepare an initial regulatory flexibility

analysis for each draft rule, unless the head of the agency certifies in the

Federal Register that “the rule will not have a significant economic impact

on a substantial number of small entities.” If a draft rule is expected to

have a significant economic impact on a substantial number of small

entities, agencies must publish their initial regulatory flexibility analysis,

or a summary of it, in the Federal Register when they publish the proposed

rule. Section 603 of the RFA requires that the initial regulatory flexibility

analysis describes the expected impact of the rule on small entities and

describes (1) why the agency is considering the regulatory action; (2) the

objectives and legal basis for the rule; (3) the type and, where feasible, an

estimate of the number of small entities to which the rule will apply;

(4) the projected reporting, recordkeeping, and other compliance

requirements of the rule; (5) all federal rules, to the extent practicable,

that may duplicate, overlap, or conflict with the proposed rulemaking; and

(6) significant alternatives to the rule that would minimize the impact on

small entities while accomplishing the purpose of the statute. Section 604

of the RFA requires agencies to conduct a similar final regulatory flexibility

analysis when they promulgate the final rule and publish the final analysis,

or a summary thereof, with the final rule. However, agencies do not have

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to conduct either the initial analysis or the final analysis if they certify that

the rule will not have a significant economic impact on a substantial

number of small entities and they explain the reasons for the certification.

Before publication of an initial regulatory flexibility analysis, section 609

of the RFA, as amended by SBREFA, requires the appropriate regulatory

agency (EPA or OSHA) to notify the SBA Chief Counsel for Advocacy and to

provide information on the draft rule’s potential impacts on small entities

and the type of small entities that might be affected. Section 609 also

requires the Chief Counsel, within 15 days of this notification, to identify

representatives of affected small entities for the purpose of obtaining

advice and recommendations from those individuals about the potential

impacts of the draft rule. The Chief Counsel may waive the requirements

to convene a panel under certain circumstances if he or she, in

consultation with representatives of affected small entities and the

Administrator of OIRA, finds that the panel requirements would not

advance the effective participation of small entities in the rulemaking

process.

SBREFA also requires each panel to consist of full-time federal employees

from the office within the agency responsible for carrying out the draft

rule and from OIRA and SBA’s Chief Counsel for Advocacy. SBREFA requires

the panel to report on the comments received from small entities and on

the panel’s recommendations no later than 60 days after the panel is

convened, and states that the panel’s report shall be made public as part of

the rulemaking record. Finally, SBREFA requires the heads of EPA and OSHA

to each designate a small business advocacy chair to act as a permanent

chair of each agency’s panels no later than April 29, 1996.

Scope and

Methodology

To determine whether OSHA and EPA convened all required advocacy

review panels for rules that they proposed in the first year after the panel

requirements took effect, we first did an electronic search of the Federal

Register to identify all OSHA- and EPA-proposed rules published between

June 28, 1996, and June 28, 1997. That search indicated that OSHA had

published 2 proposed rules during the period, and that EPA had published

more than 350 proposed rules. Because of the large number of

EPA-proposed rules, we decided to limit our review of EPA rules to the 17

that were subject to review by OIRA.

We asked SBA’s Chief Counsel for Advocacy whether he agreed with OSHA’s

and EPA’s certifications that these 19 proposed rules would not have a

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significant economic impact on a substantial number of small entities. We

interviewed officials from SBA’s Office of Advocacy, EPA, OSHA, and OIRA and

reviewed the RFA, as amended by SBREFA, to identify any criteria that could

be used to determine what constitutes a “significant economic impact on a

substantial number of small entities.” We also examined the legislative

history of the RFA and SBREFA to determine if there were any discussions

relevant to defining this term or providing criteria for its implementation.

To determine whether the EPA and OSHA panels, the regulatory agencies

themselves, and SBA’s Chief Counsel for Advocacy followed the advocacy

review panel procedural requirements and whether there were differences

in how the panels were conducted, we interviewed (1) selected officials

from EPA, OSHA, SBA’s Office of Advocacy, and OIRA who participated in the

panels that had been convened as of November 1, 1997, and (2) 32 of the

63 small entity representatives who were identified by the agencies and

were asked to provide advice and recommendations to the panels.5

 We

selected the agency officials by contacting at least one official from each

agency for each panel. We selected the small entity representatives by

contacting every other small entity representative that EPA and OSHA listed

for each panel.

We also interviewed representatives of five associations who had been

identified as possible small entity representatives so that we could

determine why they decided not to participate in the panels. In addition,

we interviewed 13 of the small entity representatives who provided advice

and recommendations to an unofficial panel that EPA convened for a draft

implementation strategy that related to EPA’s rules establishing national

ambient air quality standards for ozone and particulate matter.

Finally, we reviewed documents pertaining to the panels, including the

panel requirements in SBREFA; materials that EPA and OSHA provided to the

small entity representatives; and the final reports prepared by each panel.

To identify any changes that EPA and OSHA made to their draft rules as a

result of the panels, we compared the recommendations in the panels’

final reports with the related notices of proposed rulemaking as published

in the Federal Register. As of November 1, 1997, only two of the five draft

rules for which panels had been conducted had been published as

5

After the period of our review, EPA convened another panel on centralized waste treatment effluent

guidelines.

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proposed rules.6 To obtain suggestions about how the advocacy review

panel process could be improved, we asked officials from EPA, OSHA, OIRA,

and SBA’s Office of Advocacy and the 32 small entity representatives we

interviewed to identify possible improvements in that process.

Because EPA and OSHA had convened only five advocacy review panels at

the time of our review (four at EPA and one at OSHA), our review results

should be viewed as preliminary information on the operation of the panel

provisions. Our first objective was to determine whether any EPA- or

OSHA-proposed rules should have triggered the advocacy review panel

requirements but did not. As previously mentioned, we limited our review

of EPA rules to those that were subject to review by OIRA pursuant to

Executive Order 12866. However, there may have been other EPA rules that

had a significant economic impact on a substantial number of small

entities but were not subject to OIRA review. Because EPA panel reports for

three of its panels were not publicly available as of November 1, 1997, we

did not include them in our report. As of November 1, 1997, OSHA had

published a notice for proposed rulemaking for the panel it had held.

However, EPA had not published notices of proposed rulemaking for three

of the four panels it had held by that date. Therefore, we only could

identify changes related to one OSHA and one EPA rule.

We did our work between August 1997 and January 1998 in Washington,

D.C., in accordance with generally accepted government auditing

standards. We requested comments on a draft of this report from the

Director of OMB, the Secretary of Labor, and the Administrators of EPA and

SBA or their designees. Their comments are discussed near the end of this

letter.

Whether EPA Should

Have Convened

Additional Advocacy

Review Panels Is

Unclear

We reviewed a total of 19 notices of proposed rulemaking that EPA and

OSHA published (17 and 2 notices, respectively) during the first year’s

implementation of SBREFA’s advocacy review panel requirements. (See app.

I for a list of these 19 proposed rules.) The agencies did not convene

panels for any of these proposed rules because they certified that the rules

would not have a significant economic impact on a substantial number of

small entities. SBA’s Chief Counsel for Advocacy agreed with OSHA’s

certifications that neither of its two proposed rules required an advocacy

review panel. However, the Chief Counsel said that EPA should have

convened advocacy review panels for 2 of its 17 proposed rules—the

6

After November 1, 1997, EPA published two additional notices of proposed rulemaking for which it

had convened advocacy review panels—industrial laundries (Dec. 17, 1997) and stormwater phase II

(Jan. 9, 1998).

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national ambient air quality standards for ozone and for particulate matter.7

EPA’s certification of these two rules was based on EPA’s interpretation of

the term “impact” under the RFA. EPA concluded that the term refers to the

impact of a proposed rule on small entities subject to the rule’s

requirements because the purpose of a regulatory flexibility analysis is to

consider ways of easing a rule’s requirements as they will apply to small

entities. According to EPA, that purpose could not be served in the case of

rules such as these national ambient air quality standards, which do not

themselves impose requirements that apply to small entities. Because,

according to EPA, the only choice it has in promulgating the national

ambient air quality standards is the level of the standard and not its

implementation, EPA stated that there is nothing it can do in setting these

standards to tailor state implementation measures as they apply to small

entities. EPA said that any effect on small entities would occur only when

states specifically determine how they will implement these rules.

In a November 18, 1996, letter to the EPA Administrator, SBA’s Chief

Counsel for Advocacy said that EPA should have convened advocacy

review panels for the ozone and particulate matter rules. He said that the

promulgation of these proposed rules cannot be separated from their

implementation, and that certain effects on small entities flow

“inexorably” from the standards that these proposed rules would establish.

Also, 6 of the 13 small entity representatives we interviewed who provided

comments to an unofficial advocacy review panel on a draft

implementation strategy related to these 2 rules said that they thought EPA

should have convened panels for these standards. One of these

representatives said that by not convening advocacy review panels for

these rules, he believed that EPA had circumvented the intent of SBREFA.

8

We could not determine whether EPA should have convened advocacy

review panels for the ozone and particulate matter proposed rules because

there are no clear governmentwide criteria for determining whether a rule

has a “significant economic impact on a substantial number of small

entities.” The RFA does not define “significant economic impact” or

“substantial number of small entities,” and neither SBA nor any other

7

The rules establishing the national ambient air quality standards for ozone and for particulate matter

were proposed on December 13, 1996 (61 Fed. Reg. 65716 and 65638), and finalized on July 18, 1997 (62

Fed. Reg. 38856 and 38652).

8

The issue of whether EPA properly promulgated the ozone and particulate matter rules has been

questioned by Congress and is currently under litigation in the United States Court of Appeals for the

District of Columbia Circuit. See American Trucking Associations, Inc., et. al., v. United States

Environmental Protection Agency (97-1441, July 18, 1997).

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agency has issued governmentwide guidance regarding the meaning of

these terms. In particular, there is no governmentwide guidance or criteria

about whether health standards that an agency establishes by regulation

should be considered separable from implementation requirements

established by state governments or other entities.9

 Therefore, it is unclear

whether EPA’s ozone and particulate matter rules should have triggered the

requirements for an initial regulatory flexibility analysis and, therefore, the

advocacy review panel requirements.

Officials from SBA’s Office of Advocacy said that they are frequently asked

to define the phrase “significant economic impact on a substantial number

of small entities.” However, the officials said that the Office of Advocacy

has not taken a definitive position on the meaning of this phrase, and no

case law has clearly established its meaning. Although no governmentwide

criteria exist, both EPA and OSHA have issued guidance to help their staffs

determine when a draft rule may have a significant economic impact on a

substantial number of small entities and guidance on conducting the

SBREFA advocacy review panel process. Nevertheless, agencies ultimately

determine the meaning of the phrase on a case-by-case basis, and their

decisions are subject to comment by the public and SBA’s Office of

Advocacy, as well as judicial review.

In our 1991 report on the RFA and small governments, we found that each

of the four federal agencies we reviewed had a different interpretation of

key RFA provisions.10 In our 1994 report on the RFA, we noted that, although

the act required SBA’s Chief Counsel for Advocacy to monitor agencies’

compliance with the act, the RFA 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.11 We concluded that

this lack of authority and responsibility for interpretation and guidance

contributed to what the Chief Counsel considered to be some agencies’

noncompliance with the RFA. We said that if Congress wanted to

9

There are other instances, beyond the scope of this review, where the question of whether a standard

can be separated from its subsequent implementation by states or other entities is at issue. For

example, three business groups filed suit on January 5, 1998, citing violations of SBREFA (West

Virginia Chamber of Commerce v. Browner, No. 98-1013, 4th Cir.) because EPA did not assess the

impact of the proposal on small entities before it proposed requiring certain states to submit state

implementation plans on measures to reduce the regional transport of ozone. In its notice of proposed

rulemaking, EPA proposed the levels of nitrogen oxide emissions that each of the affected states

would be required to achieve.

10Regulatory Flexibility Act: Inherent Weaknesses May Limit Its Usefulness for Small Governments

(GAO/HRD-91-61, Jan. 11, 1991). The four agencies included in this review were EPA, the Departments

of Labor and Transportation, and the Federal Communications Commission.

11Regulatory Flexibility Act: Status of Agencies’ Compliance (GAO/GGD-94-105, Apr. 27, 1994).

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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. Although Congress amended the RFA when it enacted SBREFA,

it did not adopt these recommendations.

The Panels, Agencies,

and Chief Counsel

Generally Followed

SBREFA’s Procedural

Requirements

By November 1, 1997, OSHA and EPA had convened five advocacy review

panels. OSHA convened the first panel on September 10, 1996, to review its

draft standard for occupational exposure to tuberculosis. However, OSHA

had not convened any additional panels as of November 1, 1997. EPA

convened panels between June 1996 and November 1, 1997, to review the

following four draft rules: (1) control of emissions of air pollution from

nonroad diesel engines (Mar. 25, 1997); (2) effluent limitations guidelines

and pretreatment standards for the industrial laundries point source

category (June 6, 1997); (3) stormwater phase II—national pollutant

discharge elimination system (June 19, 1997);12 and (4) effluent limitations

guidelines and standards for the transportation equipment-cleaning

industry (July 16, 1997). Appendixes II through VI provide descriptions of

the five draft rules that the panels reviewed as well as detailed information

about the time frames for the panels and the number and types of small

entity representatives who provided advice to the panels.

The EPA and OSHA panels, the regulatory agencies themselves, and the SBA

Chief Counsel for Advocacy generally followed SBREFA’s procedural

requirements in these five panels, as shown in the examples below.

• EPA and OSHA notified the Chief Counsel before each of the five panels to

inform him that they planned to convene a panel to review the draft rules.

As part of that notification, they provided the Chief Counsel with required

information on the draft rules’ potential impacts and the types of entities

that might be affected.

• The Chief Counsel responded to EPA and OSHA no later than 15 days after

the date of receipt of these materials and helped identify individuals

representative of affected small entities for the purpose of obtaining

advice and recommendations about the potential impacts of the draft

rules. For each of EPA’s four panels, the Chief Counsel reviewed a list of

potential candidates that EPA provided and in some cases supplemented

12On January 9, 1998, EPA published a notice of proposed rulemaking in which the Administrator

certified that the stormwater phase II proposed rule would not have a significant economic impact on

a substantial number of small entities.

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the list. The Chief Counsel initially identified most of the small entity

representatives for OSHA’s panel in consultation with OSHA officials.

• The EPA and OSHA panels consisted of full-time federal employees from the

office within the agency responsible for carrying out the draft rule and

officials from OIRA and SBA’s Chief Counsel for Advocacy.

• Each of the five panels reviewed materials the regulatory agencies had

prepared and collected advice and recommendations from small entity

representatives.

However, a few of the panels’ and agencies’ actions had minor

inconsistencies with SBREFA’s specific statutory requirements. For

example, SBREFA requires that the advocacy review panels report on the

comments of the small entity representatives and their findings not later

than 60 days after the date the regulatory agency convened the panels.

However, three of the five panels took a few days longer than the allotted

60-day period to prepare the panels’ final reports. OSHA’s tuberculosis and

EPA’s industrial laundries panels took 63 days to prepare their final reports,

and the transportation equipment-cleaning panel took 69 days.

SBREFA also required both EPA and OSHA to designate by April 29, 1996,

using existing personnel to the extent possible, a small business advocacy

chair to be responsible for implementing the panel requirements and to act

as a permanent chair of the agency’s advocacy review panels. Both

agencies appointed officials as panel chairs who were already employed

by the agencies. OSHA designated its chair in March 1996, before the

statutory deadline.13 However, EPA did not designate a small business

advocacy chair until June 11, 1996, about 6 weeks later than required by

the statute.

SBREFA states that the advocacy review panels shall “report” within 60

days, “provided that such report shall be made public as part of the

rulemaking record.” However, the statute does not specify to whom the

report is to be directed and when the reports should be made available to

the public. OSHA’s panel issued its final report to the Assistant Secretary for

Occupational Safety and Health on November 12, 1996, and OSHA made the

report publicly available on December 10, 1996—10 months before the

draft rule was published as a proposed rule. EPA’s panels issued their final

reports to the EPA Administrator. However, the EPA panels decided that

they would make the final panel reports available to the public by placing

13From January to November, 1997, the Chair also served as Acting Assistant Secretary for

Occupational Safety and Health. As a result, any panel recommendations during this period would

have been made from the panel he chaired to himself. However, OSHA did not convene any advocacy

review panels during this period, so the potential conflict never arose.

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them in the public rulemaking docket only when the related proposed

rules were published in the Federal Register. This determination appears

to be consistent with SBREFA’s procedural requirements and congressional

intent.14 However, this approach has resulted in several months delay

between the issuance of the panels’ final reports and their availability to

the public.15 Some of the small entity representatives that we interviewed

said they would have liked to have seen how the panel reports reflected

their comments as soon as the reports became final rather than having to

wait until EPA published the associated notice of proposed rulemaking. To

accommodate the small entities representatives’ concerns regarding the

delay in releasing these reports, EPA’s Chair said that he briefed some of

the representatives about the content of the panels’ final reports and how

their comments had been reflected in these reports.

Implementation of the

Panels Differed

Although the five advocacy review panels convened as of November 1,

1997, generally followed SBREFA’s procedural requirements, there were

differences among the panels in how those requirements were

implemented and in the general operation of the panels. Some of those

differences appeared to occur because the panel process was new and

evolving, and the panels made adjustments to their procedures as they

gained experience.

One of the differences among the panels was the degree of prepanel

contact that the agencies had with the small entity representatives, which

in turn had implications for other aspects of the panel process. For

example, although OSHA had done some outreach with small entities before

its tuberculosis panel, it had not previously dealt with some of the types of

small entities that were expected to be affected by the draft tuberculosis

exposure rule. As a result, it was difficult for OSHA and SBA’s Chief Counsel

for Advocacy to identify representatives from those small entities to

participate on that panel. In contrast, many of the small entity

representatives to the EPA panel regarding stormwater phase II guidelines

had worked with EPA on a related federal advisory committee for 2 years

before the date that EPA convened the advocacy review panel. As a result,

it was relatively easy for EPA and the Chief Counsel to identify small entity

14See 142 Cong. Rec. S3242, S3245 (daily ed. Mar. 29, 1996) (Stmt. of Sen. Bond) and 142 Cong. Rec.

E571, 574 (daily ed. Apr. 19, 1996) (Stmt. of Rep. Hyde).

15EPA published its proposed rule on nonroad diesel engine emissions about 4 months after the panel

issued its final report. EPA has published two additional proposed rules for which it convened panels.

It released the August 8, 1997, final report for the industrial laundries’ panel on December 17, 1997, and

the August 7, 1997, final report for the stormwater phase II panel on January 9, 1998. As of February 1,

1998, EPA had not yet published a notice of proposed rulemaking related to the SBREFA panel on the

transportation equipment-cleaning industry. This panel’s final report was made on September 23, 1997.

Page 13 GAO/GGD-98-36 Review Panel Requirements
B-277946 

representatives to provide input to that panel. Also, because of their

extensive background on this issue, some of the small entity

representatives said that it was relatively easy for them to review the

materials that EPA gave them.

The panels also differed in the availability of information for the small

entity representatives to review. SBREFA states that the advocacy review

panels “shall review any material the agency has prepared,” but the statute

does not specify what information the regulatory agencies must make

available to the small entity representatives. In the five panels convened as

of November 1, 1997, EPA and OSHA provided the small entity

representatives with information about the draft rules before the

representatives provided input to the panels. That information usually

included a copy of the initial economic analyses or data on costs the

regulatory agency had prepared for the draft rules.16 However, EPA did not

prepare an initial economic analysis for its draft stormwater phase II rule

until after the small entity representatives had provided their comments to

the panel. Some of the small entity representatives to this panel said that

their comments were not as valuable or as well-grounded as they could

have been because they lacked the information in the initial economic

analysis. This economic analysis, however, led EPA to conclude that the

stormwater phase II rule would not have a significant economic impact on

a substantial number of small entities. Therefore, if EPA had completed its

initial economic analysis before it convened the advocacy review panel in

June 1997, it probably would not have convened a panel for this draft rule.

The panels also differed in how they obtained comments from the small

entity representatives. Before EPA convened its four panels, the agency

held face-to-face meetings with the representatives to discuss the draft

rules.17 Officials from OIRA and SBA’s Office of Advocacy were invited to

attend all of these meetings, and they attended most of them. None of the

EPA panels held face-to-face meetings with small entity representatives

after the panels were convened. However, three of the four EPA panels had

telephone conference calls with the representatives during the 60-day

panel process. The panel that did not have a telephone conference call was

EPA’s stormwater phase II panel. The EPA Chair said that because most of

16Although the materials for EPA’s first panel (on nonroad diesel engine emissions) did not include a

separate economic or cost analysis, cost considerations were included with descriptions of some of

the alternatives. For example, one alternative established a cost-effectiveness threshold for the

regulation of various equipment types.

17Before EPA convened the panel for the nonroad diesel engine emissions draft rule, it conducted

outreach efforts with small entities and developed a statement of principles for the rule, which the

small entities reviewed prior to the panel.

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B-277946 

the small entity representatives had worked to develop this draft rule and

had previously provided their comments, he did not believe that either

face-to-face meetings or a telephone conference call was necessary.

Instead, he sent a letter to the small entity representatives asking them if

they had any additional comments for the panel. In response, one small

entity representative resubmitted his comments, which had been

previously received by EPA a few days before the panel convened.

OSHA held individual telephone conference calls with each of the small

entity representatives who provided input to its panel. Unlike EPA’s

approach to telephone conference calling, the small entity representatives

who were individually called by OSHA’s panel were unable to hear the other

representatives’ comments. Some of these small entity representatives

said that they would have liked to have been able to hear the other

representatives’ comments.

Another difference among the panels was in how the small entity

representatives were identified. EPA initially identified most of the small

entity participants for its four panels, and then confirmed their lists of

representatives with SBA’s Office of Advocacy. OSHA, on the other hand,

collaborated with the Office of Advocacy in its initial efforts to identify

potential representatives for its panel on tuberculosis exposure. OSHA

officials said that they intend to identify small entity representatives and

conduct outreach efforts related to the panel process before convening

future panels.

EPA and its panels changed some of their procedures as they gained

experience with the panel process. For example, EPA convened its first

panel on nonroad diesel engine emissions by sending a draft panel report

summarizing the agency’s prepanel outreach efforts to the panel members.

However, EPA’s Chair said that subsequent panels changed this practice

because some Members of Congress and congressional staff viewed

convening the panel by sending the draft report as an attempt to prejudice

the panel members’ considerations. For subsequent panels, EPA developed

a summary of prepanel comments it received regarding the draft rules and

submitted these summaries to the panels, and the panels then drafted their

final reports. EPA’s Chair also said that EPA plans to clarify its guidance on

panel procedures for collecting input from small entity representatives. He

said that by sending a letter to the small entity representatives they

contacted before the panel was convened, the stormwater phase II panel

followed SBREFA’s requirements that the panel itself obtain the advice and

recommendations from the representatives. However, after this panel, he

Page 15 GAO/GGD-98-36 Review Panel Requirements
B-277946 

said that EPA realized that its guidance did not specifically address how the

panel should obtain small entities representatives’ input. Therefore, he

said that EPA plans to amend its SBREFA guidance to clarify that the panels

themselves must conduct outreach to collect advice and recommendations

from the small entity representatives.

Notices of Proposed

Rulemaking

Contained Some

Panel

Recommendations

As of November 1, 1997, two of the draft rules for which EPA and OSHA held

advocacy review panels had been published as notices of proposed

rulemaking in the Federal Register—OSHA’s proposed rule on occupational

exposure to tuberculosis and EPA’s proposed rule to control nonroad diesel

engine emissions. As previously mentioned, EPA’s panels do not release

their reports until EPA publishes the related notice of proposed rulemaking

in the Federal Register. Because three of the panels’ reports were not

publicly available as of November 1, 1997, this report does not discuss the

degree to which EPA reflected the panel recommendations for three of the

four draft rules for which EPA convened panels.

The OSHA tuberculosis exposure panel’s and the EPA nonroad diesel engine

panel’s recommendations focused on providing small entities with

compliance flexibility and on considering potentially overlapping local,

state, and federal regulations and enforcement. OSHA and EPA primarily

responded to the panels’ recommendations in the supplementary

information sections of their notices of the proposed rulemakings,

although OSHA also made some changes to the text of its draft rule as a

result of its panel’s recommendations. SBA’s Office of Advocacy officials

told us they believed that discussing panel recommendations in the

preamble helps to highlight and elicit comments on the issues raised by

the panels, and that such discussions do not relieve the agencies of the

responsibility to make appropriate changes in the text of the rules

themselves. However, until EPA and OSHA conclude the public comment

periods for these proposed rules and publish them as final rules, it is too

early to tell whether the rules will reflect the panels’ recommendations.

OSHA Tuberculosis

Exposure Panel

The panel for OSHA’s draft standards for occupational exposure to

tuberculosis made dozens of recommendations in its final report.18 Most of

the panel’s recommendations were that OSHA should clarify certain terms

or processes, request comments on certain issues, obtain additional

information, or explain OSHA’s regulatory role in relation to other state and

18The notice of proposed rulemaking (62 Fed. Reg. 54160, Oct. 17, 1997) listed the panel’s

recommendations and described how OSHA was responding to them on pages 54229-54231.

Page 16 GAO/GGD-98-36 Review Panel Requirements
B-277946 

federal agencies. OSHA responded to almost all of the panel’s

recommendations in the supplementary information section of the notice

of proposed rulemaking. For example, one of the panel’s major

recommendations was for OSHA to reexamine the application of the draft

rule to homeless shelters. In the supplementary information, OSHA said that

it was conducting a special study of this issue and would hold hearings on

issues related to tuberculosis exposure in homeless shelters before issuing

the final rule. Other panel recommendations were that OSHA should clarify

a number of terms regarding the coverage of the draft rule and provide

additional explanations and analyses. OSHA responded to these

recommendations by, among other things, incorporating definitions of

several terms in the supplementary information (e.g., defining an

“establishment” versus a “facility”) and describing OSHA’s assumptions

about some of the rule’s costs. OSHA officials said that they found the small

entity representatives’ suggestions to improve clarity and readability to be

very helpful.

A few of the OSHA panel’s recommendations resulted in changes in the text

of the draft rule. For example, the panel recommended that OSHA examine

the potential cost savings associated with allowing tuberculosis training

that a worker received in one place of employment to be used to satisfy

training requirements in another place of employment. The panel also

recommended that OSHA examine the need for annual retraining of

employees. In response, OSHA changed the text of the draft rule to allow

the portability of nonsite specific training and to allow employers to

demonstrate to regulators that their employees are knowledgeable in the

area of occupational exposure to tuberculosis, rather than provide annual

retraining.

EPA Nonroad Diesel

Engine Panel

EPA’s panel on its draft rule to control nonroad diesel engine emissions

recommended that EPA solicit comments on five alternative

implementation strategies in its notice of proposed rulemaking. These

alternative strategies included gradually phasing in the requirements,

offering manufacturers flexible exemptions, allowing manufacturers to

purchase credits to sell equipment with noncomplying engines, providing

exemptions for certain engine models, and instituting a hardship relief

appeals process. According to its final report, the panel believed that these

alternative strategies would maximize compliance flexibility for small

manufacturers of nonroad equipment and small businesses that modify

Page 17 GAO/GGD-98-36 Review Panel Requirements
B-277946 

diesel engines for marine use.19 In the supplementary information section

of the notice of proposed rulemaking, EPA presented these five alternative

strategies and requested public comments on them.20

The panel also recommended that EPA continue to seek information and

conduct analyses relating to the number of small entities potentially

affected by the draft rule, consider the potential overlap of the rule with

OSHA regulations related to ambient carbon monoxide levels, and design

the proposed rule to minimize the need for recordkeeping and reporting.

In the supplementary information section, EPA requested additional

information, comments, and suggestions on the number of small entities

and on the potential overlap with OSHA’s regulations. EPA also said that it

was taking steps to minimize recordkeeping and reporting requirements.

According to EPA’s Chair, the small entity representatives suggested

several ideas that EPA previously had not considered, and the draft rule

was changed as a result of these contributions. An official from SBA’s

Office of Advocacy said that EPA’s experience in developing this proposed

rule was an excellent example of how the panels have improved the

agencies’ rulemaking process.

Small Entity

Representatives’ Views

About one-third (11 of 32) of the small entity representatives that we

interviewed (including those who commented on draft rules that had not

been published) said they believed that the agencies planned to make

some changes to the draft rules as a result of their comments. For

example, four of the six small entity representatives that we interviewed

who provided comments to EPA’s nonroad diesel engine emissions panel

said that they believed EPA changed the rule in response to their

comments. A representative who provided input to EPA’s stormwater phase

II panel said that the draft rule had “reflected many people’s comments

and was well balanced.” Another representative said that EPA seemed to

take the small entity representatives’ suggestions seriously; therefore, he

expected that some of the comments would be reflected in the proposed

rule when it is published.

However, one-third (10 of 32) of the small entity representatives that we

interviewed said that they did not believe that their comments would

19Some of these alternative implementation strategies had been among a list of 10 alternative strategies

developed by EPA staff on the basis of input from small entity representatives and other commenters

on the supplemental advanced notice of proposed rulemaking.

20The EPA draft rule to control nonroad diesel engine emissions was proposed on September 24, 1997

(62 Fed. Reg. 50151).

Page 18 GAO/GGD-98-36 Review Panel Requirements
B-277946 

result in any changes to the proposed rules.21 Six of the representatives

said they believed that the regulatory agency officials had already decided

how the rules would be written before convening the panel, and that the

officials were not interested in making any significant changes to the rules.

One of these representatives, who provided input to EPA’s stormwater

phase II panel, said that he did not believe that the regulatory agency

would change the rule in “any meaningful way,” and that word changes

were “just window dressing.” Another representative, who also provided

input to this panel, said that he perceived the panel process as another

opportunity for EPA to defend its draft rule as written. Some of the small

entity representatives we interviewed said that they would have liked a

more open, give-and-take discussion with the agency officials on the issues

related to the draft rule.

Small Entity

Representatives

Offered Suggestions

to Improve the Panel

Process

Most of the small entity representatives we spoke with who participated in

the advocacy review panel process said that they thought the process was

worthwhile. About three-fourths of the 32 small entity representatives

suggested changes to improve how the agencies have implemented the

panel process. Their comments primarily focused on the following four

issues: (1) the time frames in which the panels were conducted, (2) the

composition of the groups of small entity representatives commenting to

the panels, (3) the methods the panels used to gather comments, and

(4) the materials about the draft rule that the agencies provided for the

small entities representatives’ review.

Time Frames Seven of the 32 small entity representatives who participated in the panel

process said that they would have liked to have had more advance notice

of panel meetings and telephone conference calls with the panels. Some of

these representatives said that short advance notice had prevented them

from participating in certain efforts. One individual, who had been

identified as a possible small entity representative, said that short notice of

these meetings prevented him from participating in the panel process at

all.22 Most of those who voiced this concern said that they would have

liked at least 1 additional week of advance notice for panel meetings and

telephone conference calls to avoid conflicts with other scheduled

commitments.

21The remaining one-third of the small entity representatives said they did not know whether their

comments would result in any changes to the proposed rules.

22Other potential small entity representatives said that they did not participate in the panel process

because of scheduling conflicts or lack of interest in the draft rules.

Page 19 GAO/GGD-98-36 Review Panel Requirements
B-277946 

Eighteen small entity representatives we interviewed said that they had

sufficient time to study the materials that the agencies provided to them

before being asked to provide comments on the draft rules. However, 14

representatives said they felt that they were not given enough time to

study those materials. Many of these representatives said that an

additional 1 to 2 weeks would have allowed them to consult with others

(e.g., members of their professional associations) before providing

comments. One small entity representative said that requiring comments

from the representatives shortly after they receive materials from the

agencies prevents them from providing the panels with an in-depth

perspective regarding the draft rule.

Five small entity representatives recommended holding the panels earlier

in the rulemaking process. They said that, in some cases, decisions were

made regarding the draft rules before the panels were convened. As a

result, they said, it was less likely that the panels would have much impact

on the draft rules.

Composition of Small

Entity Representatives’

Groups

The 32 small entity representatives we interviewed were evenly split on

whether they believed that the individuals and organizations providing

comments to their panels adequately represented the types of entities that

would be affected by the associated draft rule. Fourteen small entity

representatives said they thought the representation was adequate.

However, 14 other small entity representatives said they thought the

composition of the panels could be improved.23 Specifically, they said that

(1) they would have liked the panels to hear from more representatives

from individual small entities, in addition to representatives from

associations; (2) certain types of affected small entities were not included

(e.g., representatives from certain geographical areas); and (3) those

entities that would bear the burden of implementing the draft rule were

underrepresented (e.g., small municipalities).

In some cases, the small entity representatives who provided input to the

EPA panels had been working with the agency for some time to assist in

developing the draft rules. Some of the small entity representatives who

provided input to one EPA panel said they thought that the mix of those

providing advice to the panels should have included other representatives

who would have been reviewing and commenting on the draft rule for the

23The remaining four small entity representatives that were interviewed said they were unsure whether

the representatives’ composition was adequate.

Page 20 GAO/GGD-98-36 Review Panel Requirements
B-277946 

first time, and who, therefore, might have been able to provide a fresh

perspective or some different ideas to the panel.

Methods Used to Gather

Representatives’

Comments

Although EPA officials met face-to-face with small entity representatives

before EPA convened its panels, none of the panels themselves met with

the representatives to obtain their comments about the draft rules after

the panels had been convened.24 The OSHA panel and all but one of the EPA

panels convened as of November 1, 1997, relied on telephone conference

calls with the small entity representatives to gather input during the panel

process. The remaining EPA panel only obtained input during the panel

process as a result of a letter from the Chair to the small entity

representatives requesting any additional comments that had not already

been provided during prior outreach and federal advisory committee

efforts regarding the draft rule.

Four small entity representatives said that they viewed telephone

conference calls as an efficient way to gather comments from the

representatives. However, nine small entity representatives felt that

telephone conference calls limited the amount of discussion that could

take place between them and the panels. Most of these representatives

also expressed a preference for face-to-face meetings instead of telephone

conference calls because they believed the discussions would be fuller and

would provide greater value to the panels. When telephone conference

calls were used, four of the small entity representatives said they found it

confusing when there were numerous participants on the phone at once.

One of these representatives, for example, suggested setting an agenda to

clarify participation in the telephone conference calls.

Materials Provided to

Representatives

Twenty-four small entity representatives said the materials that the

agencies provided to them about the draft rules permitted an intelligent

and informed discussion of the rules’ potential effects on small entities.

However, eight of the representatives said they believed that the materials

that the regulatory agencies provided could have been improved. Six of

the representatives who believed the materials could be improved said

that the materials were too vague or did not provide enough information

regarding the potential economic impact on small entities. Conversely, two

representatives said that the materials were too voluminous and complex

to review expeditiously. Three of the small entity representatives for EPA’s

24An OSHA official said that OSHA offered the small entity representatives the option of having a

face-to-face meeting, but that all of the representatives chose the telephone conference option.

Page 21 GAO/GGD-98-36 Review Panel Requirements
B-277946 

industrial laundries panel said that EPA seemed unwilling to share

information with the small entity representatives.

Agency Officials’

Suggestions and

Observations

The agency officials we interviewed offered fewer suggestions for

improving the panels than the small entity representatives. EPA’s and OSHA’s

Chairs and some of the agency officials we interviewed said that it may be

a good idea to hold future panels earlier in the rulemaking process. SBA’s

Office of Advocacy officials said that they thought it was beneficial for EPA

and OSHA to identify small entity representatives and start conducting

outreach efforts before convening the panel. Officials from the Office of

Advocacy also suggested improving the adequacy and timing of the

materials that the regulatory agencies provide to small entity

representatives and the panels. They said that the small entity

representatives and the panels cannot comment without appropriate and

timely materials. However, the Chair of EPA’s panels said that some of the

panels and the small entity representatives wanted data or types of

analyses that were not available. He said that EPA is willing to provide

additional information and analysis to the panels “within reason,” given

the time constraints of the rulemaking process.25 For two of its panels, EPA

provided background materials and held a meeting with the small entity

representatives before convening the panel to determine what information

would be needed for that panel.

Many of the agency officials we spoke with said that the 60-day period that

SBREFA mandates for the panels is adequate. Both SBA’s Office of Advocacy

and EPA officials said that, although 60 days is a tight time frame, it

encourages agencies and small entity representatives to focus on the

issues and get the job done. They said that additional time might just

expand the panel process without producing better results. Several agency

officials also said that telephone conference calls were an effective and

efficient method for panel members to gather small entity representatives’

comments within the 60-day period. For example, the EPA Chair said that

telephone conference calls save travel expenses and time away from work

for the small entity representatives.

Many of the agency officials we interviewed also said that the process has

changed and will continue to change as the agencies gain more experience

with the panel process. Some EPA and OSHA officials also said that the

demands of the panel process should be placed in the context of their

25An EPA official said that some of the data that the small entity representatives wanted to see were

confidential business information regarding industrial laundries, which EPA could not share with the

small entity representatives.

Page 22 GAO/GGD-98-36 Review Panel Requirements
B-277946 

agencies’ other efforts to conduct a timely rulemaking process. These

agency officials pointed out that there are costs associated with the

advocacy review panel process in terms of the time and resources

expended. A few EPA and OSHA program officials who had each participated

in one panel also said that there are other opportunities for small entities

to provide input during the public comment period. For example, an EPA

official said that in some cases, such as when the small entity

representatives did not have the opportunity to comment to the advocacy

review panel on an initial economic analysis, the representatives could

provide their views and any relevant information during the public

comment period after the rule is proposed.

Although there were some individual small entities included in all but one

of the groups of small entity representatives that provided input to the

panels, most of the representatives to the panels were from associations,

such as those associations representing the health care industry, the

construction industry, or local governments. Some agency officials told us

that they believed it was important for agencies to identify representatives

from individual small entities and not to rely solely on representatives

from associations. However, SBA’s Office of Advocacy officials pointed out

that representatives from associations may have more resources and

expertise available to participate in the advocacy review panels than do

individual small entities.

Finally, although some officials in OSHA, EPA, OIRA, and SBA’s Office of

Advocacy said they had already noticed benefits from the panels, they also

said that it is too soon to tell whether the panel process would result in

better rules until after the public comments have been received for the

rules and the rules are finalized.

Conclusions Although federal agencies’ experiences with the advocacy review panels

have been limited thus far, some initial observations about the panel

process can be made. Agency officials and small entity representatives

generally agreed that the panel process is worthwhile, providing valuable

insights and opportunities for participation in the rulemaking process.

Many of the panel participants we interviewed said they welcomed the

panel process because it has provided an opportunity to identify

significant impacts on small entities and has given the agencies a better

appreciation of small entities’ concerns.

Page 23 GAO/GGD-98-36 Review Panel Requirements
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However, implementation of the panel process has not been without

controversy or concern. The SBA Chief Counsel for Advocacy and some

small entity representatives believe that EPA should have convened

advocacy review panels for two rules for which advocacy review panels

were not held. EPA and three of the five panels that were held did not meet

some of the specific time requirements of the statute. In addition, although

consistent with the statute, the EPA panels’ policy regarding when their

final reports can be made public may result in reports not being made

available to the small entity representatives or the public until months

after the reports are provided to the EPA Administrator. Some of the small

entity representatives believe that the panels should be held earlier in the

rulemaking process, that the materials provided to the representatives

could be improved, that they should have more time to review those

materials, and that the agencies should improve the means by which they

obtain small entity representatives’ comments.

Some of the concerns that small entity representatives expressed about

the panel process appear to be inconsistent and may be difficult to resolve.

For example, when panels are held early in the rulemaking process, some

of the data and analyses that the small entity representatives said they

need to have an informed discussion about a draft rule are less likely to be

available than later in the process. Conversely, delaying the panels until

the data are available may limit the panels’ opportunity to influence key

decisions.

Some EPA and OSHA program officials who had each participated in one

panel made comments regarding the panel process that indicated they did

not fully appreciate the intent of the process. For example, an EPA official

said that small entity representatives who did not have an opportunity to

review and comment on a draft rule’s initial economic analysis could do so

during the standard public comment period for the proposed rule.

However, this view fails to recognize that Congress established the

advocacy review panel process as an addition to the public comment

period to facilitate receiving the views of small entities at an earlier stage

of the rulemaking process. Therefore, the standard public comment period

cannot substitute for the panel process.

How agencies implement the advocacy review panel process will have a

pronounced effect on the continued viability of that process. If small entity

representatives can discuss the issues related to draft rules that they

believe are important and see that their input is seriously considered, it is

likely that they will continue to view the panel process as a useful

Page 24 GAO/GGD-98-36 Review Panel Requirements
B-277946 

opportunity to provide their comments on draft rules relatively early in the

rulemaking process. Similarly, if panels continue to make adjustments to

the process as they learn from their experiences, they can help alleviate

some of the concerns voiced by the small entity representatives.

Many of the suggestions that small entity representatives made regarding

the panel process would not require changes to SBREFA. For example,

although SBREFA requires that agencies convene panels before a notice of

proposed rulemaking is published, the statute does not preclude

convening the panels even earlier in the rule development process, as the

small entity representatives suggested. Although some of the

representatives said they needed more advance notice of meetings and

telephone conference calls and more time to review background materials

provided by the agencies, those changes would not necessarily require

increasing the 60-day period that SBREFA allows between the date the

panels are convened and the issuance of their final reports. The regulatory

agencies could provide representatives with materials before the panels

convene; better planning could alleviate the short advance notice problem.

The lack of clarity regarding whether EPA should have convened advocacy

review panels for its two proposed rules on ozone and particulate matter

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

whether a rule has a “significant economic impact on a substantial number

of small entities” under the RFA. We raised this issue in our 1994 report on

the RFA, in which we said that “[i]f Congress wishes 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.” If governmentwide criteria had been established regarding

when initial regulatory flexibility analyses should be prepared (and,

therefore, when SBREFA advocacy review panels should be convened), the

dispute regarding whether EPA should have convened additional panels

would likely not have arisen. Governmentwide guidance could, for

example, address the specific question at issue with regard to these two

rules—whether establishment of regulatory standards by a federal agency

should be separated from their implementation requirements imposed by

the individual states (or other entities) for purposes of compliance with

the RFA and SBREFA.

Page 25 GAO/GGD-98-36 Review Panel Requirements
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Matter for

Congressional

Consideration

If Congress wishes to clarify and strengthen the implementation of the RFA

and SBREFA, it should consider providing SBA or another entity with clearer

authority and responsibility to interpret the RFA’s provisions on a

governmentwide basis. Congress could also consider establishing, or

requiring SBA or another entity to develop, governmentwide criteria

defining the phase “significant economic impact on a substantial number

of small entities.” Those criteria should specify whether the establishment

of regulatory standards by a federal agency should be separated from their

implementation requirements imposed by other entities for the purposes

of the RFA and SBREFA.

Agency Comments

and Our Evaluation

We provided copies of a draft of this report to the Director of OMB, the

Secretary of Labor, and the Administrators of EPA and SBA for review and

comment. The comments we received from officials at OIRA, OSHA, EPA, and

SBA’s Office of Advocacy generally agreed with the information presented

in this report. An OIRA official said that the SBREFA panel process is a

valuable aid to the rulemaking process and that the initial panels have

worked well. EPA and OSHA officials suggested some specific clarifications

and technical changes to the draft, which we have incorporated into the

text of the final report as appropriate. For example, at EPA’s and OSHA’s

suggestion we clarified the methodology we used to select the proposed

rules we reviewed to determine whether they should have been subject to

the panel process.

Our draft report indicated that it was unclear whether SBREFA permits SBA’s

Chief Counsel for Advocacy to initially identify individuals representative

of affected small entities in consultation with the regulatory agencies, or

whether that initial identification should be done without receiving input

from the regulatory agency. Officials from SBA’s Office of Advocacy said

that they believed it was prudent to use the regulatory agencies’ list of

small entity representatives as a starting point in the process of identifying

small entity representatives, thereby building on the agency’s prior

outreach efforts. The officials also said that their additional contacts with

small entities can enable them to identify additional small entities that

should be asked to provide advice and recommendations to the advocacy

review panels. After considering the officials’ comments and researching

the legislative history of the provision, we changed the text in this report

to indicate that SBA’s use of draft agency lists was consistent with the

statutory requirements.

Page 26 GAO/GGD-98-36 Review Panel Requirements
B-277946 

EPA officials said that they strongly believe that they correctly interpreted

the RFA and SBREFA regarding the ozone and particulate matter rules, and

that convening advocacy review panels for those rules was not required. In

this report, we expanded our discussion of EPA’s position on this issue, but

we continued to describe both sides of this argument and to note that the

issue was under litigation.

EPA officials also expressed concerns regarding our draft report’s Matter

for Consideration section in which we suggested, conditionally, that

Congress should require SBA to develop governmentwide criteria regarding

RFA analyses. The officials said that EPA had developed detailed, interim

guidance on the RFA, as amended by SBREFA, including guidance regarding

the panel process and determination of what constitutes a “significant

economic impact on a substantial number of small entities.” They stated

that governmentwide criteria on what constitutes a significant economic

impact on a substantial number of small entities cannot be both

prescriptive enough to be authoritative, but flexible enough to take into

account the many section-by-section, statute-by-statute, and

agency-by-agency variations that must be considered. EPA officials said

that EPA’s guidance allows it to use its judgment in making case-by-case

determinations. The officials said that they would prefer to maintain the

agency’s flexibility in making certifications and to rely on Department of

Justice decisions resolving any disputes in interpretations among agencies

as well as any case law that arises under the new judicial review

provisions of SBREFA regarding agencies’ interpretations of the RFA.

Although agency-specific guidance may also be needed, we believe that

governmentwide criteria regarding RFA analysis could help promote a more

consistent and less contentious approach for agencies to use in complying

with the RFA and SBREFA requirements. In our 1991 report on the RFA, we

identified instances of agencies’ interpreting key provisions of the RFA

differently. Congress enacted the RFA and SBREFA to ensure that small

entities’ views are taken into consideration in developing notices of

proposed rulemaking. Establishing governmentwide criteria could help

small entities as well as agencies more clearly understand when and how

the RFA and SBREFA requirements should be applied. While we recognize

that governmentwide criteria need to be flexible enough to allow for some

agency-by-agency variations, we believe that the criteria should be

sufficiently standardized to provide for consistent implementation among

federal regulatory agencies. Although challenging to develop, a set of

criteria would help ensure that the intent of the RFA and SBREFA

requirements is understood and fairly implemented. Therefore, we

Page 27 GAO/GGD-98-36 Review Panel Requirements
B-277946 

retained the Matter for Congressional Consideration section in which we

suggest that governmentwide criteria be established, and we stated that

those criteria should specify whether the establishment of regulatory

standards by a federal agency should be separated from their

implementation requirements imposed by other entities for the purpose of

the RFA and SBREFA.

EPA officials also said that, if governmentwide criteria were to be

developed, SBA should not be the agency designated to develop these

criteria. They said that previous SBA interpretations of the RFA have

differed from those of many other agencies, and in some instances, from

the language of the statute. EPA officials also said that giving SBA the

authority to interpret the RFA could bind the regulatory agencies to a single

(and possibly incorrect) view of the statute’s requirements. For example,

both EPA and OSHA officials disagree with SBA’s interpretation that a

“significant economic impact” could be either a positive or negative

impact. EPA and OSHA officials said that the language in the statute as well

as the great weight of its legislative history clearly indicate that the

purpose of the RFA is to consider regulatory alternatives that would

minimize negative impacts on affected small entities, and the officials do

not consider positive or beneficial regulatory effects to constitute a

“significant economic impact” under the RFA. In response to these officials’

comments, we indicated in the Matter for Congressional Consideration

section that Congress could establish, or could require SBA or another

entity to develop, governmentwide criteria defining the phrase “significant

economic impact on a substantial number of small entities.”

We are sending copies of this report to the Ranking Minority Members of

the Senate Committee on Small Business and the House Committee on

Small Business’ Subcommittees on Government Programs and Oversight,

and Regulatory Reform and Paperwork Reduction; the Director of OMB; the

Secretary of Labor; and the Administrators of EPA and SBA. We will also

make copies available to others on request.

Page 28 GAO/GGD-98-36 Review Panel Requirements
B-277946 

Major contributors to this report are listed in appendix VII. Please contact

me on (202) 512-8676 if you or your staff have any questions concerning

this report.

L. Nye Stevens

Director, Federal Management

 and Workforce Issues

Page 29 GAO/GGD-98-36 Review Panel Requirements
Contents

Letter 1

Appendix I 

Selected EPA- and

OSHA-Proposed Rules

for Which Panels

Were Not Held

34

Appendix II 

OSHA Panel on

Occupational

Exposure to

Tuberculosis

37

Appendix III 

EPA Panel on

Nonroad Diesel

Engine Emissions

40

Appendix IV 

EPA Panel on

Stormwater Phase II

(National Pollutant

Discharge Elimination

System)

43

Page 30 GAO/GGD-98-36 Review Panel Requirements
Contents

Appendix V 

EPA Panel on Effluent

Limitations Guidelines

and Pretreatment

Standards for

Industrial Laundries

Point Source Category

45

Appendix VI 

EPA Panel on Effluent

Limitations Guidelines

and Standards for the

Transportation

Equipment-Cleaning

Industry

47

Appendix VII 

Major Contributors to

This Report

49

Tables Table I.1: Selected EPA-Proposed Rules Published in the First

Year of the SBREFA Advocacy Review Panel Process for Which

Panels Were Not Held

35

Table I.2: OSHA-Proposed Rules Published in the First Year of the

SBREFA Advocacy Review Panel Process for Which Panels Were

Not Held

36

Page 31 GAO/GGD-98-36 Review Panel Requirements
Contents

Abbreviations

EPA Environmental Protection Agency

NPDES National Pollutant Discharge Elimination System

OIRA Office of Information and Regulatory Affairs

OMB Office of Management and Budget

OSHA Occupational Safety and Health Administration

RFA Regulatory Flexibility Act

SBA Small Business Administration

SBREFA Small Business Regulatory Enforcement Fairness Act

TB tuberculosis

Page 32 GAO/GGD-98-36 Review Panel Requirements
Page 33 GAO/GGD-98-36 Review Panel Requirements
Appendix I 

Selected EPA- and OSHA-Proposed Rules

for Which Panels Were Not Held

This appendix lists the proposed rules that the Environmental Protection

Agency (EPA) and the Occupational Safety and Health Administration

(OSHA) published under notices of proposed rulemaking in the Federal

Register during the first year’s implementation of the Small Business

Regulatory Enforcement Fairness Act (SBREFA) advocacy review panel

process. EPA and OSHA did not convene advocacy review panels for these

proposed rules because they certified that the rules would not have a

significant economic impact on a substantial number of small entities.

Because of the large volume of proposed rules that EPA published in the

Federal Register during this period (June 28, 1996, through June 28, 1997),

we limited our review of EPA-proposed rules to those that were subject to

review by OIRA, pursuant to Executive Order 12866.

Page 34 GAO/GGD-98-36 Review Panel Requirements
Appendix I 

Selected EPA- and OSHA-Proposed Rules

for Which Panels Were Not Held

Table I.1: Selected EPA-Proposed

Rules Published in the First Year of the

SBREFA Advocacy Review Panel

Process for Which Panels Were Not

Held

Date Proposed rule

July 9, 1996 Transportation Conformity Rule Amendments: Flexibility

and Streamlining

July 23, 1996 Prevention of Significant Deterioration (PSD) and

Nonattainment New Source Review (NSR)

August 14, 1996 Hazardous Waste Management System; Identification and

Listing of Hazardous Waste; Solvents; CERCLA

Hazardous Substance Designation and Reportable

Quantities

September 26, 1996 National Emission Standards for Hazardous Air Pollutants

for Source Categories; National Emission Standards for

Hazardous Air Pollutants for Primary Aluminum Reduction

Plants

December 13, 1996 National Ambient Air Quality Standards for Particulate

Matter: Proposed Decision

December 13, 1996 National Ambient Air Quality Standards for Ozone:

Proposed Decision

December 13, 1996 Proposed Requirements for Designation of Reference and

Equivalent Methods for Particulate Matter (PM)2.5 and

Ambient Air Quality Surveillance for Particulate Matter

December 27, 1996 Acid Rain Program: Permits, Allowance System, Sulfur

Dioxide Opt-Ins, Continuous Emission Monitoring, Excess

Emissions, and Appeal Procedures

January 2, 1997 Proposed Implementation Requirements for Reduction of

Sulfur Oxide (Sulfur Dioxide) Emissions

February 11, 1997 Emission Standards for Locomotives and Locomotive

Engines

March 28, 1997 Regulation of Fuels and Fuel Additives: Modification of the

Covered Areas Provision for Reformulated Gasoline

March 28, 1997 Transitional and General Opt Out Procedures for Phase II

Reformulated Gasoline Requirements

April 2, 1997 National Emission Standards for Hazardous Air Pollutants

Pharmaceuticals Production

May 6, 1997 Regulation of Fuels and Fuel Additives: Baseline

Requirements for Gasoline Produced by Foreign Refiners

May 7, 1997 Addition of Dioxin and Dioxin-Like Compounds;

Modification of Polychlorinated Biphenyls (PCBs) Listing;

Toxic Chemical Release Reporting; Community

Right-to-Know

May 12, 1997 Land Disposal Restrictions Phase IV: Second

Supplemental Proposal on Treatment Standards for Metal

Wastes and Mineral Processing Wastes, Mineral

Processing and Bevill Exclusion Issues, and the Use of

Hazardous Waste as Fill

May 21, 1997 Protection of Stratospheric Ozone

Source: The Federal Register for the relevant dates.

Page 35 GAO/GGD-98-36 Review Panel Requirements
Appendix I 

Selected EPA- and OSHA-Proposed Rules

for Which Panels Were Not Held

Table I.2: OSHA-Proposed Rules

Published in the First Year of the

SBREFA Advocacy Review Panel

Process for Which Panels Were Not

Held

Date Proposed rule

July 22, 1996 Miscellaneous Changes to General Industry and

Construction Standards; Proposed Paperwork Collection,

Comment Request for Coke Oven Emissions and

Inorganic Arsenic

September 10, 1996 Exit Routes (Means of Egress)

Source: The Federal Register for the relevant dates.

Page 36 GAO/GGD-98-36 Review Panel Requirements
Appendix II 

OSHA Panel on Occupational Exposure to

Tuberculosis

In October and November, 1995, OSHA held a series of meetings with

representatives from labor unions, professional organizations, trade

associations, state and federal governments, and employees of business

and industry to receive input on the approaches OSHA was considering for

its draft rule on occupational exposure to tuberculosis (TB). According to

OSHA, the draft rule would set standards requiring employers to protect

TB-exposed employees by means of infection prevention and control

measures that had been demonstrated to be effective.

In a letter dated August 16, 1996, OSHA’s Small Business Advocacy Chair

notified the Small Business Administration’s (SBA) Chief Counsel for

Advocacy that the OSHA draft rule might have a significant economic

impact on a substantial number of small entities. The OSHA Chair also

identified the types of entities that might be affected by the rule. The Chief

Counsel consulted with OSHA officials and identified 11 small entity

representatives who he believed could provide comments on the draft rule

to the panel. However, a number of these representatives withdrew from

participating or recommended other representatives as being more

appropriate. Ultimately, eight small entity representatives provided input

to the panel—one representative from a homeless shelter, two

representatives from homeless shelter associations, two representatives

from health care associations, one representative from a home health care

service, one emergency medical care service representative, and one

representative from a ventilation and air conditioning contractor.

The OSHA Chair convened the review panel at a meeting on September 10,

1996. The panel formally consisted of the Deputy Assistant Secretary of

Labor, OSHA (Panel Chair); the Associate Solicitor for Occupational Safety

and Health, Department of Labor; the Director of the Directorate of Health

Standards Programs, OSHA; the Director of the Office of Regulatory

Analysis, OSHA; the Chief Counsel for Advocacy, SBA; and the Administrator

of the Office of Management and Budget’s (OMB) Office of Information and

Regulatory Affairs (OIRA). However, OIRA’s Administrator was represented

on the panel by OIRA staff members.

On September 13, 16, and 24, 1996, OSHA provided the eight small entity

representatives with background materials on the draft rule, including the

text of the draft rule. In a letter dated September 16, 1996, the OSHA Chair

instructed the small entity representatives to provide the panel with their

written comments on the background materials within 30 days. All of the

small entity representatives provided written comments, although some

representatives took more than the allotted 30 days. On October 7, 1996,

Page 37 GAO/GGD-98-36 Review Panel Requirements
Appendix II 

OSHA Panel on Occupational Exposure to

Tuberculosis

the panel met and addressed the questions of the small entity

representatives through a conference telephone call. About 3 weeks later,

on October 30, 1996, and November 1, 1996, the panel met to review the

comments and recommendations they had received from the small entity

representatives and to draft the panel’s report. The panel’s report was

completed on November 12, 1996, and was signed by the Chair, the

Administrator of OIRA, and the SBA Chief Counsel for Advocacy. OSHA then

made the final report available to the public in the docket related to this

draft rule on December 10, 1996. OSHA published the proposed rulemaking

for the TB standards nearly a year later, on October 17, 1997. This notice of

proposed rulemaking asked for public comments on, among other things,

the advocacy review panel’s recommendations.

The review panel’s final report included what the panel characterized as 22

major recommendations and 24 other recommendations. Several of the

major recommendations stated that OSHA should take the following

actions:

• Simplify and clarify the text of the proposed rule and define such terms as

“firm” and “facility” so that they are readily understood.

• Consider analyzing additional size classes of small entities where existing

analysis suggests that such examination would provide opportunities to

minimize small entity impacts while accomplishing statutory objectives.

• Either change the definition of a “suspect case” or develop an alternative

approach for homeless shelters.

• Reexamine the costs and impacts of some of the standard’s requirements

for homeless shelters and substance abuse treatment centers.

• More carefully address the economic impacts of the proposed rule on

facilities, including a reexamination of the ability of various facilities to

pass on costs (especially those facilities receiving Medicare and Medicaid

funding), and incorporate the results into its determination of feasibility.

• Solicit comments on whether there are any conflicts between OSHA

regulations and those of other regulatory and voluntary organizations, and

on ways OSHA could better coordinate with these groups. The panel’s final

report said OSHA should specifically include a discussion of similar state

requirements in the preamble to the rule, examine possible interaction

with Health Care Financing Administration rules, and provide greater

detail on how OSHA’s proposed standard compares with Centers for

Disease Control guidelines.

Although the panel’s final report contained a single set of major and other

recommendations, the report indicated that the panel members were not

Page 38 GAO/GGD-98-36 Review Panel Requirements
Appendix II 

OSHA Panel on Occupational Exposure to

Tuberculosis

always in agreement regarding certain issues. For example, OIRA and SBA’s

Office of Advocacy panel members suggested that OSHA analyze the

potential impact of the draft rule on volunteers. However, OSHA panel

members said that such an analysis was not necessary because the

Occupational Safety and Health Act does not cover volunteers. The panel

report ultimately recommended that OSHA consider estimating the rule’s

effect on volunteers and include a discussion explaining that the draft rule

does not apply to volunteers, although some states may choose to do so.

Page 39 GAO/GGD-98-36 Review Panel Requirements
Appendix III 

EPA Panel on Nonroad Diesel Engine

Emissions

As part of the process by which EPA developed its draft rule on the control

of air pollution emitted by nonroad diesel engines, EPA conducted outreach

efforts with a number of organizations that were expected to be affected

by the rule, including small entity representatives. In this draft rule, EPA

plans to establish new emission standards for nonroad diesel engines that

are used in equipment, such as tractors, and some marine applications.

The draft rule includes a program that consists of stringent new emission

standards, requirements to ensure that engines maintain their level of

emission performance as they age, provisions allowing compliance

flexibility to engine and equipment manufacturers, and a voluntary

program to encourage the introduction of low-emitting engines.

In a letter dated November 13, 1996, EPA’s Small Business Advocacy Chair

notified SBA’s Chief Counsel for Advocacy that this draft rule might have a

significant economic impact on a substantial number of small entities,

thereby triggering the SBREFA advocacy review panel requirements. The

Chair also provided the Chief Counsel with a suggested list of six small

entity representatives to provide advice and recommendations to the

panel. As required by SBREFA, the Chief Counsel responded within 15 days

and agreed with EPA’s suggested list of small entity representatives.

Subsequently, EPA and SBA’s Office of Advocacy agreed to add five

additional representatives to the panel process. The 11 representatives

consisted of 1 small nonroad diesel engine manufacturer, 3 association

representatives, 1 individual business representative of small nonroad

equipment manufacturers, 4 representatives of small businesses that

modify engines for marine use (“marinizers”), and 2 association

representatives of engine rebuilders or remanufacturers.

In January 1997, EPA published and sought comments on a statement of

principles in a Supplemental Advance Notice of Proposed Rulemaking in

the Federal Register. The statement of principles, which called for more

stringent emission standards, had been signed earlier by EPA, the California

Air Resources Board, and members of the nonroad diesel engine industry.

EPA also held a workshop in Chicago, Illinois, during the comment period

for this notice that devoted a significant amount of time to discussing

equipment manufacturer regulatory flexibilities and small entity issues.

The written comments received from the supplemental advance notice and

suggestions received at EPA’s workshop and other outreach efforts resulted

in 10 concepts to make emission standards for nonroad diesel engines

flexible and reduce the regulatory burden for small entities.

Page 40 GAO/GGD-98-36 Review Panel Requirements
Appendix III 

EPA Panel on Nonroad Diesel Engine

Emissions

In a letter dated March 25, 1997, the EPA Chair convened the review panel,

which consisted of the Director of the Office of Regulatory Management

and Information, EPA (Panel Chair); the Director, Engine Programs and

Compliance Division, EPA; the Chief Counsel for Advocacy, SBA; and the

Administrator of OMB’s OIRA. However, OIRA’s Administrator was

represented on the panel by an OIRA staff member.

On April 24, 1997, the Chair sent the 10 concepts developed during EPA’s

outreach efforts to the 11 small entity representatives and requested that

they provide the panel with any written comments and recommendations

on these concepts within 2 weeks. Four of the 11 representatives

responded (2 businesses and 2 association representatives). On May 2,

1997, the panel held a telephone conference call with 7 of the 11 small

entity representatives (3 of which also had provided written comments)

during which they discussed and clarified potential regulatory options.

The panel had a third meeting on May 14, 1997, and issued its final report

to the EPA Administrator on May 23, 1997. The report’s cover letter was

signed by all four panel members. The report was made available to the

public on September 24, 1997, when EPA published the associated notice of

proposed rulemaking in the Federal Register.

In its final report, the review panel recommended that EPA (1) continue to

seek information and conduct analyses relating to the number of small

entities potentially affected by the proposed rule; (2) consider the

potential overlap of the rule with OSHA regulations related to ambient

carbon monoxide levels; (3) design the rule to minimize the need for

recordkeeping and reporting; and (4) consider conducting further analysis

on 5 of the 10 concepts that were considered to provide significant

flexibility and burden reduction for small entities, and soliciting comments

on these concepts when it published its notice of proposed rulemaking.

The panel’s final report stated that incorporating these five concepts into

the notice of proposed rulemaking would allow EPA to meet the program’s

emission-reduction goals while maximizing the compliance flexibility for

small manufacturers of nonroad equipment and small marinizers. These

concepts addressed such issues as exemption and volume allowances,

equity between engine size categories, engine program credits, and relief

for hardship cases.

In the preamble of its notice of proposed rulemaking, EPA said that it was

(1) requesting additional information, comments, and suggestions on the

number of small entities potentially affected by the rule and the potential

overlap with OSHA’s carbon monoxide limits; (2) taking steps to minimize

Page 41 GAO/GGD-98-36 Review Panel Requirements
Appendix III 

EPA Panel on Nonroad Diesel Engine

Emissions

recordkeeping and reporting; and (3) proposing or soliciting comments on

the five regulatory alternatives.

Page 42 GAO/GGD-98-36 Review Panel Requirements
Appendix IV 

EPA Panel on Stormwater Phase II (National

Pollutant Discharge Elimination System)

EPA began developing proposed revisions to its National Pollutant

Discharge Elimination System (NPDES) regulations in 1992. To help the

agency develop the draft rule, EPA convened a federal advisory committee

comprised of various stakeholders, including municipalities, industrial and

commercial sectors, and public interest groups. The advisory committee

met 11 times between September 1995 and February 1997.

EPA’s proposed revisions to the NPDES regulations were intended to address

unregulated discharges of stormwater associated with small, municipal

separate storm sewer systems and construction activities at small

construction sites. Therefore, EPA concluded that the draft rule might have

a significant economic effect on a substantial number of small entities.1

 On

April 10, 1997, EPA’s Small Business Advocacy Chair sent a letter to SBA’s

Chief Counsel for Advocacy notifying him that EPA believed its draft rule

might trigger the requirements for an advocacy review panel.

The Chair also provided the Chief Counsel with a list of 10 small

government and business representatives that EPA had been in contact

with during the development of the draft rule since 1995, and that the

agency believed could serve as small entity representatives for the panel

process. The Chief Counsel responded within 15 days of EPA’s notification,

as required by SBREFA, and suggested adding 13 additional representatives.

Ultimately, 29 small entity representatives participated in the panel

process. These representatives included 12 individuals from associations

representing city and county governments and the construction industry,

individual municipalities, and Indian tribes, most of whom had previously

served on the federal advisory committee that helped to develop the draft

rule. The remaining 17 representatives were affiliated with industrial or

commercial associations, many of whom were suggested by SBA.

Twenty-two of the representatives were from business or small

government associations, and 7 were individuals from small governments

or Indian tribes.

EPA conducted telephone conference calls on May 14 and 15, 1997, and

held an 1-day meeting at EPA headquarters in Washington, D.C., on May 22,

1997, to brief the small entity and streamlining representatives on the draft

rule. Officials from OIRA and SBA’s Office of Advocacy also participated in

these telephone conference calls and the 1-day meeting. By June 13, 1997,

25 of the small entity representatives had submitted 12 sets of written

1

After completion of the panel process, additional data and analysis led EPA to conclude that the rule

would not have such an impact. When EPA published the notice of proposed rulemaking on January 9,

1998, the EPA Administrator certified that the proposed rule would not have a significant economic

impact on a substantial number of small entities.

Page 43 GAO/GGD-98-36 Review Panel Requirements
Appendix IV 

EPA Panel on Stormwater Phase II

(National Pollutant Discharge Elimination

System)

comments. Two sets of written comments had multiple signatures: 1 letter

was signed by 6 municipal representatives and the other letter was signed

by 13 industry representatives. Three representatives signed more than

one set of letters sent to the panel.

The stormwater phase II advocacy review panel convened on June 19,

1997, and formally consisted of the Director of the Office of Regulatory

Management and Information, EPA (Panel Chair); the Director of the Office

of Wastewater Management, Office of Water, EPA; the Chief Counsel for

Advocacy, SBA; and the Administrator of OIRA, OMB. For this meeting, OIRA’s

Administrator and the Chief Counsel were represented by members of

their staffs. On June 23, 1997, the Chair sent a letter to each representative

that summarized the comments that had been received by June 13, 1997,

and requested any additional comments. In response, one small entity

representative resubmitted his comments, which had been previously

received by EPA a few days before the panel convened.

Because the panel’s report was not publicly available as of November 1,

1997, we did not describe the panel’s recommendations or EPA’s reaction

to those recommendations in this report.

Page 44 GAO/GGD-98-36 Review Panel Requirements
Appendix V 

EPA Panel on Effluent Limitations

Guidelines and Pretreatment Standards for

Industrial Laundries Point Source Category

On February 20, 1997, a Project Manager from EPA’s Office of Water sent a

letter to two individuals in the industrial laundry industry and five

representatives of business and trade associations regarding the agency’s

draft effluent guidelines and standards for industrial laundries. The letter

stated that the representatives had been identified as candidates to serve

as small entity representatives for an anticipated SBREFA advocacy review

panel regarding the draft rule. Attached to the letter was background

information about the draft rule. The letter also reminded these

representatives of a March 4, 1997, public meeting sponsored by EPA to

discuss the development of the draft rule with interested parties.

In a letter dated March 3, 1997, EPA’s Small Business Advocacy Chair

notified SBA’s Chief Counsel for Advocacy that EPA may convene a review

panel for its draft rule on effluent limitations guidelines and standards for

industrial laundries. The Chair also provided the Chief Counsel with a list

of the seven individuals that EPA had identified in February 1997 who could

provide advice and recommendations to the panel by serving as small

entity representatives. As required by SBREFA, the Chief Counsel responded

within 15 days. He agreed with EPA’s list and suggested an additional name.

Another representative was added following the March 4, 1997, public

meeting on the draft rule. These nine small entity representatives included

five trade association representatives and four representatives from

individual businesses within the industrial laundries sector. EPA reported

that it had been working with some of these representatives since 1992 to

develop regulatory options for the draft rule.

On April 15, 1997, seven of the nine small entity representatives attended a

meeting with EPA officials to discuss the background material the agency

had sent to them and to provide EPA with some initial comments on the

draft rule. Five small entity representatives subsequently responded to

EPA’s request for written comments on the background material by the

agency’s May 12, 1997, deadline. In a memorandum dated June 4, 1997,

EPA’s Chair provided a summary of the small entity representatives’ advice

and recommendations, as well as background material on the draft rule, to

the panel members and the nine small entity representatives.

On June 6, 1997, the Chair convened the industrial laundries review panel,

which formally consisted of the Director of the Office of Regulatory

Management and Information, EPA (Panel Chair); the Director of the Office

of Science and Technology, Office of Water, EPA; the Chief Counsel for

Advocacy, SBA; and the Administrator of OIRA, OMB. OIRA’s Administrator

was represented in the panel meetings and telephone conference calls by

Page 45 GAO/GGD-98-36 Review Panel Requirements
Appendix V 

EPA Panel on Effluent Limitations

Guidelines and Pretreatment Standards for

Industrial Laundries Point Source Category

an OIRA staff member. EPA staff (not the panel) held a conference call on

June 11, 1997, with five of the nine small entity representatives to discuss

different exemptions, enforcement options, and other regulatory issues.

On June 19, 1997, the panel held a conference call with five of the small

entity representatives (four of whom had participated in the June 11, 1997,

conference call) to address their questions and gather additional input. On

June 27, 1997, EPA provided the panel members with additional analyses of

regulatory alternatives requested by the panel during the June 19, 1997,

conference call. Six of the nine small entity representatives (four

association representatives and two representatives of individual

businesses) provided written comments during the panel process. During

a meeting on July 18, 1997, the review panel requested additional analysis

and information from EPA, which was sent to the panel members on

July 23, 1997. The panel issued its final report, with a cover letter signed by

all four panel members, on August 8, 1997.

Because the panel’s report was not publicly available as of November 1,

1997, we did not describe the panel’s recommendations or EPA’s reaction

to those recommendations in this report.

Page 46 GAO/GGD-98-36 Review Panel Requirements
Appendix VI 

EPA Panel on Effluent Limitations

Guidelines and Standards for the

Transportation Equipment-Cleaning

Industry

EPA began developing a draft rule on effluent limitations guidelines and

pretreatment standards for the transportation equipment-cleaning industry

in 1992. The intent of the draft rule was to limit the discharge of pollutants

into the nation’s waters and the introduction of pollutants into publicly

owned treatment works. Between 1992 and 1997, EPA officials made 39

visits to transportation equipment-cleaning facilities and attended

numerous meetings to gather information to develop the draft rule. The

agency also worked with three trade associations and several small

businesses to identify potential regulatory options and compliance issues.

On April 10, 1997, EPA’s Small Business Advocacy Chair sent a letter to

SBA’s Chief Counsel for Advocacy notifying him that EPA expected to

convene a SBREFA review panel for this draft rule. In his letter, the EPA

Chair suggested four small entity representatives (three of which had been

involved with the draft rule’s development) to provide advice and

recommendations to the panel. The Chief Counsel responded to the EPA

Chair’s letter within 15 days and suggested two additional small entity

representatives that EPA’s panel could contact. The Chief Counsel and EPA

officials agreed on six small entity representatives, all of whom were from

trade associations related to the transportation equipment-cleaning

industry. One of these additional representatives was later replaced by

another association representative who came forward at a public meeting

held on the draft rule.

EPA sent background material to the small entity representatives on June 6

and 27, 1997, and met with the representatives on July 2, 1997, to discuss

the material. EPA held another meeting between EPA staff and one small

entity representative on July 14, 1997, to clarify EPA’s analyses involving

some facilities that might be impacted by the draft rule.

On July 16, 1997, the EPA Chair convened the review panel by sending a

letter to the panel members. At the same time, he provided additional

background material to the small entity representatives on the draft rule’s

projected impacts and EPA’s regulatory options. The panel held its first

meeting on July 22, 1997, and held two subsequent meetings on August 13,

1997, and September 9, 1997. The panel formally consisted of the Director

of the Office of Regulatory Management and Information, EPA (Panel

Chair); the Acting Director, Engineering and Analysis Division, Office of

Water, EPA; the Chief Counsel for Advocacy, SBA; and the Administrator of

OIRA, OMB. However, OIRA’s Administrator was represented on the panel by

an OIRA staff member who had participated in related meetings and

telephone conference calls.

Page 47 GAO/GGD-98-36 Review Panel Requirements
Appendix VI 

EPA Panel on Effluent Limitations

Guidelines and Standards for the

Transportation Equipment-Cleaning

Industry

By July 24, 1997, four of the six small entity representatives had provided

the panel with their written comments and recommendations on the draft

rule. In a July 29, 1997, letter, the EPA Chair informed all of the small entity

representatives that any additional comments needed to be received by

August 15, 1997. Two of the four small entity representatives who provided

initial comments submitted additional comments by the August 15

deadline.

The panel held a telephone conference call with two of the six small entity

representatives who were available on August 13, 1997, during which EPA

officials agreed to provide additional information on compliance costs and

other impacts on facilities in the transportation equipment-cleaning

industry. On August 19, 1997, EPA sent a memorandum to the panel and the

small entity representatives providing them with the agreed-upon

information. The panel’s final report was issued on September 23, 1997,

summarizing the small entities’ written and oral comments and listing the

panel’s recommendations. Each panel member signed the cover letter

accompanying the final report.

Because the panel’s report was not publicly available as of November 1,

1997, we did not describe the panel’s recommendations or EPA’s reaction

to those recommendations in this report.

Page 48 GAO/GGD-98-36 Review Panel Requirements
Appendix VII 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

Curtis W. Copeland, Assistant Director, Federal Management and

Workforce Issues, (202) 512-8101

Susan Ragland, Evaluator-in-Charge

Steven G. Lozano, Senior Evaluator

Kiki Theodoropoulos, Senior Evaluator

Thomas M. Beall, Technical Analyst

Stuart M. Kaufman, Technical Analyst

Office of the General

Counsel

Jill P. Sayre, Senior Attorney

(410158) Page 49 GAO/GGD-98-36 Review Panel Requirements
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