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77–558 2012

REGULATORY FLEXIBILITY ACT COMPLIANCE: IS 

EPA FAILING SMALL BUSINESSES? 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

HEARING HELD 

JUNE 27, 2012 

Small Business Committee Document Number 112–075 

Available via the GPO Website: www.fdsys.gov 


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C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Sam Graves ..................................................................................................... 1 

WITNESSES 

Keith W. Holman, Legal and Policy Counsel, U.S. Chamber of Commerce, 

Environment, Technology and Regulatory Affairs Division, Washington, DC 2 

Frank Knapp, President and CEO, South Carolina Small Business Chamber 

of Commerce, Columbia, SC ................................................................................ 4 

Jeff Brediger, Director of Utilities, Orrville Utilities, Orrville, OH .................... 6 

David Merrick, President, Merrick Design and Build Inc., Kensington, MD ..... 8 

APPENDIX 

Prepared Statements: 

Keith W. Holman, Legal and Policy Counsel, U.S. Chamber of Commerce, 

Environment, Technology and Regulatory Affairs Division, Washington, 

DC .................................................................................................................. 23 

Frank Knapp, President and CEO, South Carolina Small Business Chamber of Commrce, Columbia, SC .................................................................... 33 

Jeff Brediger, Director of Utilities, Orrville Utilities, Orrville, OH ............. 38 

David Merrick, President, Merrick Design and Build Inc., Kensington, 

MD .................................................................................................................. 45 

Questions for the Record: 

Rep. Mulvaney Questions for Mr. Merrick ..................................................... 51 

Rep. Mulvaney Questions for Mr. Knapp ....................................................... 52 

Answers for the Record: 

Knapp Answer for the Record ......................................................................... 53 

Merrick Answer for the Record ....................................................................... 54 

Additional Materials for the Record: 

Squire Sanders Letter for the Record ............................................................. 57 

National Federation of Independent Business Statement for the Record ... 70 

National Association of Home Builders Statement for the Record .............. 73 

National Association of Realtors Letter for the Record ................................. 78 

Design Build Group Letter for the Record ..................................................... 81 

Congressman Mike Coffman Statement for the Record ................................ 83 

Baker Botts L.L.P. Letter for the Record ....................................................... 85 

Douglas County Business Alliance Letter for the Record ............................. 100 

Colorado Contractors Association Letter for the Record ............................... 102 

Associated Builders and Contractors, Inc. Letter for the Record ................. 104 

National Association for Surface Finishing Letter for the Record ............... 106 


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HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

ROSCOE BARTLETT, Maryland 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

MIKE MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

JEFF LANDRY, Louisiana 

JAIME HERRERA BEUTLER, Washington 

ALLEN WEST, Florida 

RENEE ELLMERS, North Carolina 

JOE WALSH, Illinois 

LOU BARLETTA, Pennsylvania 

RICHARD HANNA, New York 

ROBERT T. SCHILLING, Illinois 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

MARK CRITZ, Pennsylvania 

YVETTE CLARKE, New York 

JUDY CHU, California 

DAVID CICILLINE, Rhode Island 

CEDRIC RICHMOND, Louisiana 

JANICE HAHN, California 

GARY PETERS, Michigan 

BILL OWENS, New York 

BILL KEATING, Massachusetts 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 


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REGULATORY FLEXIBILITY ACT COMPLIANCE: IS EPA FAILING SMALL BUSINESSES? 

WEDNESDAY, JUNE 27, 2012 

HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, Washington, DC. 

The Committee met, pursuant to call, at 1:07 a.m., in Room 

2360, Rayburn House Office Building, Hon. Sam Graves (Chairman 

of the Committee) presiding. 

Present: Representatives Graves, Chabot, Mulvaney, Tipton, 

West, Ellmers, Hanna, Schilling, Hahn, and Owens. 

Chairman GRAVES. We will go ahead and bring our witnesses up 

and we will get the name tags out and we can get started. 

Good afternoon, everyone, this hearing will come to order. I want 

to thank our witnesses for being here today. I appreciate it very 

much and we definitely look forward to your—to your testimony. 

Small businesses are disproportionately burdened by the cost of 

regulations in comparison to their larger counterparts by virtue of 

their size and resources. Despite the economic downturn and painfully slow recovery, the regulatory burden on small businesses continues to grow. Increased regulations means small businesses must 

dedicate more time, more money and resources to comply with the 

regulations instead of doing what they do best, and that is creating 

jobs and innovative new products. 

To ensure that Federal agencies analyze the impact of new regulations on small businesses, Congress enacted the Regulatory Flexible Act, or the RFA. The RFA requires all Federal agencies to examine the impact of their proposed and final rules on small businesses, small not-for-profits and small government jurisdictions. If 

those impacts are significant, the agency is required to consider 

less burdensome alternatives. The RFA has been on the books for 

some 30-years, but Federal agencies still fail to comply or fully 

comply with both the letter and spirit of the law and unfortunately, 

the Environmental Protection Agency is not meeting its legal obligations under the RFA. And by failing to comply with the RFA, the 

Environmental Protection Agency imposes unnecessary burdens on 

small businesses instead of using small businesses to, their input 

to craft better tailored regulations that address specific problems. 

Last December, the Regulatory Flexibility Improvements Act of 

2011, which was H.R. 527 and I co-wrote along with the House Judiciary chairman Lamar Smith, passed the House, and H.R. 527 

will strengthen the RFA and close the loopholes that agencies exploit to avoid complying with the RFA. H.R. 527 is stalled in the 

Senate and the President has threatened to veto it. 


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Unfortunately, the failure to act on H.R. 527 seems to be indicative of the administration’s attitude towards small businesses in 

our struggling economy, apathetic, and out of touch. And today we 

will be hearing directly from small business on how EPA’s regulations are affecting their ability to compete and create jobs. And additionally, we will be examining the EPA’s compliance with the 

RFA. And again, I want to thank all of our witnesses for being here 

today and for your participation. And we will move right on into— 

right on into your opening statements. 

And basically, to explain the lights to you, you each have 5-minutes, and once it gets down to 1 minute the light will turn yellow, 

and then past the 5-minutes, it will turn red so that you have a 

moment beyond that to go ahead and give your testimony. But 

again, we look forward to all of you being here. 

And our first introduction, is going to be Mr. Keith Holman, who 

currently serves as the legal and policy counsel at the United 

States Chamber of Commerce in their environmental, technology, 

and regulatory affairs division. Prior to working for the U.S. Chamber, Mr. Holman was the regional counsel for the Environmental 

Protection Agency and an assistant chief counsel in the Office of 

Advocacy for the Small Business Administration. As assistant chief 

counsel, Mr. Holman advocated for the interest of small businesses 

before the EPA and the Department of Energy and reviewed the 

small business impacts on Federal rule makers involving air quality. And again, thank you for being here. I look forward to your testimony. 

STATEMENTS OF KEITH W. HOLMAN, LEGAL AND POLICY 

COUNSEL, U.S. CHAMBER OF COMMERCE, ENVIRONMENT, 

TECHNOLOGY AND REGULATORY AFFAIRS DIVISION; FRANK 

KNAPP, PRESIDENT AND CEO, SOUTH CAROLINA SMALL 

BUSINESS CHAMBER OF COMMERCE, ON BEHALF OF THE 

AMERICAN SUSTAINABLE BUSINESS COUNCIL; JEFF 

BREDIGER, DIRECTOR OF UTILITIES, ORRVILLE UTILITIES, 

ON BEHALF OF THE AMERICAN PUBLIC POWER ASSOCIATION; AND DAVID MERRICK, PRESIDENT, MERRICK DESIGN 

AND BUILD INC., ON BEHALF OF THE NATIONAL ASSOCIATION OF THE REMODELING INDUSTRY 

STATEMENT OF KEITH W. HOLMAN 

Mr. HOLMAN. Thank you, Chairman Graves, and members of the 

committee. Good afternoon. Again, my name is Keith Holman. I am 

the legal policy counsel at the U.S. Chamber of Commerce. The 

Chamber of Commerce has approximately 96-percent of its membership which is small businesses, so the Regulatory Flexibility Act 

is actually very important to the Chamber and its members. You 

have asked me to offer the Chamber’s views today on how the U.S. 

Environmental Protection Agency is actually complying with the 

Regulatory Flexibility Act, or we call it, the RFA. And as you said, 

between 2010, and excuse me, 2002 and 2010, I was an assistant 

chief counsel at the SBA Office of Advocacy, and I had primary responsibility for working with the EPA on RFA-compliance matters 

on their rulemaking. So this is an issue I am very familiar with. 


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I think it is fair to say that when Congress passed the RFA back 

in 1980, it is hard to believe it has been around this long, it was— 

the idea was to give small entities in that small businesses, small 

associations, and small communities some sort of voice in the Federal rulemaking process. Put simply, the RFA requires Federal 

agencies to assess the economic impact of their planned regulations 

on small entities, and to consider alternatives that would lessen 

those impacts. The RFA requires each Federal agency to review its 

proposed and final rules to determine if a rule in question will have 

what is known as a significant economic impact on a substantial 

number of small entities. 

If the rule will, in fact, have that impact, which we call 

SEISNOSE, the agency must assess the anticipated economic impacts of the rule and evaluate whether there are alternatives that 

would actually allow the impact of the rule to be minimized on 

small entities, but would still accomplish the regulatory objectives 

of the rule. 

Now, EPA looked at, you know, particularly as an agency, writes 

a lot of rules every year. They are one of the most prolific rule-writing agencies of all of the Federal agencies. For that reason, back 

in 1996, Congress decided to require EPA, when it goes through 

rulemakings, to go through an additional step other than just looking at the impact of their regulations. 

They have to do what is actually known as a small business advocacy review panel. The panel process is triggered whenever there 

is a rule that they anticipate will have a substantial economic impact on a significant number of small entities. Since 1996, EPA has 

done more than 30 of these panels. Small entity representatives 

who speak for the industries that will be impacted by the rule are 

invited to come in and have face-to-face meetings with EPA, with 

Advocacy, and with the Office of Information and Regulatory Affairs which is at the Office of Management and Budget. 

This is a unique opportunity for small businesses to actually sit 

down with the agency that is going to regulate them, and say, here 

is how this rule is going to affect me. It is very valuable. It does 

take time, and it takes some resources, but in my experience, it has 

been extremely valuable, very early in the process before you actually get a rule that goes to proposal, before the public ever sees it, 

you are giving a chance for small entities to actually sit down with 

the agency, ask questions, get feedback, understand the rule that 

is actually going to apply to them, and have some ability to help 

in the design of the rule as it is finalized. 

This has been a very, very valuable process. I worked on nine 

panels during my time at SBA’s Office of Advocacy. Those panels 

were very valuable. Three examples I give in my written testimony 

were the Cooling Water Intake Panel, the Lime MACT Panel, and 

something called the MSAT Panel, which was a rule for mobile 

source air toxics. Why were they good? Because EPA did a very 

good job of getting the information pulled together early on, meeting with the small entities, doing a really good job of trying to figure out who they were, how they were going to be affected, and 

what the potential alternatives would be that would help them. 

Finding the alternatives is crucial. 


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Since 2009, what we have seen is EPA has not been doing this 

same good job, particularly with panels. Three things have been 

problems with panels. They don’t do panels when they are supposed to do them. This has been a problem with the greenhouse 

gas rules, with things like the coal ash rule, and with many other 

rules where EPA just doesn’t do the panel. Or they say, well, we 

have agreed to a court deadline so we don’t have time to do a panel 

correctly, so they don’t go through the steps to do a panel correctly. 

And I have outlined some situations where that has happened publicly in the last 4-years or so. 

Finally, there are situations where you do a panel. They take the 

time to do the panel, but they don’t follow the panel’s recommendations. This is a critical problem for the process. Thank you. 

Chairman GRAVES. Our next witness is Mr. Frank Knapp. He is 

the vice chairman of the American Sustainable Business Council 

and President of South Carolina Small Business Chamber of Commerce. Mr. Knapp, we appreciate you coming in and look forward 

to your testimony. 

STATEMENT OF FRANK KNAPP 

Mr. KNAPP. Thank you, Chairman Graves, members of the committee. 

Chairman GRAVES. Yeah, you might turn your mic on. 

Mr. KNAPP. Thank you very much. Appreciate it. Chairman 

Graves, members of the committee, I am Frank Knapp, Jr., president and CEO and cofounder of the South Carolina Small Business 

Chamber of Commerce, and vice chair of the American Sustainable 

Business Council. Thank you for the opportunity to testify before 

you today. 

The South Carolina Chamber of Commerce is a statewide advocacy organization with over 5,000 members that promotes a more 

small business-friendly State and Federal Government. The American Sustainable Business Council was founded in 2009, and its 

members now represent over 150,000 businesses and more than 

300,000 entrepreneurs, owners, executives, investors, and business 

professionals across the country. These diverse business organizations cover the gamut of local and State Chamber of Commerce, 

micro-enterprise, social enterprise, green and sustainable business 

groups, local living economy groups, women business leaders, economic development organizations, and investor and business incubators. 

I had the opportunity to read the testimony of Mr. Holman, representing the U.S. Chamber of Commerce, and Mr. Merrick representing the National Association of the Remodeling Industry 

prior to preparing my comments. I commend them for their civility 

of their remarks and their focus on the Regulatory Flexibility Act 

as it pertains to the Environmental Protection Agency. 

Both gentlemen recognize the importance of the Regulatory 

Flexibility Act for ensuring that regulations are reviewed to determine if they are too burdensome for small businesses, and if the 

goals of regulations can be achieved in alternative methods. 

They pointed out some instances where businesses, the business 

community and EPA didn’t agree, but they also point out successful 

RFA stories. In 2004, my South Carolina organization worked with 


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our South Carolina Chamber of Commerce and the NFIB to pass 

a Regulatory Flexibility Act modeled after the Federal law. Last 

August the then-chairman of the South Carolina Small Business 

Regulatory Review Committee told me that over the previous 7 

years, his committee had reviewed over 300 proposed regulations 

and identified only 10 that raised a concern. His committee worked 

with the State agencies promulgating these new regulations satisfactorily resolved the issues. The Regulatory Flexibility Act has created an effective process to protect small businesses, even if the 

process itself needs some attention from time to time. 

Mr. Holman correctly identifies one area where the EPA’s compliance with the RFA can be improved; more resources for the rulemaking process. While there are voices we hear in Washington critical of the EPA and calls for cutting back or freezing the regulatory 

process, the reality is, that it can work better for small businesses 

and the public if the EPA was better funded. With more resources, 

the EPA can do a better job of meeting the requirements of the 

RFA to the benefit of a small business. However, more resources 

for the EPA would not only allow the agency to be more efficient 

and effective in complying with the RFA, it would also enable the 

organization to do a better job of protecting the public’s and environment’s health while unleashing entrepreneurial innovations and 

creating jobs. 

Any responsible new rule that protects the health of our citizens 

and workers opens a door to newer and better products. Our Nation is loaded with these small business entrepreneurs, just waiting 

to solve a problem when the demand is created. The Toxic Substance Control Act is so outdated that the EPA’s resources are so 

strained that there are literally over 80,000 chemicals in the Agency’s inventory, but it has only been able to require testing for only 

about 200. Just yesterday, the State of California took the lead on 

investigating the health hazards of toxic flame retardant chemicals 

used in furniture and mattresses, while not providing protection 

from fires. 

The EPA should be examining this national hazard, but it 

doesn’t have the resources. Can the materials we sleep in, and 

sleep on, sit on, be nontoxic and still resist fire? Absolutely. Ask 

Barry Cik, owner of Naturepedic in Cleveland, Ohio. Naturepedic 

manufactures baby and crib mattresses that provide proper support, meet government flammability requirements, provide waterproofing, seamless designs and other hygienic features, all without 

the use of harmful chemicals or allergic materials. 

But instead of helping this innovative industry take off and make 

bedding healthier for families, we protect the use of carcinogen materials of the past by not properly imparting the EPA with the 

needed legislative resources and support. The public and small 

business owners want good regulations. A recent national poll of 

small business owners conducted for the American Sustainable 

Business Council found that 80 percent support disclosure and regulations of toxic materials; 79 percent support ensuring clean air 

and water, and 61 percent support moving the country towards energy efficiency and clean energy. 

It is very clear that the future of our economy really depends on 

our tying to sustainable economy. And the EPA really has the opVerDate Mar 15 2010 23:15 Jan 10, 2013 Jkt 077558 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 E:\HR\OC\B558.XXX B558

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portunity if we take this opportunity to empower them and give 

them the resources to actually move us towards that sustainable 

economy faster. So thank you very much for the opportunity to testify today. 

Chairman GRAVES. Thank you very much, Mr. Knapp. 

Chairman GRAVES. Our third witness is Jeff Brediger. He is the 

director of Utilities for Orrville Utilities which is located in 

Orrville, Ohio. Mr. Brediger started with Orrville Utilities as a 

plan engineer in 1987. He served as the American Municipal Powers—on the American Municipal Power’s board of trustees as an active member of the American Public Power Association. He is 

APPA’s small generation representative and serves on the Energy, 

Environment and Government Relations Committees. He has 

served on several EPA small business advocacy review panels, including the panel on Boiler MACT, major and another area source 

rules. Mr. Brediger, thanks for coming in from Ohio. I appreciate 

you being here. 

STATEMENT OF JEFFREY A. BREDIGER 

Mr. BREDIGER. You are welcome. Mr. Chairman, members of the 

committee, good afternoon. My name is Jeff Brediger. I am the utilities director for Orrville Utilities in Orrville, Ohio. I am presenting 

this testimony today on behalf of Orrville Utilities, and American 

Public Power Association, of which my municipal utility is a member. APPA is a national service organization, representing the interests of more than 2,000 not-for-profit community-owned electric 

utilities that serve over 46 million Americans. Under SBREFA, 90 

percent of these utilities themselves are considered small businesses, and in addition to that, they are serving the small businesses in their communities. Orrville is a small city of about 8,300 

located in the northern part of Ohio. Some may recognize Orrville 

from its association as the home of the J.M. Smucker Company, 

our largest employer with over 1,500 employees. Our community 

owns its own coal-fired power plant which has enabled us to offer 

competitively-priced electricity to our customers since 1917, has 

helped promote local business development efforts, and has protected our customers from volatile electricity markets. But as environmental requirements tighten, Orrville Utilities face increasingly 

costs and burdens to provide those important services to our community. 

Our greatest concern is the EPA’s Boiler MACT rule, which was 

to be finalized this spring, which after several rounds of legal challenges, reconsiderations, and proposals, we are still waiting for. In 

2003, I participated with APPA in the SBREFA review process for 

the Boiler MACT rule. I also served as a small-entity representative in the latest SBREFA effort on the current proposed rule. The 

SBREFA process was important to Orrville and other small electric 

generators because small utilities and small governments were a 

subset of those being regulated by the Boiler MACT rule and EPA 

was not focused on the burdens on these small entities. 

The primary recommendation from the SBREFA panel proposed 

that the EPA implement a health-based compliance alternative 

that would allow entities to avoid significant costs of hydrogen 

chloride scrubbers when they could demonstrate their emissions 


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did not pose a significant health risk. This proposed solution would 

have provided significant cost relief for small entities while maintaining protective of human health. The EPA had the discretion to 

adopt it under the Clean Air Act, but failed to do so. In our view, 

the process failed. 

When coupled with the President’s 2011 executive order on regulatory reform, SBREFA should ensure that the needs of small businesses are thoroughly addressed as a regular consideration of the 

regulatory process for certain agencies’ rules. But the process has 

fallen short of desired expectations. 

In some cases, the EPA has declined to convene a panel to evaluate small entity relief. When panels are convened, they may lack 

the information necessary to generate effective alternatives. When 

effective alternatives are generated, the EPA may ignore the results. Our recent experience with SBREFA has been disappointing 

at best. While the SBREFA process is intended to provide small entities with an expanded opportunity to participate into the development of certain regulations, the process lately has taken on more 

of window dressing, with the EPA simply checking the box, to indicate a requirement has been met, even if done insufficiently. 

In addition, poor preparation by EPA staff has wasted the time 

and resources of panel participants, and too little time is invested 

in the panel process to allow participants to properly review and 

comment on detailed technical materials and issues. Perhaps most 

disturbing is when the panels produce a viable alternative, only to 

have the EPA ignore the recommendation coming from those with 

real world operational experience. 

Despite our misgivings regarding our experiences with the 

SBREFA process, Orrville and APPA thoroughly endorse the concept of a specialized process to seek, consider, and incorporate the 

specific needs of small entities in the regulatory process. 

In our written statement, we do offer specific recommendations 

for improving the SBREFA process. Also I will add, as a local government, we do share the same concerns. It is not that we do not 

want to do anything. We struggle with the requirements that are 

totally unnecessary. 

In conclusion, I commend this committee for holding this hearing 

today. It is clear that some important changes need to be made to 

the way the EPA performs its duties under SBREFA, and we look 

forward to those improvements. 

I thank you for the opportunity to present this testimony, and I 

would be happy to answer any of your questions. Thank you. 

Chairman GRAVES. Thank you, Mr. Brediger. 

Chairman GRAVES. Our final witness is David Merrick, who is 

the President of Merrick Design and Build, which is a full-services 

residential and commercial remodeling, designing, and building 

company located in Kensington, Maryland. Mr. Merrick is an active 

member of the National Association of Remodeling Industry, and 

currently serves as chairman of their Government Affairs Committee. Thank you for being here today. I look forward to your testimony. 


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STATEMENT OF DAVID MERRICK 

Mr. MERRICK. Thank you, Mr. Chairman, and members of the 

committee. I am pleased to present this testimony on behalf of the 

National Association of the Remodeling Industry. NARI is a nonprofit trade association based in Des Plaines, Illinois. We have 58 

chapters in major metro areas nationwide and our membership of 

7,000 companies is comprised of remodeling contractors, local suppliers, and national suppliers. Eighty-three percent of NARI members have fewer than 20 employees, and many are one- or two-man 

operations; a new thought about small business. 

I run a design build company in Kensington, Maryland. Merrick 

Design Build is a full service residential and commercial remodeling design and build company. In 2010, when EPA decided to 

change the LRRP rules, NARI was disappointed. We worked with 

several contracting, home building, and remodeling businesses to 

express our concerns and comments to EPA that we submitted in 

July of 2010. With the chairman’s permission, I would like to submit our comments for the record. They are from July 21st, 2010, 

and were written by Baker Botts LLP, and submitted to the EPA 

on amendments to LRRP. 

Chairman GRAVES. Without objection. 

Mr. Merrick. Thank you, sir. Fundamental to our concerns was 

the removal of the opt-out provision and EPA’s refusal to reconvene 

a group of small businesses, the U.S. Small Business Administration’s Office of Advocacy, and the Office of Management and Budget to ensure flexibility in the rulemaking for small businesses. 

NARI’s concern with the EPA moving forward with a public and 

commercial building rule are threefold. First, we are concerned 

that the EPA may proceed without convening a SBREFA small 

business advocacy review panel. We do not want the same thing to 

happen when EPA proposed the 2010 amendments to LRRP, that 

a rule move forward without a SBREFA panel. 

Second, NARI is concerned that EPA may move forward with a 

public and commercial LRRP rule without clear evidence and data 

showing that lead poisoning risk to children under 6 and pregnant 

women from construction activities at public commercial buildings. 

If the EPA cannot present a clear connection between the activity 

and the risk to children and pregnant women, then our customers 

certainly will not understand why their projects have become more 

expensive. 

Third, when EPA moves forward with the rule, NARI would advise that the Agency make rules flexible enough to cover different 

scenarios. This is what NARI member Kevin Nau advised the EPA 

during meetings last year. With the chairman’s permission, I would 

like to submit Kevin Nau’s letter to EPA, from March 1, 2011, for 

the record. 

Chairman GRAVES. Without objection. 

Mr. MERRICK. Thank you. NARI is pleased with the opportunity 

to advise the committee about how EPA interacts with small business when the Agency develops regulations. The SBREFA process 

was designed to codify what simply makes sense for small businesses to work with EPA to come up with constructive solutions for 

complex problems. It seems as though the process works when EPA 

listens to the input from the Office of Advocacy and from small 


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business. It does not seem to work when EPA rushes the process 

or avoids it altogether. We will continue to work with the EPA. We 

will try and increase our customers’ knowledge of LRRP rules, and 

we will continue to work with remodelers to create—increase EPA 

certification. 

Our dialogue with EPA is important because NARI should be 

EPA’s partners in our efforts to protect children and pregnant 

women from lead-based dangers caused by remodeling activities. 

Thank you for your attention to these important matters. 

Chairman GRAVES. Thank you very much to all of our witnesses 

and we will start with our questions. We will start with Mr. Schilling. 

Mr. SCHILLING. Thank you, Chairman. The first question I have 

would be for Mr. Knapp, and thank you all for coming to the panel. 

I really appreciate it. Did I hear in your opening statement that 

you say—just clarify this for me. I kind of opened up when I heard 

it. Did you say more money for the EPA is what is needed? So basically, what I heard, and tell me if I am wrong is, more money for 

the EPA for more regulation is going to help the economy? 

Mr. KNAPP. Congressman, what I heard and what I read in the 

testimony today, was that there is concern that the EPA is not fulfilling all of the requirements of the RFA; that they sometimes 

move faster than they should move. What that tells me, as somebody who has been around for a while, is that maybe they don’t 

have the resources; that they may aspire to do these things, but 

like any organization that does not have specific resources, they 

start moving things quicker. 

And so that is what I meant. I mean, literally, if we want them 

to do the perfect job for small businesses, and comply with all of 

the RFA to the letter of the law, then they need to have the resources to do that. And that will serve all of these gentlemen up 

here much better. And so yes, I hate to say this, but I think that 

there are—resources and support for the EPA could solve a lot of 

the problems that you have heard today. 

Mr. SCHILLING. Very good. And then, the RFA requires Federal 

agencies to analyze the impact of regulations on small entities. Do 

you think this is a good idea? 

Mr. KNAPP. Absolutely, it is a good idea. I mean, from our experience in South Carolina—again, a friend of mine who Congressman 

Mulvaney knows, Monty, you know, he headed that organization 

for the original chairman for 7 years, and the last 300 regulations 

being promulgated by State agencies in South Carolina, found 10 

that they weren’t happy with. They worked with those agencies, 

and it all worked out. 

So yes, small businesses need to have that type of protection, and 

that type of input that we were talking about into the process with 

the RFA. 

Mr. SCHILLING. Okay, earlier last year, we had the head of the 

EPA in on the Ag Committee and what we talked about is the 

apparatuses that they were going to have the farmer actually wear, 

and one of the questions to Ms. Jackson was, do you know how 

much these cost? And she said she wasn’t sure. Do you know if 

they are $5,500, or $5,000? But that, you know, in itself says that 

they didn’t bring in the farmer to ask the question. Now, you know, 


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they have been talking for quite some time about regulating farm 

dust. Thank you very much, sir. 

Mr. KNAPP. Thank you, sir. 

Mr. SCHILLING. What I would like to do, Mr. Merrick, how many 

people do you employee, sir? 

Mr. MERRICK. We have 16 full-time employees. 

Mr. SCHILLING. And is keeping your workers and clients safe one 

of your top priorities. 

Mr. MERRICK. Keeping our workers and clients safe is a fundamental aspect of business. If we don’t take care of our workers, 

they won’t be around, they won’t do their job, and if we don’t take 

care of our customers, they won’t come back and they won’t recommend us to other customers. 

Mr. SCHILLING. As a small business owner trying to do your best 

to comply with EPA rules, what is your greatest fear in dealing 

with the EPA? 

Mr. MERRICK. My greatest fear would be that they don’t listen 

to us or don’t ask our advice. 

Mr. SCHILLING. And then, I got plenty of time, all right. Basically, members who are certified on a lead-safe work practices lost 

business because of the lead paint rule, would that be a fair statement? 

Mr. MERRICK. The businesses are still out there and there are 

people doing the jobs. The largest problem right now is the lack of 

enforcement. EPA has identified almost 650 small entities that this 

rule will cover, and has certified 123,000 firms, and that is 20 percent. 

Mr. SCHILLING. Very good. With that I yield back. Thank you, 

sir. 

Chairman GRAVES. Ms. Hahn. 

Ms. HAHN. Thank you, Chairman Graves, for holding this hearing. It has been interesting, and I was—I keep saying I am the new 

kid on the block, but actually, come next week, I think I will actually have been here a year. And I really have loved being on the 

Small Business Committee, and I have convened a small business 

advisory council that advises me on issues and legislation that Congress is, you know, considering how it does impact small businesses. And I have gone around and talked to hundreds, over 100 

small businesses myself because I want to know, you know, what 

can the Federal Government do? Or can we be more helpful? 

Should we get out of the way? What is the burden? What is keeping you from succeeding, from growing, from hiring? Because I believe, like a lot of people here, that small businesses really are the 

backbone of our economy. I think they are the key to actually turning this economy around. They are the ones that are actually hiring folks right now. 

So we want to do what we can to support them. But when I talk 

to them, I am not hearing as much about that it is the environmental regulations that are keeping them back. They always love 

to say, Janice, we need more customers. That is what is going to 

help us. We want the economy to turn around. We want other people to have jobs so that they can spend their money in our businesses. 


srobinson on DSK4SPTVN1PROD with 
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And in my community in Los Angeles, it has actually been some 

of the environmental regulations that have created small businesses. We have had very strict environmental regulations at the 

Port of Los Angeles, and what it has done is create this whole new 

technology, this clean-air technology that spawned businesses that 

used algae to reduce stationary source emissions. It has allowed an 

electric truck company to actually create the first long-haul electric 

truck, and this guy has actually sold his electric drive system to 

China. And he has created about 150 jobs. 

So I know regulations can be burdensome. I know that is what 

we are hearing today. But for me, and Mr. Merrick, you know, I 

am trying to get—being on this committee, I know that we oversee 

the Small Business Administration. So I want to get a sense from 

you in the context of the EPA, and some of these regulations, what 

has been your experience, or some of your, you know, other small 

businesses that you know, directly with the Small Business Administration in helping you comply with regulations, or helping explain 

some of the regulations that are coming down? How has that experience been, and is that an area that we could probably maybe do 

a better job of? 

I mean, it is all about resources with the SBA as well, but is that 

a better connection with small businesses from the Federal Government’s perspective that we can actually help with some of these 

problems? 

Mr. MERRICK. I wouldn’t say that the EPA has gone out of its 

way to be helpful, and I would like to start by making a point 

about in remodeling what a small business is. Most remodelers are 

one- or two-man operations, and recordkeeping for them can be a 

huge burden. Many of them, their idea of recordkeeping is a 

shoebox that they dump receipts in and dump them on their accountant’s lap at tax time. So asking them to do any kind of regulation bookkeeping is a burden on them, and as you pointed out with 

the new businesses that are created, as new businesses are created, 

old businesses sometimes have to go away. 

And one of the unfortunate side effects of regulations is the 

smaller one- or two-man businesses simply don’t have the resources 

within their own organization to function with all of the regulations. My primary concern as a small businessman is the economy. 

And as I look at my business, I am large enough to keep records 

properly, and I live in fear of the EPA walking into my operation 

and not criticizing me on the way I protect people from lead paint, 

but on the records I am keeping about how I did that. 

Ms. HAHN. And again, you didn’t really comment on the, you 

know, the Small Business Administration. 

Mr. MERRICK. It was a long question. 

Ms. HAHN. What is your interaction—I know, and a lot of pontificating. What is your experience with them? 

Mr. MERRICK. With the SBA? 

Ms. HAHN. Yeah, with the SBA? 

Are they helping you comply with some of these, or to understand some of these regulations? Or is that a resource that you 

even access? 

Mr. MERRICK. Yeah, I would say it is a resource that I don’t access and I can’t honestly answer that question. 


srobinson on DSK4SPTVN1PROD with 
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Ms. HAHN. Okay. And when I get my bid from the contractor on 

remodeling, should I triple the time and double the money? Just 

kidding. 

Mr. MERRICK. No, but I do have a card. 

Ms. HAHN. Thank you, Mr. Chairman. 

Chairman GRAVES. Mr. West. 

Mr. WEST. Thank you, Mr. Chairman, and thanks for the panel 

for being here. And, you know, I think everyone agrees there has 

to be some, you know, regulation that is out there to make sure 

that we do have a free market that operates properly and does not 

put the consumer at a disadvantage. But I think there is a simple 

maxim out there that the more you regulate something, the less 

you get of it. 

You know, I am down in the State of Florida, and we have the 

EPA suing our State over this thing called numeric nutrient criteria, which is basically telling our farmers and some of our local 

municipalities that they have to produce storm drains or runoff 

water that is parts per billion purer than rain water. And of 

course, when they were challenged, the EPA couldn’t tell them 

where they got that formula from. You know, we have got a—we 

are big in the maritime industry down along the coastline there, 

southeast coast. Twin Vee Catamarans, you know, the gentleman 

there, Roger, had to hire an EPA-compliant assistant because of all 

of the regulations that were coming down as far as, you know, construction, and gasoline tank construction, and motors, and things 

of that nature. And that one EPA compliant assistant caused him 

to not be able to hire three people to build boats. 

And so, you know, my question to you all, and the panel is, you 

know, do you all believe that the small business, you know, the 

Flexibility Act, the panel that works with the Regulatory Flexibility Act, they are failing in trying to constrain or rein in the EPA 

as far as, you know, listening to you and taking into account some 

of the ramifications thereof on your businesses and industries, 

what have you, before they issue these regulations. 

And before I close out, and get your response, you know, Lisa 

Jackson came up here, the administrator of the EPA last year before the Energy and Commerce Committee, and she was asked, did 

she take in the economic impact of the regulations that they are 

producing? She said no. And that is the problem that I have. 

So I would like to know what impact you are seeing and whether 

you believe the small business Regulatory Flexibility Act and the 

panel is really meeting up to its intents or are you just getting 

steamrolled? 

Mr. KNAPP. Congressman, thank you very much. By the way, it 

is a pleasure to meet you. 

Mr. WEST. Thank you. 

Mr. KNAPP. I am not sure what that is about. Thank you, Congressman. 

Mr. WEST. We are all from the south, Mick. You can like each 

other. 

Mr. KNAPP. We try to be polite, don’t we? 

Mr. WEST. Mick is not polite. 

Mr. KNAPP. There is always that balance. There is always that 

balance between protecting the health and safety of our people and 


srobinson on DSK4SPTVN1PROD with 
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our environment, and not having that heavy burden. And that is 

what the RFA is supposed to look at, at least for the small businesses that will be impacted by those regulations. To the degree 

they are—may not be able to work with everybody, to the extent 

they need it, I will go again and say that a lot of it comes back 

to resources. I don’t think that the EPA has—— 

Mr. WEST. I don’t think the EPA needs more stuff. 

Mr. KNAPP. Well, that is not what I hear here. But that is okay. 

If you want good quality work out of any organization, whether it 

be private sector, or public sector, you have got to make sure that 

it has the adequate funds to do the job. And I don’t think that the 

EPA has any malevolence in it. Can they do better from time to 

time? Probably can. But so can every organization. But thank you, 

sir. 

Mr. WEST. But in 2011, the Federal Government added over 

71,000 pages of new regulations to the Federal Register. That is 

unconscionable to me. And look, I—22 years in the United States 

military. I understand accomplishing a mission without having a 

whole lot of resources. And I think that the focus of the EPA is 

really counterproductive to our small businesses and our free-market growth. And that is why I am trying to get the understanding. 

Are they really listening to you? Is there any consequence out there 

for them not listening to you? 

Mr. BREDIGER. The answer is no, they are not listening, in my 

opinion. The EPA has some very intelligent people on staff. When 

we have convened these SBREFA panels, we bring a very talented 

group of people together with the common goal of trying to understand these very complex issues. And from my perspective, we are 

just choosing to ignore those or water them down, or discount 

them. For example, take the recent recommendations that the 

panel made on our Boiler MACT panel to preclude the addition of 

scrubbers. For our community, we are looking at this rulemaking 

alone costing anywhere from $8.5 to $12 million per unit, and we 

have four units, sir, and our budget is only $30 million. These 

scrubbers alone add in the neighborhood of $2- to $3 million for 

those overall costs. 

The EPA just doesn’t seem to want to recognize those costs, or 

take the data that our panel members bring in the case. They say 

well, we have done our study. We have done our own economics. 

But we have seen in my opinion, sir, some of these estimates off 

by magnitudes of three or four. And the EPA says we have done 

our estimates, check the box. We have done our job. Time to move 

on. 

Mr. WEST. Well, if I can ask just a short follow-on. The people 

that you are talking about showing you their work, are they really 

and truthfully, you know, familiar? Do they have experience in 

your industry? Or are they just sitting back crunching numbers? 

Mr. BREDIGER. Somewhat. 

Mr. WEST. Come on now. Throw the dog a bone, okay? You have 

got to give me a definitive answer. You sound like a politician. 

Mr. BREDIGER. I am trying not to be, sir. 

Mr. WEST. Okay. 

Mr. BREDIGER. Generally not. I would say if you are looking to 

try to take the expertise that the panel members bring to these 


srobinson on DSK4SPTVN1PROD with 
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committees, and match that up against who the agency brings in 

to the table, we have a far superior panel member on board, and 

that is where a lot of the rub is at. We fail both on defending economics. We are technically more superior in my opinion. 

Mr. WEST. Thank you, Mr. Chairman. I yield back. 

Chairman GRAVES. Okay, Mr. Hanna. 

Mr. HANNA. Mr. Knapp, how are you doing? 

Mr. KNAPP. I am on the hot seat tonight, aren’t I? 

Mr. HANNA. I don’t think so. I think people are sitting here wondering if you are really a businessman or not. 

Mr. KNAPP. I can assure you, sir, I have been for a number of 

years. 

Mr. HANNA. Me too. I have a quick question. For the SBREFA 

reviews, the SBAR, you call it. Mr. Holman, you said significant 

economic impact or substantial number—for a substantial number 

of small entities. Those are all of those subjective words. 

Mr. HOLMAN. Correct. 

Mr. HANNA. Right. Well, what does that mean? 

Mr. HOLMAN. What it means is Congress apparently wanted each 

agency to look at each situation and try to decide for that given 

rulemaking in that situation, and those regulated entities, what is 

a significant economic impact and what is a substantial number of 

small entities. So what most agencies, including EPA have done, is 

to develop guidance documents for their rule writers, that set out 

of sort of rules of thumb that they go by, and how they make that 

determination in each case. 

Mr. HANNA. Can you give me an idea of what that looks like because that is also so subjective that it doesn’t pin down the agency 

to have these—— 

Mr. HOLMAN. I am going to paint a little bit broadly, but EPA 

generally says if a rule is likely to have more than a 3-percent economic impact on small entities, and it affects—it is a sliding scale, 

but let’s say 1,000 or more small entities are going to be impacted 

by the rule, then there is no way that they can avoid having to go 

through the panel process under their guidance. 

Mr. HANNA. But you said out of, I think, 300, they had reviewed 

10? 

Mr. HOLMAN. That is in South Carolina. That is a state rule. 

That has nothing to do with the Federal RFA. 

Mr. HANNA. Wouldn’t that suggest to you, though, that the rulemaking procedure is skewed in favor of an agency, whether it is 

understaffed, or disinterested, would be able to rush to judgment? 

Mr. HOLMAN. Yes. And I can actually give you some thoughts on 

the resource issue. 

Mr. HANNA. Go ahead. 

Mr. HOLMAN. I mean, I agree that it is tempting to say, wow, you 

know, we should just throw more money at EPA because they need 

to do this job correctly because it is an important job. But having 

watched this process work pretty well during the mid 2000s, I 

know that EPA can do this job when they want to. They do a good 

job on panels when they are interested in doing a good job on panels. Resources are not really the problem. It is the fact that this 

is not a high priority for the Agency at this time. 


srobinson on DSK4SPTVN1PROD with 
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Mr. HANNA. As a matter of fact, the rules, aren’t they—forgive 

me for interrupting—but aren’t they set up to actually advance the 

procedure more quickly? And wouldn’t the fact that they are understaffed tend to give them an excuse to have fewer panels? 

Mr. HOLMAN. I think that is—that happens. I think the biggest 

most obvious reason that they use to say we don’t have time to do 

a panel is we have agreed to a deadline, or we have a deadline put 

upon us. We just don’t have time to do a panel. 

Mr. HANNA. So an artificial deadline can be the cause to undermine a rule that is designed to protect businesses, and hence, almost automatically undo the very thing it is designed to do? 

Mr. HOLMAN. Yes, and what we have seen in the last few years 

is more and more what I call multibillion dollar rules that have 

huge impact on the economy, including small businesses, and that 

unfortunately, the Agency often treats a small business the same 

way they treat, you know, a large corporation. And because we 

don’t go through this panel process, there is never a chance of trying to figure out how are these small guys different from the big 

guys. 

Mr. HANNA. Would you say it might be inappropriate for the 

agency to be in charge of what it decides or doesn’t decide to review? Wouldn’t it be appropriate to have an outside source that— 

to decide what panels, what item, what issue should have a panel, 

which one should not? 

Mr. HOLMAN. Ideally, that would be very good if there was an 

agency like OIRA that would decide, is this an appropriate thing 

not to be going through a panel. 

Mr. HANNA. Right. I mean, I have dealt with a lot of environmental agencies in my life in my own business, and so much can 

change from individual to individual. You have different inspectors 

on different days and different outcomes and hugely different costs 

to whatever I was doing. Thank you very much. 

Mr. HOLMAN. Thank you. 

Chairman GRAVES. Mr. Mulvaney. 

Mr. MULVANEY. Thank you, Mr. Chairman. Mr. Knapp, welcome. 

Mr. KNAPP. Thank you. 

Mr. MULVANEY. Mr. Knapp, welcome. Good to see a fellow South 

Carolinian. Mr. West commented on his way out that he didn’t 

really think you were from South Carolina. I assured him that you 

were. One of the things that I have learned in the short time that 

I have been here, is that I am going to disagree with folks all the 

time. We do these hearings all the time, and we always hear opposing views, which I always appreciate. 

I have also come to know, however, that I would like to know 

where the information is coming from. If I am on a hearing and 

I have Heritage and Brookings, I can understand where they are 

coming from. If I have an economist from Yale and one from the 

University of Chicago, I have got a sense for where I am coming 

from. So any time I have a group that comes in and calls themselves the Small Business Chamber of Commerce from any State, 

South Carolina or wherever, which at one time or another has supported Dodd-Frank, the public option health care, Cap and Trade, 

thought the stimulus was too small, supports Boiler MACT, opposed tort reform, and then actually was advocating for a brandVerDate Mar 15 2010 23:15 Jan 10, 2013 Jkt 077558 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 E:\HR\OC\B558.XXX B558

srobinson on DSK4SPTVN1PROD with 
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new State small business government agency, as your organization 

has done all of those things, I want to talk a little bit about who 

you all are. And I think it is a fair question. You have heard other 

folks, you know, say today that they can’t believe someone from a 

small business group is saying some of the things you are saying. 

The group has actually come up before in conversation. And if we 

could—actually, before I ask the question, I have got the stuff off 

your Web site and your affiliated groups, your members and all 

that, and one of the groups that has been here before us, the Main 

Street Alliance. You folks are affiliated with that group? 

Mr. KNAPP. The Main Street Alliance is an organization we have 

worked for. We don’t have any formal affiliation with them other 

than we have partnered on issues at the national level before. 

Mr. MULVANEY. Got you. And how long has that relationship 

gone on? 

Mr. KNAPP. We have probably been working with Main Street Alliance on issues on and off probably for the last 3 years. 

Mr. MULVANEY. Will you play my video, please, is that ready? 

[Video was played as requested.] 

Mr. MULVANEY. Actually, what I went on to tell Mr. Daley at 

that time was, at your site, your organization was linked on their 

Web site as yours is. Later that day, your organization came off of 

their Web site. So I am going to ask you a simple question. Was 

Mr. Daley telling us the truth when he said he was not affiliated 

you folks at all? 

Mr. KNAPP. Well, Congressman, if I might, I think that was very 

unfair you to do that to Bill Daley. He is a friend of mine. He did 

not know you were going to bring that up. He had no idea where 

that came from. He is not responsible for what goes on the Web 

site with Main Street Alliance. So I think that was really, really 

unfair of you to do that. So that—— 

Mr. MULVANEY. Why did you think it was unfair, Mr. Knapp? 

Mr. KNAPP. It was unfair because the gentleman was there to 

talk about another issue altogether. And for you to bring up and 

start talking about the South Carolina Small Business Chamber of 

Commerce, which was not invited to the table, I don’t think it is 

up to Mr. Daley to defend us. I can do that very well. Thank you. 

Mr. MULVANEY. Well, was it up to Mr. Daley to not tell us the 

truth about his affiliations? 

Mr. KNAPP. Mr. Daley was not telling you the truth. He does not 

run that Web site. He doesn’t know who put that on there, or what 

it says. But all it does is the same as ours. We have a relationship 

from time to time, with the Small Business Majority, with the 

Main Street Alliance, with some other organizations. It doesn’t 

mean we are part of them. We just have a good relationships with 

them, and want to promote them to other people to come to our 

Web site. 

Mr. MULVANEY. I don’t remember what Mr. Daley’s title is with 

the Main Street Alliance. I do remember, however, that he had 

enough influence over the Web site to take your organization off of 

it before the end of the day. 

Mr. KNAPP. And I can assure you that Mr. Daley did not do that 

because I got contacted by Sam Blair, who is with the administration of the Main Street Alliance. He told me what went on. He sent 


srobinson on DSK4SPTVN1PROD with 
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me that video, which I was appalled at, and they did remove me 

because frankly, sir, you intimidated them. 

Mr. MULVANEY. I think it is always fair, Mr. Knapp, to know the 

motivations for the people who are giving testimony here. 

Mr. KNAPP. That is fine. 

Mr. MULVANEY. And to know who they are affiliated with; know 

who they really are. And again, if you are going to be this Small 

Business Chamber of Commerce and come in and say things like, 

you know what I really think will pump up the economy is to give 

the EPA more money, then you can fully expect us to start asking 

some questions about your organization, the Main Street Alliance. 

In fact, let’s talk about your organization. 

Mr. KNAPP. Well, no, no, let me interrupt you, sir. 

Mr. MULVANEY. No, no, you don’t get to do that, actually, Mr. 

Knapp. We are not on your radio show. 

Mr. MULVANEY. Let’s talk about your organization. You advertise 

as having 5,000-plus members. How many of those are members of 

the South Carolina Academy of Trial Lawyers—oh, I am sorry, the 

new name is the South Carolina Association for Justice. 

Mr. KNAPP. Association for Justice. We provide membership, we 

grant membership to the associations that belong as trade associations. This has been a long standard of ours. So when the trial— 

when the South Carolina Association for Justice becomes a member 

and has a board member, we convey membership on all of them. 

It doesn’t mean that they are paying dues, but we convey a membership. 

Mr. MULVANEY. In fact, it is free to be a member of your organization. 

Mr. KNAPP. You can. Absolutely, sir. We have always been under 

the principle that we would rather have more members than more 

money. Now, that means we live hand to mouth, but it also means 

that we get to communicate our message to the members, to the 

people of South Carolina, to the small businesses, and we find that 

it resonates. 

Mr. MULVANEY. But of your 5,000-plus members, and is it 6,000, 

or is it about 5,000, is that fair? That is what your Web site says. 

Mr. KNAPP. Yes, sir. 

Mr. MULVANEY. How many of those are you counting are members of the Academy of Association for Justice? 

Mr. KNAPP. Association for Justice. It is probably about—I would 

say that their membership is probably around 1,500. 

Mr. MULVANEY. Okay. Then how many of your members in that 

5,000 are members of the workers’ comp bar? 

Mr. KNAPP. They are all—as you probably know, sir, the Injured 

Workers Advocates and the Association for Justice basically have 

overlapping membership. 

Mr. MULVANEY. Got you. All right. Do you have any home builders who are your members? 

Mr. KNAPP. You know, we used to have the home builders as a 

trade association, and then they dropped off as a trade association 

member. We still have our heating and air conditioning members 

of our association. 

Mr. MULVANEY. So you don’t have any home builders as members? 


srobinson on DSK4SPTVN1PROD with 
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Mr. KNAPP. No. We do not have the trade association. I cannot 

answer the question of how many or if we have any home builders 

themselves. I do not look over our membership lists. 

Mr. MULVANEY. So if I asked you the question have you asked 

your home builder members if they thought it would be a good idea 

to give the EPA more money, you wouldn’t know their response to 

that? 

Mr. KNAPP. I would not know. I have not asked them that question. 

Mr. MULVANEY. Do you have any remodelers? 

Mr. KNAPP. Yes, we do have remodelers. I know we do. 

Mr. MULVANEY. And did you ask them about your presentation 

here today, that you think giving EPA more money—— 

Mr. KNAPP. No, sir. We did not poll our membership and ask 

them what I should say today, as I imagine that most members did 

not poll every one of their members to ask them what they are 

going to say today. 

Mr. MULVANEY. But you refer to a lot of polling in your statement today. Where do those polls come from? 

Mr. KNAPP. Those polls are national polls conducted on behalf, or 

conducted for the American Sustainable Business Council and the 

Main Street Alliance and the Small Business Majority, and that is 

where those polling data come from. 

Mr. MULVANEY. Do you have any paving contractors? 

Mr. KNAPP. We may have paving contractors. I would be glad to 

go research this when I get back. 

Mr. MULVANEY. And we all reserve the right to ask questions 

afterwards, so we would be more than happy to send you those 

things. 

Mr. KNAPP. Thank you, sir. 

Mr. MULVANEY. I could ask the same thing about convenience 

store owners, swimming pool installers, auto body shops. 

Mr. KNAPP. Yes, sir. 

Mr. MULVANEY. I am just stunned, Mr. Knapp, again, as I was 

with the Main Street Alliance, that somebody comes in and says 

look, I represent small business, and I really think the way we can 

fix things is to give the EPA more money. I have never heard that 

before from anybody other than the EPA, and other folks like the 

EPA a lot. I am just stunned. 

I could ask you the same questions about Boiler MACT, which 

you support. And I have been through our State. You know, we go 

home as much as we possibly can, and every small business I go 

to is scared to death of Boiler MACT. And yet you are here promoting it. 

You don’t get to ask any questions, Mr. Knapp. Again, we are not 

on your radio show. Which reminds me, this is not—your work 

with the South Carolina Small Business Chamber of Commerce is 

not your full-time gig, is it? 

Mr. KNAPP. Although, sir, I do not get paid a full-time salary, or 

I probably spend the majority of my time on the South Carolina 

Small Business Chamber of Commerce, and I might add, we have 

never taken a position on that Boiler issue. Never. 


srobinson on DSK4SPTVN1PROD with 
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Mr. MULVANEY. Now, a majority of your time—how much of your 

time is in at the Knapp Agency, your public relations firm that you 

own and operate? 

Mr. KNAPP. Well, I am not sure that this is under the purview 

of this committee, but I would probably say about 15, 20 percent 

of my time is with my public relations firm. 

Mr. MULVANEY. And how much of it is as the progressive talk 

show host on WOIC in Columbia? 

Mr. KNAPP. I have a 2 hours a day show every weekday afternoon from 4 to 6, and, sir, I invite you to be a guest any time you 

want to. 

Mr. MULVANEY. In fact, I listened a couple days ago when you 

invited in Mr. Matt Gertz, the Deputy Research Director for Media 

Matters, for his input. You were looking for a responsible media 

representative to talk about what was going on in the right wing 

media, and you invited Media Matters in to do that. 

And, again, do you want to give a plug to the radio, it is, what, 

1240 AM or something? 

Mr. KNAPP. Well, it is 1230 AM on the dial. You can go to 

youneedtoknow.info and stream it any time you want to. 

Mr. MULVANEY. Mr. Knapp, I appreciate you coming here today. 

You have been a good sport. But, again, I think it is important that 

we understand exactly who is giving us the testimony. By the way, 

who invited you to be here today? 

Mr. KNAPP. I was invited to be here today, that invitation came 

through the American Sustainable Business Council. 

Mr. MULVANEY. But were you a Republican-requested witness or 

a Democrat-requested witness? 

Mr. KNAPP. No, sir, I was in the minority. 

Mr. MULVANEY. Okay. Again, nothing in what I have tried to do 

here, Mr. Knapp, today is to undermine the veracity of what you 

are saying. I actually believe that you believe just about everything 

that you have said. 

Mr. KNAPP. Thank you, sir. 

Mr. MULVANEY. And that is not my point here. My point here is 

to let everybody on this committee know who is giving them testimony, to take that into consideration as we sit here and go through 

the issues. 

There is one thing I don’t believe, Mr. Knapp, and I will close 

with this: You said that you hated to say this, but you really think 

the EPA should get more money. And I don’t believe that. I believe 

that you really do want to say that and you really do believe the 

EPA should get more money. 

With that, I will yield back the balance of my time. Thank you, 

Mr. Chairman. 

Chairman GRAVES. Mr. Tipton. 

Mr. TIPTON. Thank you, Mr. Chairman. I would like to thank our 

panel for taking the time to be able to be here. I am a small businessman as well, and one thing that I find incredibly disturbing is 

that in order to be able to fill out all of the forms, be able to fill 

all the requirements, we actually have out of the SBA a report saying that we are spending $10,585 per employee to be able to comply. 


srobinson on DSK4SPTVN1PROD with 
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You know, we are facing an incredible debt in this country, and 

the best solution to that is to be able to get people back to work 

in this Nation. To be able to get this economy moving once again, 

it is going to have to actually come from the private sector. 

We know we have a problem with the EPA. One of the first town 

hall meetings that I held better than a year ago was in the San 

Luis Valley of Colorado visiting with potato farmers. And our 

issues are always about water. They didn’t bring up water. They 

brought up the EPA. The overreach and the tentacles seem to be 

extraordinary. And we all want clean air, we all want clean water, 

but we are continuing to see an agency that is continuing to expand and to overreach. 

I guess I would just like to ask the panel, do you think that it 

is appropriate to have an agency that is writing rules and regulations, and the only way to be able to reverse those once they go 

final is having the obligatory act of Congress? Should there be a 

better way? Should Congress be able to roll up its sleeves and actually get involved in this regulatory and review process before the 

EPA goes final? Mr. Holman? 

Mr. HOLMAN. You know, we have actually—we have supported, 

the Chamber has supported the REINS Act. There are some questions that come up about how that would work in practice in terms 

of if it was implemented. But clearly, Congress needs to take some 

increased role in this process. The fact that we have an agency that 

essentially no one is home in terms of the oversight of the agency 

and how they do panels and how they do their business and writing billion dollar rules. You know, last year in 2011, EPA had four 

rules that are over $1 billion each in the pipeline, more to follow, 

more coming. We know that. 

What we are asking in this particular hearing is at least have 

some place at the table for small businesses. If you say EPA thinks 

that is too much work, they don’t want to take the time to do it, 

they don’t want oversight from Congress, we would say there needs 

to be oversight from Congress on that. 

Mr. TIPTON. Would you agree with that, Mr. Knapp? 

Mr. KNAPP. I agree with Mr. Holman that that poses some problem if Congress has to approve every regulation that is promulgated by an agency. I think the cumbersomeness of that would be 

amazing, and given our division in Congress, it is hard to get anything done; essentially I think it would shut down all future regulations. 

Mr. TIPTON. Are you calling on the U.S. Senate to approve the 

REINS Act passed by the U.S. House of Representatives? 

Mr. KNAPP. No, sir, we are not. 

Mr. TIPTON. Mr. Brediger? 

Mr. BREDIGER. Back where I come from, we believe that the EPA 

works under the auspices of Congress, and when we see these regulations rolling out and when we are looking for relief, we seem to 

have to find our relief in the Federal Court system. That troubles 

us. We should be coming back to this body seeking the relief and 

requiring the kind of oversight that is necessary before the genie 

pops out of the bottle. We seem to be chasing our tail all the way 

around. We think it is this Congress’ job to stop some of these 


srobinson on DSK4SPTVN1PROD with 
21 

things before they come out so we can use these panels, for example, to complement the work that should be done. 

Mr. TIPTON. So effectively, what you are saying is if EPA is asking for input, maybe it would be a good idea for them to listen? 

Mr. BREDIGER. Yes. 

Mr. TIPTON. Not a bad idea. 

Mr. BREDIGER. Not a bad idea. 

Mr. TIPTON. Mr. Merrick? 

Mr. MERRICK. To expect that every rule that comes out of the 

EPA would be perfect and ready for the street every time I think 

is far-fetched. There ought to be some kind of review process to review the rules once they have been implemented and see how it is 

working. I know we have gone back to the EPA and they are very 

gracious about meeting with us. They take our comments and disappear behind the doors and we never hear from them again. 

Mr. TIPTON. And are forgotten again. You know, you had mentioned in your testimony that the EPA had a set emission limits 

that are unachievable based on their failed calculations. Is this a 

pretty common occurrence? 

Mr. MERRICK. I believe that would be—— 

Mr. TIPTON. Was that from Mr. Brediger? 

Mr. BREDIGER. The answer to that is yes. Yes, we have limits 

that are beyond where technology exists today. Yes, sir. 

Mr. MERRICK. And they have limits on our work that are beyond 

capability too. 

Mr. TIPTON. Great. Well, do you think maybe if we really want 

to be able to fix something, Mr. Knapp, maybe you want to be able 

to jump in on this as well, the last I was able to read, and the 

numbers may have been adjusted up or down, but it was about a 

$10.8 billion budget, something along those lines for the EPA. If we 

really want to fix the problem, maybe we take some of that money 

that has already been appropriated rather than putting a burden 

back on a business and we actually fix the problem. Would that be 

an approach? 

Mr. KNAPP. Well, as you have already heard my testimony, I 

think part of the problem that these gentleman are experiencing is 

because of the lack of resources and support for the EPA. So I don’t 

know that by cutting their budget even more and doing something 

else with it, it is going to get any better outcomes than what they 

are getting now. 

Mr. TIPTON. So forget the goal. Just increase the bureaucracy? 

Mr. KNAPP. Sir, it is not a matter of increasing the bureaucracy. 

But if Congress has given them instructions and provided them 

with a document that is called the RFA, and they are to carry it 

out to the best extent to try to work with these organizations, and 

if they have too quick a deadline and if they don’t think they are 

getting—if they are getting short shrift, then there may be a problem of resources, and that is the way they are dealing with it. 

Mr. TIPTON. I am over time. I guess what is really disturbing 

about that is we continue to hear testimony from a variety of different sources that the EPA does not listen, that it is agenda-driven from within, and the RFA is something that they aren’t really 

paying attention to. The impacts that we are truly seeing on small 

business across this Nation and in real lives is devastating right 


srobinson on DSK4SPTVN1PROD with 
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now to the economy, and we need to be able to find a better commonsense balance to it. 

So thank you gentleman for being here. 

Chairman GRAVES. With that, I want to thank all of you for participating in the hearing. When the EPA fails to comply with the 

Regulatory Flexibility Act, small businesses suffer, and I think that 

the quality of rules that the EPA promulgates, I think that suffers 

also. The EPA should be working collaboratively with small businesses to ensure that small business impacts are analyzed and that 

less burdensome alternatives are considered. 

For the record, I want to say that tomorrow the EPA administrator, Lisa Jackson, is testifying before the Committee on Science, 

Space, and Technology, and we are going to be submitting a letter 

for the record outlining the concerns with EPA’s compliance with 

the RFAs that were raised in today’s hearing. 

In addition, we will continue to exercise our oversight responsibilities to ensure that Federal agencies do comply with the RFA. 

With that, I would ask unanimous consent that members have 

5 legislative days to submit statements and supporting materials 

for the record. Without objection, that is so ordered. 

With that, the hearing is adjourned. Thank you. 

[Whereupon, at 2:10 p.m., the committee was adjourned.] 


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100 Years Standing Up for American Enterprise 

U.S. CHAMBER OF COMMERCE 

tateDlent 

.s. 

ON: REGULATORY FLEXIBILITY ACT COMPLIANCE: IS 

EPA FAILING SMALL BUSINESSES? 

TO: HOUSE COMMITTEE ON SMALL BUSINESS 

BY: KEITH W. HOLMAN 

LEGAL POLICY COUNSEL 

ENVIRONMENT, TECHNOLOGY & REGULATORY 

AFFAIRS 

DATE: JUNE 27,2012 
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BEFORE THE COMMITTEE ON SMALL BUSINESS 

OF THE U.S. HOUSE OF REPRESENTATIVES 

"Regulatory Flexibility Act Compliance: Is EPA Failing Small Businesses?" 

Testimony of Keith W. Holman 

Legal Policy Counsel, Environment, Technology & Regulatory Affairs 

U.S. Chamber of Commerce 

June 27, 2012 

Good morning, Chairman Graves, Ranking Member Velasquez, and members of 

the Committee. My name is Keith W. Holman and I am Legal Policy Counsel for the 

Environment, Technology and Regulatory Affairs Division at the U.S. Chamber of 

Commerce. The Chamber is the world's largest business federation, representing the 

interests of more than three million businesses and organizations of every size, sector, 

and region. More than 96% of U.S. Chamber members are small businesses with 100 

employees or fewer. Small businesses are vital to the U.S. economy, comprising 99.7% 

of all employer firms and generating two-thirds of the net new U.S. jobs over the past 17 

years.l You have asked me to come before the Committee today to offer the Chamber's 

view on whether the U.S. Environmental Protection Agency (EPA) is complying with the 

Regulatory Flexibility Act (RF A). 2 On behalf of the Chamber and our small business 

members, who benefit from agencies' RFA compliance when they write rules, I thank 

you for the opportunity to testifY here today. 

I bring some personal perspective to this question. From 2002 to 2010, I served 

as an Assistant Chief Counsel in the Office of Advocacy of the Small Business 

Administration. In that position, I was responsible for ensuring that EPA followed the 

RF A in its various rulemakings. 3 I worked on many rulemakings where EPA did a good 

job of complying with the RF A, and several where they did not. My testimony, in part, 

reflects those experiences. 

I Office of Advocacy. U.S. Small Business Administration, Frequently Asked Questions (January 2011). 

available at ~~l!Jl.,I!O,!sit~sidefaulUtileslsQi1lQJ?J![. Small businesses must often bear a disproportionate 

burden from federal regulations, In the case of environmental regulations, for example, a business with 

fewer than 20 employees must bear a per-employee cost burden that is almost five times higher than a 

business with 500 or more employees, See The Impact of Regulatory Costs on Small Firms, an Office of 

Advocacy funded study by Nicole Crain and Mark Crain (2010). available at 

www,sba,goviadvoiresearchirs37Itot.pdf. 

2 Pub, L. No. 96-354. 94 Stat. 1164 (1981). (codified as amended at 5 U,S.C. §§ 601- 612), 

3 During this time period, I personally served as Advocacy's representative on nine Small Business 

Advocacy Review Panels convened by EPA. SBAR Panels are discussed in detail below, 
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I. The Regulatory Flexibility Act 

Congress passed the RF A in 1980 to give small entities a voice in the federal 

rulemaking process. The premise of the Regulatory Flexibility Act is relatively simple: 

to require federal agencies to assess the economic impact of planned regulations on small 

entities4 and to consider alternatives that would lessen those impacts. Prior to passage of 

the RF A, small businesses often were unaware of new regulations coming out of 

Washington and powerless to meaningfully affect the design of those rules after they had 

been proposed. One account of this situation, written in 1964, describes the frustration of 

small business owners: 

Often businessmen come down to Washington when they are almost purple 

with apoplexy. A particular piece of legislation or an administrative ruling 

has been either passed or under consideration for weeks, months, or 

perhaps even a year. When it is about to be finalized--or even after it has 

been passed-the businessman shows up in Washington for a 'last-ditch 

effort.' He must necessarily be aggressive and antagonistic in conflict 

with a policy or program whose cement had virtually hardened. 5 

Even today, it is true that unless the concerns of a small business can be brought before a 

regulatory agency early in the rulemaking process, the regulatory 'cement will harden' 

and the rule will be finalized without addressing the concerns. Small businesses typically 

also must vie against larger businesses for the attention of regulators. 

To address this situation, the RFA requires each federal agency to review its 

proposed and final rules that are subject to notice and comment rulemaking under section 

553 ofthe Administrative Procedure Act6 to determine if the rule in question will have a 

"significant economic impact on a substantial number of small entities (SEISNOSE).,,7 

Unless the head of the agency can certify that a proposed rule will not, if promulgated, 

have a SEISNOSE, the agency must prepare an initial regulatory flexibility analysis 

(IRF A) and make it available for public review and comment. The IRF A must describe 

the anticipated economic impacts of the rule and evaluate whether alternative actions that 

would minimize the rule's impact would still achieve the rule's purpose. When the 

agency issues the final rule, if it cannot certify that the rule will not have a significant 

4 The RF A applies to three types of small entities: small businesses, small organizations, and small 

communities. Small businesses are defined by the Small Business Administration at 13 C.F.R. § 121.201. 

Small organizations are not-for-profit enterprises that are independently owned and operated and are not 

dominant in their field.(e.g., private hospitals, private schools). Small governments are the governments of 

cities, towns, villages, school districts or special districts having a popUlation of less than 50,000. 

5 William Ruder & Raymond Nathan, The Businessman's Guide to Washington, at 3 (1964). 

65 U.S.C. § 553. 

75 U.S.C. § 605(b). EPA has prepared guidance on how it interprets the terms "significant economic 

impact" and "substantial number". See EPA, Final Guidance for EPA Rulewriters: Regulatory Flexibility 

Act (November 2006). 

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economic impact, the agency must prepare a final regulatory flexibility analysis (FRFA). 

The FRFA must summarize any issues raised by the public, describe the steps taken by 

the agency to minimize burdens on small entities, and explain why the agency took the 

final action it did. Importantly, the agency must explain why other alternatives were 

r"jected. The objective of these procedures is to ensure that the agency has had the 

opportunity to hear and understand the specific issues small entities will have when they 

must comply with a new regulatory mandate. 

II. EPA and the RFA 

EPA is one of the most prolific rule-writing agencies in the Federal government. 

In 2011, for example, the agency completed or was actively developing 257 regulations; 

only the Departments of Treasury, Commerce, and Interior wrote more rules. 8 Moreover, 

not only does EPA issue a significant number of rules, but many of the rules the agency 

writes are big, costly rules that affect large sectors of the U.S. economy.9 In part, because 

Congress recognized that EPA writes a large number of high-impact rules, EPA became 

subject to an additional small entity impact analysis requirement in 1996 when the RF A 

was amended. The Small Business Regulatory Enforcement Fairness Act of 1996 

(SBREFA)IO requires EPA (as well as the Occupational Safety and Health Administration 

(OSHA)) to convene a Small Business Advocacy Review (SBAR) Panel whenever one of 

their planned rules is likely to have a SEISNOSE. 11 As a practical matter, the vast 

majority of EPA rules are certified by the agency as not having a SEISNOSE, and 

accordingly are not required to go through the SBAR Panel process. In any given year 

EPA might write more than three hundred proposed rules, but only two to eight rules 

might actually require a SBAR Panel. 

III. The SBAR Panel Process 

The Panel process generally adds a total of six to twelve months to EPA's 

rulemaking process, most of which is preparation time. Panel members include 

representatives from the SBA Office of Advocacy, the Office of Management and 

8 Clyde Wayne Crews Jr .• Competitive Enterprise Institute. Ten Thousand Commandments: An Annual 

Snapshot oJthe Federal Regulatory State, 2012 Edition, at 22 (Treasury 495 rules. Commerce - 324 

rules, Interior - 318 rules. EPA 257 rules). 

9 For example, when President Obama identified seven proposed or planned rules in August 2011 that were 

anticipated to have annual compliance costs of$1 billion or more. four of the seven rules were EPA rules. 

Letter from President Barack Obama to Speaker John Boehner, August 30, 20 II, available from 

www.whitehouse.gov. The EPA rules were: Reconsideration of the 2008 Ozone NAAQS Standard. Utility 

MACT Rule. Boiler MACT Rule. and the Coal Ash Rule). 

10 Pub. L. No. 104-121,110 Stat. 847 (1996)(current version at 5 U.S.c. §§ 601-612). 

11 5 U.S.C. §§ 609(b), (d). 

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Budget's Office ofInfonnation and Regulatory Affairs (OlRA), the EPA program office 

planning to issue the rule, and EPA's Office of Policy, Economics and Innovation 

(OPEl). Small entity representatives (SERs)-who speak for the sectors that are likely to 

be affected by the planned rule-advise the Panel members on the probable real-world 

impacts of the rule and potential regulatory alternatives. Generally, the Panel members 

meet with SERs well before formal convening ofthe Panel. These early meetings are 

intended to give SERs a sense of the design of the planned rule, the underlying data and 

legal authority supporting the rule, and early estimates of its economic impacts. SERs 

have several opportunities to ask the agency questions, and to submit written and oral 

comments to the Panel members. Within 60 days after the Panel fonnally convenes, 

Panel members must prepare a report to the agency containing recommended alternatives 

for the planned rule. These alternatives have often been incorporated by EPA into the 

proposed rule. The Panel process is the best opportunity for EPA to get face-to-face 

interaction with small entities and get a sense of the ways that small entities differ from 

their larger counterparts in their ability to comply with regulatory mandates. Because the 

Panel occurs early, before the planned rule is publicly proposed, it also represents the best 

opportunity for small entities to have real input into the final design of a rule. 

IV, Has EPA's SBAR Panel Process Worked Well? 

In some cases, EPA has done a good job of meeting both the letter and the spirit 

of the SBAR Panel requirement. Examples of Panels where the exchange of information 

and regulatory alternatives was particularly robust include the Lime MACT Panel 

(January 2002-March 2002), the Cooling Water Intake Structures Panel (February 2004-

April 2004) and the Mobile Source Air Toxics Panel (September 2005-November 2005). 

• Lime MACT Panel. This Panel involved the setting of a Maximum Achievable 

Control Technology standard for lime kilns under the Clean Air Act. The 

industry was very engaged with EPA, and provided detailed information to the 

agency that allowed alternatives to be adopted to benefit the small companies in 

the industry. The detailed exchange of data and face-to-face diseussions paved 

the way for a tinal rule that met the regulatory objective and that the industry 

could live with. 

• Cooling Water Intake Structures Panel. This Panel dealt with a Clean Water 

Act regulation designed to prevent aquatic organisms from being killed when they 

are trapped in cooling water intake structures at existing small utilities and other 

facilities. SERs provided extremely accurate mitigation cost data to EPA, and the 

Panel was able to recommend an intake flow threshold to the agency that met the 

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objective of the rule while addressing the cost feasibility concerns of the SERs. 

EPA adopted the Panel's recommendation. 

• Mobile Source Air Toxics Panel. This Panel involved a Clean Air Act rule to 

lower benzene emissions from gasoline and reduce evaporative emissions from 

vehicles, boats, and portable gas containers. SERs from the small refining, 

boatbuilding, and gasoline container manufacturing industries provided detailed 

information about the technical and cost feasibility of EPA's rule. Valuable 

regulatory alternatives were recommended by the Panel and adopted by EPA. 

In each of the cases, both the SERs and EPA came away from the Panel process with 

something valuable. By putting its cards on the table up front and honestly exchanging 

information with the SERs, EPA learned where the weaknesses in its planned rule were. 

EPA also was able to find alternatives that still met its goals without needlessly damagin~ 

small businesses. The small entities got a rule that they could live with, that took their 

particular concerns into account. EPA got a rule that was more likely to be accepted and 

complied with by small entities, instead of a rule that would be fought in the courts for 

years. 

V. When Has EPA's SBAR Panel Process Worked Poorly? 

While EPA is highly experienced in dealing with the RF A and conducting SBAR 

Panels, there has occasionally been tension between the Office of Advocacy and EPA 

over how Panels have been conducted. Going back to 1997, there have at times been 

disagreements over issues such as how much supporting data EPA should provide to 

SERs before the formal convening of the Panel and how detailed the description ofthe 

planned rule and its impacts needs to be. While EPA has been concerned that premature 

public release of details about planned rules will damage the overall rulemaking effort, 

Advocacy has always sought to ensure that SERs have sufficient infonnation about the 

rule and its expected costs to be able to make knowledgeable contributions to the Panel 

discussions. 

In 2009, far more serious issues began to arise concerning EPA's administration of 

Panels. In general, these issues fall under the following three categories: 

• EPA Declines to Hold A Panel When A Panel Should Be Convened. There 

have been a number of situations where EPA was asked to convene a Panel and 

declined to do so, despite clear evidence that a Panel was warranted under the 

RFA. In 2008 and 2009, Advocacy asked EPA repeatedly to convene a Panel or 

Panels on its planned greenhouse gas (GHG) endangennent finding for vehicles 

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and resulting GHG rules. 12 Because of the magnitude of the potential economic 

impact of these GHG rules on literally millions of small entities, it was important 

that EPA make the effort to reach out to small entities and understand how they 

would be affected. Instead, EPA determined that a Panel was not needed, and that 

informal consultation and public outreach meetings would suffice. 

Also in 2009, EPA was asked to convene a Panel to consider the planned 

Coal Ash Rule, which the Obama Administration later estimated would cost 

between $600 million and $1.5 billion to comply with,13 tor the rule's impact on 

small municipal utilities and rural cooperatives. EPA asserted, with very limited 

data, that potential new coal ash disposal costs for small utilities would not be 

significant. Clearly EPA would have been better served to conduct a Panel and 

learn for itself what the true compliance cost for small utilities would be under the 

Coal Ash Rule. 

• EPA Agrees to A Judicial Or Other Deadline That Provides Insufficient 

Time To Conduct A Panel. In recent years, EPA has more frequently engaged 

in out-of-court settlements with environmental advocacy groups that result in 

agreements to issue particular rules on a specific timetable. Very often, these 

timetables do not allow sufficient time for EPA to properly go through the SBAR 

Panel process. In extreme cases, there may not be enough time to conduct a Panel 

at all. This has happened in a few situations where EPA agreed to deadlines to 

issue multiple revisions of MACT standards; when the agency later discovers that 

a rule will in fact have a SEISNOSE, there is no time for a Panel. In other 

situations, EPA may not have adequate time to prepare itself, other Panel 

members, or SERs for the Panel. A Panel's utility is greatly diminished when the 

agency does not have sufficient information about the rule, the anticipated impact 

of the rule, and potential regulatory alternatives. 

On January 19,201 I, Advocacy submitted a comment letter to EPA 

regarding proposed settlement agreements that would require rulemakings under 

the Clean Air Act to establish New Source Performance Standards for greenhouse 

gases (GHGs) for utilities and refineries. 14 The letter notes that "Advocacy 

believes the most productive Panels occur after EPA has done preliminary 

12 See, e.g.. Comments of the Office of Advocacy to EPA on the proposed rule "Prevention of Significant 

Deterioration and Title V Greenhouse Gas Tailoring Rule" (December 23, 2009). available at 

WIVW .sba. gov/sites/defaultlfileslreg%20 I 223%20EP A.pdfo 

13 See Letter from President Barack Ohama to Speaker John Boehner (August 30, 20 II), available from 

www.whitehouse.govo 14 Comments of the Office of Advocacy to EPA on the proposed rule "Proposed Settlement Agreements for 

Petroleum Refineries and Electric Utility Generating Units" (January 19,2011), available at 

www.sba.gov!sitesldefaultlfi!es!cpall 0119.pdf. 

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development and analysis of regulatory options before the initial outreach to 

Advocacy and the Small Entity Representatives ... Advocacy is therefore 

concerned that the proposed settlement agreements do not provide sufficient time 

for a full Panel process .... ,,15 Subsequently, when EPA notified Advocacy that 

it was convening a Panel on the GHG New Source Performance Standards, 

Advocacy responded that "SERs have not been provided enough information to 

project how EPA will structure this regulation or establish the relevant standards. 

In the absence of information sufficient for SERs to appreciate the impact of the 

proposed rule and to identifY regulatory options that would fulfill EPA's statutory 

objectives, Advocacy believes that convening this panel is premature.,,16 

Advocacy made similar objections to EPA's management of Panel for the Utility 

MACT, another multibillion dollar rulemaking. 17 In a comment letter Advocacy 

sent to EPA on August 4, 20 I I, serious concerns were raised that EPA failed to 

provide adequate infonnation to SERs before convening the Panel, did not 

identifY regulatory alternatives, did not provide deliberative materials to other 

Panel members, and failed to recommend any regulatory alternatives. Advocacy 

noted that "EPA advised that preparation for this panel would be abbreviated 

because of negotiated settlement agreement deadlines ... The SERs commented 

that the lack of pre-panel consultation harmed their ability to participate 

meaningfully and that this was inconsistent with EPA's prior practice.,,18 

• EPA Ignores the Recommendations of A Panel. Even where EPA takes the 

time to properly conduct a Panel, occasionally the agency will simply choose to 

ignore the recommendations of the Panel members. For example, the Boiler 

MACT Panel strongly recommended that EPA (I) include a health-based 

compliance alternative in the rule, or provide the legal rationale for excluding 

such an alternative, and (2) identifY additional boiler subcategories, such as 

limited-use and seasonal units. EPA declined to adopt either recommendation, 

with no adequate explanation. 19 Both of these regulatory alternatives would have 

saved regulated small entities considerable amounts without compromising the 

environmental objective of the Boiler MACT rule. Although it is unusual for 

J5 [d. at 3. 

J6 Comments of the Office of Advocacy to EPA on the convening of the Panel on "Greenhouse Gas New 

Source Performance Standard for Electric Utility Steam Generating Units" (June 13, 2011), available at 

www.sba.gov/sitesldefaultlfiles/tileslepall 0613.pdf. 

J7 EPA estimated the cost of the Utility MACT rule at $10 billion. See Letter from President Barack 

Obama to Speaker John Boehner (August 30, 2011). available from www.whitehouse.gov. 

J8 Comments of the Office of Advocacy to EPA on the proposed rule Utility MACT Standard for Electric 

Utility Steam Generating Units" (August 4, 20 II) at 4. available at 

www.sba.gov/sitesldefauItlfiles/files/epaII 0804.pdf. 

J9 Comments of the Office of Advocacy to EPA on the proposed Boiler MACT Standards (August 23, 

2010), available at www.sba.gov/advocacv/816112752. 

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EPA to simply ignore the recommendations of Panel members, it has happened in 

recent years. 

Together, these serious lapses point to a disturbing trend: EPA now seems to be 

indifferent to the quality of the Panels it conducts. In the Office of Advocacy's most 

recent annual report to Congress, it was noted that: 

Advocacy had concerns with a number of panels ... and, for the first 

time, expressed some of these concerns in public letters ... 

Advocacy's major concern with the panels was the lack of information 

provided to the small entity representatives (SERs) about the potential 

effects of the proposed rule and the lack of significant regulatory 

alternatives to be discussed with the SERs. 20 

This recent trend is quite unfortunate, because Panels are extremely valuable tools in the 

rulemaking process when they are conducted properly. When EPA receives high-quality, 

detailed information from SERs about how a rule will impact them, particularly at that 

early stage in the rule's development, it results in a far better final rule. While it is clear 

that conducting Panels requires an investment of additional time and other agency 

resources, Panels are investments that yield improved rulemakings. In a regulatory 

environment where multi-billion dollar rules are more and more common, it should not 

be asking too much of EPA to approach the Panel process as a valuable learning 

experience, not a check-box exercise that merely slows down the process of issuing rules. 

VI. How Could EPA's Compliance with the RFA Be Improved? 

EPA needs to build the time and resources into the rulemaking process so that it 

can conduct thorough, meaningful Panels. The agency must ensure that the regulatory 

deadlines it agrees to in settlements actually allow sufficient time for RF A compliance. 

The agency should also give more prominence to the office within EPA that manages 

Panels and RF A compliance. If EPA's current leadership treated RFA compliance and 

Panels as the important priorities they should be, the agency as a whole would follow 

suit. The RF A and the SBAR Panel process will not be the vital tools to ensure a level 

playing field for small entities that Congress intended them to be if EPA does not take 

these requirements seriously. 

20 Office of Advocacy. Annual Report of the Chi~fCounselfor Advocacy on Implementation (Jfthe 

Regulatory Flexibility Act and Executive Order 13272 (February 2012) at 26. available at 

www.sba.gov/sites/defaultifiles/ilregflx O.pdf. 

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Again, thank you for giving me the opportunity to testify today. I look forward to 

answering any questions you may have. 

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Testimony of 

Frank Knapp, Jr. 

President & CEO, South Carolina Small Business 

Chamber of Commerce 

Vice Chair, American Sustainable Business Council 

U.S. House of Representatives 

Committee on Small Business 

June 27, 2012 

Regulatory Flexibility Act Compliance: Is 

EPA Failing Business? 
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Chairman Graves, Ranking Member Velasquez, and members of the Committee, I 

am Frank Knapp, Jr., president, CEO and co-founder of the South Carolina Small 

Business Chamber of Commerce and Vice Chair of the American Sustainable 

Business Council. Thank you for this opportunity to testify before you today. 

The South Carolina Small Business Chamber is a statewide advocacy organization 

of 5000 plus members that promotes a more small-business friendly state and 

federal government. 

The American Sustainable Business Council founded in 2009 and its members 

now represent over 150,000 businesses and more than 300,000 entrepreneurs, 

owners, executives, investors and business professionals across the country. 

These diverse business organizations cover the gamut of local and state 

chambers of commerce, microenterprise, social enterprise, green and 

sustainable business groups, local living economy groups, women business 

leaders, economic development organizations and investor and business 

incubators. 

I had the opportunity to read the testimony of Mr. Holman, representing the U.S. 

Chamber of Commerce, and Mr. Merrick, representing the National Association 

of the Remodeling Industry, prior to preparing my comments. I commend them 

for the civility of their remarks and their focus on the Regulatory Flexibility Act as 

it pertains to the Environmental Protection Agency. 

Both gentlemen recognized the importance of the Regulatory Flexibility Act for 

insuring that regulations are reviewed to determine if they are too burdensome 

for small businesses and if the goal of regulations can be achieved in alternative 

methods. They pointed out some instances where the business community and 

the EPA didn't agree. But they also point out successful RFA stories. 

In 2004 my South Carolina organization worked with our South Carolina Chamber 

and NFIB to pass our Small Business Regulatory Flexibility Act modeled after the 
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federal law. Last August the then chairman of the South Carolina Small Business 

Regulatory Review Committee told me that over the previous seven years his 

committee had reviewed about 300 proposed regulations and identified only ten 

that raised their concern. His Committee worked with the state agency 

promulgating these new regulations and satisfactorily resolved the issues. 

The Regulatory Flexibility Act has created an effective process to protect small 

businesses even if the process itself needs some attention from time to time. 

Mr. Holman correctly identifies one area where the EPA's compliance with the 

RFA can be improved-more resources for the rulemaking process. While there 

are voices we hear in Washington critical of the EPA and calls for cutting back or 

freezing the regulatory process, the reality is that it can work better for small 

businesses and the public if the EPA was better funded. 

With more resources the EPA can do a better job of meeting the requirements of 

the RFA to the benefit of small business. However more resources for the EPA 

would not only allow the agency to be more efficient and effective in complying 

with the RFA, it would also enable the organization to do a better job of 

protecting the public's and environment's health while unleashing 

entrepreneurial innovations and creating jobs. 

Every responsible new rule that protects the health of our citizens and workers 

opens a door to newer and better products. Our nation is loaded with these 

small business entrepreneurs just waiting to solve a problem when the demand 

is created. 

The Toxic Substance Control Act is so outdated and the EPA's resources so 

strained that there are literally over 80,000 chemicals in the agency's inventory 

but it has been able to require testing for only about 200. Just yesterday the 

state of California took the lead on investigating the health hazards of toxic flame 

retardant chemicals used in furniture and mattresses while not providing 

protection from fires. The EPA should be examining this national health hazard 
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but it doesn't have the resources. 

Can the materials we sleep and sit on be non-toxic and still resist fire? 

Absolutely. Ask Barry Cik, owner of Naturepedic in Cleveland, Ohio. Naturepedic 

manufactures baby and crib mattresses that provide proper support, meet 

government flammability requirements, provide waterproofing, seamless designs 

and other hygienic features all without the use of harmful chemicals or allergenic 

materials. But instead of helping this innovative industry take off and making 

bedding healthier for families, we protect the use of carcinogenic chemicals of 

the past by not properly empowering the EPA with the needed legislative 

support and resources. 

Then there is Bioamber, a bio-based chemical manufacturer. The renewable 

chemical industry with all its new jobs is on the launch pad. But while it is 

developing technology and struggling to be profitable, it is laboring in the 

shadow of the old guard chemical giants churning out chemicals that avoid the 

inspection of an under-resourced EPA. Reforming the Toxic Substance Control 

Act to produce stronger and clearer regulations on hazardous chemicals will 

result in hundreds of new Bioambers to grow a sustainable economy. 

The public and small business owners want good regulations. A recent national 

poll of small business owners conducted for the American Sustainable Business 

Council found that 80 percent support disclosure and regulations of toxic 

materials, 79 percent support ensuring clean air and water and 61 percent 

support moving the country towards energy efficiency and clean energy. 

It is in this area that support for the EPA is vital not only to protect our health 

from toxic emissions and the high costs to our economy that results, but also to 

protect our existing small businesses from the negative effects of carbon 

emissions resulting in rising sea levels and more severe weather events, a very 

crucial issue for all and certainly our coastal areas in South Carolina. Effective 

EPA regulations will drive a new energy economy that will create millions of new 

jobs, reduce energy costs and make our country truly energy independent. That 
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is the kind of economic impact that a properly supported and resourced EPA can 

have that will benefit all small businesses, not just the ones impacted by the RFA. 

Here is the question asked in the title of this hearing-ills EPA Failing Small 

Businesses?" The EPA's compliance with the Regulatory Flexibility Act isn't failing 

small businesses but it could do a better job of working with small businesses if, 

as Mr. Holman points out, it had more resources. 

Now is the moment to support the EPA to enable it to really live up to its 

potential to help our small businesses and our economy in promulgating fair and 

transparent regulations on toxic chemicals and air and water pollution. In the 

same poll I mentioned above it found that 86 percent of small businesses see 

regulations as a necessary part of a modern market-based economy. The 

American Sustainable Business Council believes that we don't have to choose 

between regulations to protect our health and environment and creating jobs to 

grow our economy. That is the old way of doing business. 

Our future prosperity is clearly tied to developing a sustainable economy through 

business innovation. BUSinesses can take care of our people and environment 

and make a profit all at the same time. And a properly supported and resourced 

EPA can help us get to this sustainable economy faster. 

Thank you for the opportunity to speak to you today. 
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WRITTEN STATEMENT OF 

JEFFREY A. BREDIGER, DIRECTOR OF UTILITIES 

ORRVILLE (OHIO) UTILITIES 

ON 

"REGULATORY FLEXIBILITY ACT COMPLIANCE: IS EPA FAILING SMALL 

BUSINESS?" 

HEARING BEFORE THE 

COMMITTEE ON SMALL BUSINESS 

U.S. HOUSE OF REPRESENTATIVES 

JUNE 27, 2012 

Mr. Chainnan and members of the Committee. Good afternoon. My name is Jeffrey A. 

Brediger, and I am director of utilities for Orrville Utilities in Orrville, Ohio. I am presenting this 

statement today on behalf of Orrville Utilities and the American Public Power Association 

(APPA), of which my municipal electric utility is a member. 

APPA is the national service organization representing the interests ofthe nation's more than 

2,000 not-for-profit, community-owned electric utilities that serve over 46 million Americans in 

49 states (all but Hawaii). Public power utilities include state public power agencies, municipal 

electric utilities, and special utility districts that provide electricity and other services to some of 

the nation's largest cities such as Los Angeles, Seattle, Omaha, San Antonio, and Jacksonville, 

but also some of its smallest towns. The vast majority of public power utilities serve small and 

medium-sized communities - in fact, 70 percent of public power utilities are located in 

communities with populations of 10,000 people or less. Under the Small Business Regulatory 

Enforcement and Fairness Act (SBREFA), over 90 percent of the nation's public power utilities 

are themselves considered small businesses, in addition to serving the small businesses in their 

communities. 

Orrville is a small city of about 8,300 located in the northern part of Ohio. Some may recognize 

Orrville from its association as the home of the J.M. Smucker Company, our largest employer 

with over 1,500 employees. Orrville is also home to a number of other nationally prominent 

companies, including the Smith Dairy Company (1909), the Schantz Organ Company (1873), the 

Will-Burt Company (1918), and the Quality Castings Company (1933)-which is Orrville 

Utilities' largest customer, accounting for approximately 40 percent of retail electricity sales. 
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Orrville prides itself on being a city of diversified industry. For nearly 150 years, Orrville has 

built a reputation as a flourishing community with a supportive business climate where major 

corporations, family businesses, and entrepreneurs can start and grow a business in the midst of 

strategic U.S. market areas. In fact, approximately 20 industries have been operating in Orrville 

since 1970 or earlier, demonstrating a well-established foundation for successful businesses. 

Today, new industries are also calling Orrville home, and the city's companies currently employ 

more than 3,000 people who live primarily in Orrville and the surrounding Wayne County area. 

Orrville offers companies a number of competitive advantages including a skilled workforce 

with a heritage of a good work ethic, perhaps passed down from the pioneering generations who 

started their farms and small businesses in the area more than 170 years ago and built the city 

into a prosperous center for commerce. Other advantages include: the excellent Orrville School 

District, Aultman Orrville Hospital, proximity to numerous colleges and universities, affordable 

housing, and Orrville's municipally owned electric power plant. 

Orrville's Experience with the Boiler MACT Rule I SBREFA 

As a public power community that also owns its own power plant, Orrville has been able to offer 

competitively priced electricity to our residential, commercial, and industrial customers, which 

has helped promote local business development efforts and has helped protect our customers 

from volatile electricity markets. But as environmental requirements tighten, Orrville Utilities 

faces increasing costs and burdens to provide these important community services. We have 

been active in the battle against a number of unreasonable regulations proposed by the 

Environmental Protection Agency (EPA), most notably the Industrial, Commercial, and 

Institutional Boiler Maximum Achievable Control Technology (Boiler MACT) rule, which was 

due to be finalized by EPA this spring after several rounds oflegal challenges, reconsideration, 

and fe-proposal. When asked about the status last week, EPA indicated it is "still working on it." 

In addition to being a member of APPA, Orrville is a member of American Municipal Power, 

Inc. (AMP), a nonprofit joint action agency serving a membership composed of 129 public 

power members in seven states. Through AMP and APPA and representing Orrville, [ have been 

involved in the Boiler MACT rule since 2003. Orrville's power plant serves generators of25 

MW or less, which is small enough to be covered by the Boiler MACT rule instead of the rules 

governing larger utilities. As a small utility and as a small government with a population of less 

than 50,000, the City of Orrville is considered a "small entity" under SBREF A. Representing 

Orrville and other small generators, I participated with APPA in the SBREF A review process for 

the Boiler MACT rule in 2003, and also served as a Small Entity Representative (SER) in the 

latest SBREF A effort on the current proposed rule on reconsideration. 
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The SBREF A process was important to Orrville and the other AMP generating members because 

small utilities and small governments were a small subset of those being regulated by the Boiler 

MACT rule, and EPA was not focused on the burdens on small entities. In fact, AMP challenged 

the first Boiler MACT rule on the basis that EPA had failed to follow the SBREF A process by 

not convening a small business advocacy review (SBAR) panel to consider the impact on small 

municipal utilities and others. EPA was more careful to follow the procedural requirements of 

SBREFA for its second try at Boiler MACT rulemaking. However, EPA chose not to adopt the 

primary recommendation from the small business panel. The panel recommended that EPA 

implement a health-based compliance alternative that would allow small entities to avoid the 

significant cost of hydrogen chloride (HCI) scrubbers when they could demonstrate that their 

emissions did not pose a health risk at their fence line. This proposed solution would have 

provided cost relief for small entities while remaining protective of human health. EPA had the 

discretion to adopt it under the Clean Air Act, but it chose not to. 

We are still waiting for relief on Boiler MACT. In comments filed on the reconsidered Boiler 

MACT rule in February 2012, AMP remarked that: 

" ... the rule remains unduly burdensome and unsupportable, particularly for small, coalfired municipal utilities. Small municipal utilities have faced disproportionate impacts 

under each iteration of this rule, and will continue to face disproportionate impacts under 

the Proposed Rule. Municipal utilities play an important role that is not filled by any 

other entity. Municipal utilities provide reliable and affordable cost competitive electric 

service to small communities, increase electric grid reliability, attract high-quality jobs to 

local communities, and act as a buffer to price spikes and supply shortages during times 

of peak usage. These are important functions that the Proposed Rule threatens to regulate 

out of existence. EPA has the regulatory authority to avoid that adverse result."] 

We remain hopeful that the final rule will reflect our concerns. A copy of AMP's filed 

comments is attached for the record. 

I would also like to briefly mention our appreeiation for the passage by the House last October 

and the support of most of this Committee's members ofH.R. 2250, the EPA Regulatory Relief 

Act, which specifically would provide EPA with an additional IS months to fully consider new 

data related to the Boiler MACT rule in order to "get it right." In addition, the legislation would 

provide a full five years for impacted units to meet the rule's capital-intensive compliance limits 

and would ensure that any such limits could actually be met by units under real-world and not 

theoretical conditions. As you know, a Senate effort to attach this bill to the surface 

I February 21,2012, Comments of American Municipal Power, Inc., Docket lD No. EPA-HQ-OAR-2002-

0058, National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial, 

and Institutional Boilers and Process Heaters (76 Federal Register 80598, December 23,2011). 
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transportation bill failed in March. But the debate has highlighted the ongoing need to seek 

modifications to this unacceptable rule, whether through legislation, legal, or regulatory avenues. 

SBREFA Process: Goals v. Results 

As previously mentioned, I have been involved directly with the SBREFA review process 

regarding the Boiler MACT rule. As you know, SBREFA was enacted in 1996, amending the 

Regulatory Fairness Act of 1980 (RF A). The SBREF A process requires EPA, the Occupational 

Safety and Health Administration (OSHA), and the new Consumer Financial Protection Bureau 

(CFPB) to "convene a panel whenever a regulation is to have a significant impact on a 

substantial number of small entities.,,2 Further, in its Report on the Regulatory Flexibility Act, 

FY 2011, the U. S. Small Business Administration (SBA) noted that "President Obarna issued 

Executive Order 13563 [issued January 18,2011] requiring every Federal Agency to create a 

process to systematically review its rules with an eye toward reducing the burden imposed by 

those regulations. The President's memo further directed that the agencies' explicitly justi1)r any 

decision not to provide flexibility for small businesses."} Coupled together, these processes 

should ensure that the needs of small businesses are thoroughly addressed as a regular 

consideration of the regulatory process, particularly for rules originating at EPA, OSHA, and 

CFPB. Unfortunately, this laudable goal has met with mixed results. 

While SBA's 2012 Report to Congress on the Regulatory Flexibility Act indicated that SBAR 

panels under SBREFA have resulted in regulations that have reduced regulatory costs by $11.7 

billion for a number of agencies, we note that - as least in our experience - the process has fallen 

short of desired expectations. In some cases, EPA has declined to convene a panel to evaluate 

small entity relief. When panels are convened, they may lack the information necessary to 

generate effective alternatives. When effective alternatives are generated, EPA may ignore the 

results. Small entities are not getting the regulatory relief we need. 

Of the approximately 30 SER panels conducted to date, about two-thirds have pertained to EPA 

rules. While we are not aware of the details of other agency SER panels, Orrville and APPA can 

comment on the four SER panels for various regulations impacting electric utilities conducted 

over the last eight years: 

• July 30, 2004: Cooling Water Intake Structures (Sec. 316(b) ofthe Clean Water Act) 

• June 2011 (not completed): New Source Performance Standards (NSPS) for Greenhouse 

Gases (GHG) / CO2 (Clean Air Act) 

2 U. S. Small Business Administration, 2012 Report on the Regulatory Flexibility Act. 

, U. S. Small Business Administration, Report on the Regulatory Flexibility Act, FY 2011, Feb. 2012, pp. 

and 5. 
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• July 13,2011: Mercury and Air Toxics Standards (MATS) (Clean Air Act) 

• November 2008 - August 2011: Boiler MACT (Clean Air Act) 

In addition to these four, which are discussed below, one request by small business and the utility 

industry for EPA to convene a SER panel on the proposed Resource Conservation and Recovery 

Act (RCRA) regulation on coal ash (or coal residuals) was declined. Thus, the agency failed to 

look at alternatives to regulating all coal ash as hazardous waste that would benefit small 

utilities, small governments, and those small businesses that may be beneficially reusing coal ash 

in various products. These industries include road construction and wallboard and other home 

construction material manufacturers that use coal ash as a recycled product. 

Cooling Water Intake Structures: In 2004, EPA convened a Clean Water Act SER panel that 

successfully identified regulatory options and alternatives to requiring cooling towers in each 

location and at each existing power plant regardless of size, location, and species of affected fish. 

While the final 3J6(b) rule has not yet been issued, the SER process seemed to work in this 

instance, and a lower-cost outcome was evident in the proposed rule. The SER process did a 

good job in identifYing impacts, costs, and some regulatory alternatives for smaller electric 

utilities while still respecting the need to mitigate against impingement and entrainment of 

aquatic organisms in the intake pipes at electric utilities. If the SER-recommended alternatives 

are included in the final 316(b) rule, the process will have provided real relief for small entities. 

NSPS for GHG I C02: EPA failed to identifY real-world regulatory alternatives for coal plants 

to meet a natural gas equivalent standard, nor did EPA seek advance comments or opinions about 

the feasibility of carbon capture and storage (CCS) technologies that have not been commercially 

demonstrated. In both of these instances, the SER panel process was not provided sufficient time 

for consideration and was not thorough in the scope of its review. For example, as opposed to 

the agency providing technical information for the SER panelists' review, such information was 

provided to EPA staff by the panelists in response to perceived flaws in EPA's rationale. 

Panelists also noted to EPA that some of the agency's ideas would violate its own Clean Air Act 

policies on New Source Review. In the case ofCCS and only at the request ofSBA, a mere ten 

minutes were provided to address the promising yet complex issues surrounding CCS and its 

lack of commercial demonstration. As a result of these deficiencies, the SBA considers the panel 

"aborted" or incomplete, as the panel never resumed meeting to complete its work.4 

MATS: In the case of the MATS rule (which applies to coal- and oil-fired units exceeding 25 

MW in size), EPA did not adequately identifY subcategories or provide for discussion of 

workplace standards to help reduce regulatory impacts to smaller utilities that operate units 

impacted by the rule. EPA also did not identify alternative compliance time options in a SER 

panel process or address these issues in the proposed or final rule. The public power community 

4 See letter from SBA to EPA's Lisa Jackson and OMB's Cass Sl1nstein, June 13, 2011 (also attached). 
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provided comments and documentation as to the need for additional compliance time, which 

were largely ignored, despite the fact that other industries regulated by different MACT 

standards have been granted additional time if the compliance date was not feasible or 

achievable. 

Boiler MACT: In the case of the Boiler MACT SER, EPA rejected the use of subcategories 

based on size to allow emission limits to be set based on the performance of other similar small 

entities. EPA failed to apply one of the options that the agency has successfully used for other 

industries that have smaller units, but not to provide relief for municipal electric utilities. 

Despite repeated requests, EPA also rejected the use of the health-based emission limits in the reproposed rule - despite the fact that they were approved as part of the original Boiler MACT 

rule. The SBAR panel, which EPA convened to identify ways EPA could reduce the impact of 

the Boiler MACT rule on small entities, identified the health-based alternative for HCI is as the 

most important step EPA could take to reduce the crushing cost burden on small entities like 

municipal utilities. Scrubber technologies impose significant costs on small entities. A healthbased alternative would allow a small entity to demonstrate that its HCI emissions at the fence 

line do not pose a threat to human health. If that concentration is considered safe, the small 

entity would not be required to spend millions of dollars on a control device to reduce HCI 

emissions. The health-based alternative is essential to small municipal utilities because we can 

avoid millions in unnecessary costs and continue to provide the services our communities have 

come to expect. Despite this recommendation, EPA made an arbitrary decision to eliminate the 

health-based alternative from the proposed rule, while at the same time imposing HCllimits that 

are 30 percent more stringent than those finalized in March 2011. 

In summary, public power's recent experience with SBREFA has been disappointing at best. 

While the SBREF A process is intended to provide small entities with an expanded opportunity to 

participate in the development of certain regulations, the process lately has taken on the look of 

window dressing, with EPA simply "checking the box" to indicate that a requirement has been 

met, even if done insufficiently. Poor preparation by EPA staff has wasted the time of SER 

panel participants. Too little time is invested in the panel process to allow participants to 

properly review or comment on detailed technical materials and issues. These conditions are 

also making it increasingly difficult to enlist small entity representatives to participate in the 

process. Perhaps most disturbing are the panels that produce a viable alternative, only to have 

EPA ignore the recommendation coming from those with real-world operational experiences. 

Moving Forward 

Despite our misgivings regarding our recent experience with the SBREF A process, Orrville and 

APPA thoroughly endorse the concept of a specialized process to seek, consider, and incorporate 

the specific special needs of small entities in the regulatory process. In fact, APPA at its national 
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conference earlier this month passed a resolution supporting the expansion of the SBREFA 

process to rules emanating from all federal agencies, reflecting a key provision in H.R. 527, the 

Regulatory Flexibility Improvements Act, which passed the House last December but which now 

languishes in the Senate. A copy of the APPA resolution is attached for the record. In addition, 

we offer the following specific suggestions for improving the RF A and the SBREF A SER 

panels: 

• EPA's Air Office should be more vigilant about compliance with RF A, and the process 

for SBREF A SER panels should be conducted in a more timely and more thorough 

manner, including identification and analysis of regulatory alternatives and costs 

evaluated in clear terms and provided in writing to the small entity panelists at least two 

weeks in advance of any meetings or conference calls. 

• EPA must not be allowed to ignore the results of the SER panel process. By rejecting the 

Boiler MACT health-based alternative, EPA undercut the legitimacy of the process and 

cast doubt on whether small entity relief is a true priority. 

• The EPA should conduct another SER panel on regulatory options and alternatives before 

finalizing the NSPS for GHG / C02 for the power sector since the NSPS SER panel from 

June 2011 was never completed. 

• The EPA should conduct a SER panel before revisions to the 1982 Etl1uent Limitation 

Guidelines (ELGs) for the utility sector under the Clean Water Act are proposed. The 

ELGs should look at precipitators as well as other less expensive technology as options to 

"Zero Liquid Discharge" as a way to reduce selenium from power plants. The EPA has 

not yet scheduled a SER panel and the deadline for proposal is November 24, 2012. The 

EPA should convene that SBREF A SER panel no later than 60 days before the proposed 

rule goes to the OMB for inter-agency review for the SER process to have a productive 

effect. 

Conclusion 

In conclusion, I commend the Committee for holding this hearing today. It is clear that some 

important changes need to be made to the way EPA performs its duties under SBREF A. We 

look forward to those improvements. Thank you for the opportunity to present this testimony, 

and I'd be happy to answer any questions. 
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Testimony of 

David Merrick, MCR, UDCP 

National Association of the Remodeling Industry (NARI) 

NATlONAl. ASSOClATION Of 

THE R£MODEUNG INDUSTRY 

U.S. House of Representatives 

Committee on Small Business 

June 27, 2012 

Regulatory Flexibility Act Compliance: 

Is EPA Failing Small Business? 
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Introduction: 

... "1"".,,, "',"'Ai"'",'1 hI! R1M<'I'!I'''''>'''(~'''Il\\ 

Mr. Chairman and Members of the Committee, I am pleased to present this testimony on behalf 

of the National Association of the Remodeling Industry (NARI). Today I will try and describe 

how the U.S. Environmental Protection Agency (EPA),s Lead Renovation, Repair, and Painting 

(LRRP) rule is affecting remodelers and how the EPA can do a better job working with 

organizations like NARI to protect our customers and our customers' families. 

NARI is a non-profit trade association based in Des Plaines, Illinois. We have 58 Chapters in 

major metro areas nationwide and our membership of 7,000 companies is comprised of 

remodeling contractors, local suppliers, and national suppliers. 83 percent ofNARI members 

have fewer than 20 employees and many are I or 2 man operations. NARl's core purpose is to 

advance and promote the remodeling industry'S professionalism, product and vital public 

purpose. NARI members voluntarily subscribe to a strict Code of Ethics which NARI rigorously 

enforces. 

I run a design build company in Kensington, Maryland. Merrick Design and Build Inc. is a full 

service residential and commercial remodeling, design, & build company. We have been serving 

customers in lower Montgomery County and Northwest DC since 1989 when I founded the 

company. We focus primarily on residential renovation and repair and our work includes some 

commercial projects, including churches, schools, day care centers, professional oftices and 

restaurants. 

In addition to running my business, 1 serve as Chairman ofNARl's Government Affairs 

Committee. I stay very involved with NARl's Metro DC Chapter and I am a member ofthe 

National Federation oflndependent Business (NFIB). 

Background on EPA's Lead Renovation, Repair, and Painting Rule: 

NARI has always been proud of its training and certification programs and we have a long 

history of educating remodelers on lead paint hazards. In fact, NART worked with the U.S. 

Department of Housing and Urban Affairs (HUD) to run a lead paint training program in 1998. 

Curriculum NARI developed for that program continues to be used today and NARI remains 

dedicated to training remodelers in how to ensure their customers are not harmed from lead 

paint. 

As a practical matter, please keep in mind that if EPA simply recognized the work practices 

inherent in how we remodel homes, we may have saved a lot of trouble that has overshadowed 

the issuance, re-issuance, amendments, and court settlements related to EPA's LRRP 

rulemakings. 

Page 2 
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""", NARl" 

"A!I<>i'-.'\ ~"'" I~""','" ''''Rl''''PU!N(,I'P\''IRI 

NARl did not think that EPA's rulemaking in 2008 was perfect. It still lacked some of the 

flexibility inherent in the different situations that arise unique to different projects. However, the 

"opt out" provision in the 2008 final rule was one flexibility provision that arose from the small 

business panel process that is part of the Small Business Regulatory Enforcement Fairness Act 

(SBREFA) process this Committee is discussing today. 

When EPA finalized LRRP in August of 2008, NARI made it a top priority to inform our 

members of their responsibilities and to direct members to trainers so they could become 

certified. NARI members received information on LRRP via numerous articles in our main 

membership publication, The Remodelers Journal; NARl's e-newsletter, The Spec Sheet; and in 

our e-notice, Ttiffin' [t out. NARI publishes and distributes Issue Briefing Papers, and we 

continue to devote space to the LRRP on NARl's Web site, 

In 2010, when EPA decided to change the LRRP rules, NARI was disappointed. We worked 

with several contracting, homebuilding, and remodeling businesses to express our concerns in a 

comment to EPA we submitted in July of2010. In addition to the problems we had with EPA 

changing the rules when we were pushing NARI members to get certified and learn what EPA 

had finalized just 2-years earlier, we had substantive concerns with many of the provisions in 

EPA's 2010 proposal. 

Fundamental to our concerns were the removal of the "opt-out" provision and EPA's refusal to 

re-convene a group of small businesses, the U.S. Small Business Administration's Office of 

Advocacy, and the Office of Management and Budget to ensure flexibility in the rulemaking for 

small businesses. 

In a different part of EPA's 2010 proposal, EPA did listen to small businesses. Part of what EPA 

proposed to do in its 2010 LRRP proposal was to add end-of-job requirements for remodelers 

and contractors. We had significant problems with the "clearance testing" proposal, mostly 

hecause it would have added a layer of costs and complexity to jobs for contractors who were 

still struggling to comply with the 2008 rule. Plus, our customers still did not understand that 

their projects were more expensive because of EPA requirements. NARI felt strongly that 

adding "clearance testing" would have pushed more and more contractors away ii'om the EPAcertification process, adding costs to projects without a direct correlation to making our 

customers' homes safer. 

EPA agreed with us that "clearance testing" requirements would impose more costs without 

additional benefits and last July they decided not to impose new regulatory mandates on 

remodelers, home builders, and contractors. 

Page 3 
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Legislation to restore the "opt-out" provision: 

Recently, Members of the House of Representatives introduced a bi-partisan bill that would help 

make EPA's LRRP rules work better to protect young children and pregnant women and to add 

the flexibility needed for remodelers to best serve our customers. H.R. 591 J restores the "opt 

out" provision in a way that relies on EPA to determine what projects would reduce cost without 

sacrificing safety. NARI supports that legislation and hopes this Committee will take a close 

look at it and of Tel' its support. 

EPA '8 proposal to extend LRRP requirements to cover work on the exterior of public and 

commercial buildings: 

It seems like EPA's desire to pile onto its 2008 final rule continues. EPA is considering 

extending LRRP requirements to cover work on the exterior of public and commercial buildings. 

To EPA's credit, they reached out to small businesses last year to try and flush out how their 

thinking would impact us. NARI was glad that Kevin Nau, who runs a design build company in 

Maryland, was able to consult with EPA when the agency was considering convening a Small 

Business Advocacy Review Panel under SBREFA. 

NARl's concerns with EPA moving forward with a public and commercial building rule are 

three-fold. First, we are concerned that EPA may proceed without convening a SBREFA Small 

Business Advocacy Review Panel. We do not want the same thing to happen when EPA 

proposed its 2010 additions to LRRP, that a rule move forward without a SBREFA panel. It 

seems as though EPA's attention to court-ordered deadlines can take a higher priority than 

considering small business input in ruJes. I would ask this Committee to try and change that. 

Research from the U.S. Small Business Administration's Office of Advocacy shows that we are 

disproportionately harmed by federal regulations. When it comes to EPA rules, the Office of 

Advocacy research shows finns like mine shou Ider more than 3 times the cost of large 

businesses, when it comes to federal regulatory compliance. The SBREFA panel process is 

intended to level the playing field. N ARl supported legislation this Committee approved last 

year (H.R. 527). I hope that that legislation, and oversight by this and other committees in 

Congress, impress upon EPA that small business input may be more important than meeting a 

court dead line. 

Second, NARI is concerned that EPA may move forward with a public and commercial LRRP 

rule without clear evidence and data showing lead poisoning risks to children under 6 and 

pregnant women from construction activities at public and commerciaJ bUildings. If EPA cannot 

present a clear connection between the activity and the risk to children and pregnant women, 

then our customers certainly will not understand why their projects will become more expensive. 

Page 4 
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./",. 

NARI® 

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Third, when EPA moves forward with the rule, NARI would advise that the agency make the 

rules flexible enough to cover different scenarios. This is what NARI member, Kevin Nau, 

advised the EPA during meetings last year. 

NARI's working relationship with EPA: 

NARl prides itself in relationship with EPA. We honestly believe that our goals, to protect our 

customers' families, are the same as EPA's. With that in mind, we meet regularly with EPA 

officials to make sure they know how their policies impact remodelers. 

During our meetings with EPA, we express our frustration over the low number of contracting 

firms that are EPA-certified (an LRRP requirement for working on homes built before 1978). 

Last month, EPA announced that 122,476 firms in the construction and remodeling sector are 

EPA Lead-Safe Certified Firms. According to the Joint Center for Housing Studies at Harvard 

University, there are 652,206 remodeling businesses in the United States. Not all of the EPAcertified firms are remodelers (they may be painters, window installers, plumbers, flooring 

installers, etc.). Even if all the EPA-certified firms are remodelers, that would mean EPA has 

certified less than 20% of the remodeling finns nation-wide. 

NARI believes there are several reasons why so many firms are not certified. Many noncertified firms are able to under-bid those professionals who have spent the time and money to 

become EPA-ccrtified. Since cost is driving our customers' decisions to go ahead with projects, 

those non-certified contractors are getting more jobs. That is a troubling scenario because of the 

risk that presents to homes occupied by young children or pregnant women. We believe that 

better targeted enforcement activities will help to reverse this trend. We have advised EPA to 

focus its LRRP enforcement on situations where non EPA-certified contractors are doing work in 

violation ofLRRP rules. In the 2-years since EPA has been enforcing LRRP, there are fewer 

than 10 cases filed by federal enforcement authorities against non-certified contractors for work 

practice violations. 

Additionally, home owner awareness ofLRRP has to increase. Last year, NARI worked with 

Meredith Corporation's Better Homes and Gardens' homeowner research panel to gauge 

awareness of EPA's LRRP rules. Unfortunately, 53% of the respondents were unaware of the 

rules. 

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Conclusion: 

NARI® /' 

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NARI is pleased with the opportunity to advise this Committee about how EPA interacts with 

small businesses when the agency develops regulations. The SBREF A process was designed to 

codifY what simply makes sense; for small businesses to work with EPA to corne up with 

constructive solutions for complex problems. It seems as though the process works when EPA 

listens to the input from the Office of Advocacy and from small businesses. It does not seem to 

work when EPA rushes the process or avoids it altogether. 

We will continue to work with EPA. We will try and increase our customers' knowledge of 

LRRP rules and we will continue to work with remodelers to increase EPA-certification. Our 

dialogue with EPA is important because NARI should be EPA's partners in our efforts to protect 

children and pregnant women from lead-based dangers caused by remodeling activities. 

Thank you for your attention to these important issues. 

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Congressman Mick Mulvaney 

Questions for the Record 

Committee on Small Business Committee Hearing entitled 

"Regulatory Flexibility Act Compliance: Is EPA Failing Small Businesses?" 

For Mr. David Merrick, President of Merrick Design and Build, Inc., testifying on behalf of the 

National Association of the Remodeling Industry: 

Q: In your written testimony, you provide a number of criticisms of EPA regulation. Do you 

believe there should be no EPA regulation no matter what, or are there some types or kinds of 

regulations that you believe are satisfactory? 

Q: I understand that in late June, the Federal Circuit Court of Appeals for the D.C. Circuit ruled 

in favor of the EPA, denying homebuilders and others the ability to challenge the EPA's lead 

paint rules. In that ruling, the judge said that EPA's small business process was not judicially 

reviewable. Yet, in your testimony, you take issue with EPA's small business process. Despite 

the court's ruling, how do you think the EPA should conduct the small business process? 

Q: The National Association of the Remodeling Industry (NARI) has several certifications and its 

members, like you, pride themselves as going beyond compliance to perform the best service 

for your customers. You probably go beyond what EPA requires as well. If you are already 

following best practices and going beyond what the EPA requires, do you in fact run in to 

problems with the EPA's RRP rules? 

Q: In your testimony, you commented that EPA is not enforcing enough against non-certified 

contractors. Can you please elaborate on why NARI wants EPA to do a better job enforcing its 

rules? Would additional enforcement require additional EPA funding to follow your advice? 

Q: Lead dust can be dangerous to everyone, especially those who work on site. Would 

restoring an opt-out put your workers at risk? 

Q: Are there any other dangers you foresee in restoring the opt-out, such as lead dust dangers 

to children or pregnant women, or cost-cutting by remodelers using the opt-out 

inappropriately? 
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Congressman Mick Mulvaney 

Questions for the Record 

Committee on Small Business Committee Hearing entitled 

"Regulatory Flexibility Act Compliance: Is EPA Failing Small Businesses?" 

For Mr. Frank Knapp, President and CEO of the South Carolina Small Business Chamber of 

Commerce, and testifying on behalf of the American Sustainable Business Council: 

Q: You state in your written testimony that "the South Carolina Small Business Chamber is a 

statewide advocacy organization of 5000 plus members that promotes a more small-business 

friendly state and federal government." To that point: 

1) How many of these members are also members of the South Carolina Association 

for Justice? 

2) How many of these members are also members of the Injured Workers Advocates 

and/or the worker's compensation bar? 

Q; In arriving at your count of 5,000 members, if an individual is a member of both the South 

Carolina Association for Justice and the Injured Worker's Advocates (worker's compensation 

bar), do you count that individual as one member or as two? 

Q: How many of your 5,000 members are dues paying members verses persons who provided 

an email address to receive your newsletter? 

Q: You mentioned in your testimony before the Committee that you did not poll your 

membership to determine their views on the EPA and what policies your organization should 

advocate for with respect to the EPA. You also stated that the data you site and rely in your 

written testimony to establish your policy positions is collected from polls conducted by 

organizations such as the American Sustainable Business Council, the Small Business Majority, 

and the Main Street Alliance. Please provide copies of these polls. 

Q: Have you ever polled your own organization's membership before establishing any policy 

position of the South Carolina Small Business Chamber of Commerce? If so, please provide the 

issues on which your membership was polled, the date of the poll, the results of the poll, and 

the policy position your organization took with respect to the polled issue. 
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Congressman Mick Mulvaney 

Questions for the Record 

Committee on Small Business Committee Hearing entitled 

"Regulatory Flexibility Act Compliance: Is EPA Failing Small Businesses?" 

For Mr. Frank Knapp, President and CEO of the South Carolina Small Business Chamber of 

Commerce, and testifying on behalf of the American Sustainable Business Council: 

Q: You state in your written testimony that "the South Carolina Small Business Chamber is a 

statewide advocacy organization of 5000 plus members that promotes a more small-business 

friendly state and federal government." To that point: 

1) How many of these members are also members of the South Carolina Association for 

Justice? As I stated at the Committee hearing, I estimate that the SC Association for Justice 

has approximately 1500 lawfirms as members. 

2) How many of these members are also members of the Injured Workers Advocates and/or the 

worker's compensation bar? Also as I stated at the Committee hearing, most of the members of the 

Injured Workers Advocates are also members of the SC Association of Justice so there is overlap. 

Q: In arriving at your count of 5,000 members, if an individual is a member of both the South 

Carolina Association for Justice and the Injured Worker's Advocates (worker's compensation bar), 

do you count that individual as one member or as two? One 

Q: How many of your 5,000 members are dues paying members verses persons who provided an 

email address to receive your newsletter? This would be proprietary information. 

Q: You mentioned in your testimony before the Committee that you did not poll your membership 

to determine their views on the EPA and what policies your organization should advocate for with 

respect to the EPA. You also stated that the data you site and rely in your written testimony to 

establish your policy positions is collected from polls conducted by organizations such as the 

American Sustainable Business Council, the Small Business Majority, and the Main Street Alliance. 

Please provide copies of these polls. The poll cited at the Committee hearing can be found at 

http://asbcouncil.org/sites/default/files/files/Regulations Poll Report FINAl.pdf 

Q: Have you ever polled your own organization's membership before establishing any policy 

position of the South Carolina Small Business Chamber of Commerce? If so, please provide the 

issues on which your membership was polled, the date of the poll, the results of the poll, and the 

policy position your organization took with respect to the polled issue. Like members of Congress 

on almost every issue on which they vote, the SCSBCC does not poll its members to formulate 

positions on issues. Instead we have a Board of Directors consisting of small business owners 

representative of our membership. This Board of Directors establishes the SCSBCC policy on issues. 
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David Merrick, MCR, UDCP 

President of Merrick Design and Build, Inc. 

Kensington, MD 

On Behalf of the National Association of the Remodeling Industry (NARI) 

Response to Questions for the Record 

Congressman Mick Mulvaney 

Committee on Small Business 

Hearing entitled: "Regulatory Flexibility Act Compliance: Is EPA Failing Small 

Businesses? 

Q: In your written testimony, you provide a number of criticisms of EPA regulation. Do 

you believe there should be no EPA regulation no matter what, or are there some types 

of regulations that you believe are satisfactory? 

A: The remodeling business is a service business and NARl's customers are 

homeowners. NARI is supportive of measures that are protective of our customers 

and enhance our members' ability to grow their businesses. NARI offers six 

certifications, from Certified Remodeler (CR), Certified Kitchen and Bath Remodeler 

(CKBR), and Certified Lead Carpenter (CLC), to Certified Remodeling Project 

Manager (CRPM), Green Certified Professional (GCP), and Universal Design Certified 

Professional (UDCP). Additionally we provide our members with both online and in 

person training. NARI's certifications and training help remodelers perform quality 

work while guaranteeing safety for their employees and comfort for their 

customers' families. NARl's certifications are not intended to replace local, state, 

and federal regulatory requirements. We believe that NARI's standards compliment 

the intention of regulators. For that reason, NARI is supportive of regulatory efforts 

to prevent lead poisoning. and to promote energy efficiency, worker safety, and 

environmental protection. 

While NARI is supportive of regulatory intentions, we respectfully want regulators 

to choose options that minimize red tape so that remodelers can provide costeffective services for homeowners. NARI believes that federal regulators should 

follow recommendations from the U.S. Small Business Administration's Office of 

Advocacy and strike the correct balance between regulatory constraints and free 

enterprise. 

Q: I understand that in late June, the Federal Circuit Court of Appeals for the D.C. 

Circuit ruled in favor of the EPA, denying homebuilders and others the ability to 

challenge the EPA's lead paint rules. In that ruling, the judge said that EPA's small 

business process was not judicially reviewable. Yet, in your testimony,you take issue 

with EPA's small business process. Despite the court's ruling, how do you think the EPA 

should conduct the small business process? 

A: NARI believes that regulatory agencies benefit from pre-proposal input from 

small businesses. The Regulatory Flexibility Act was amended in 1996 by the Small 

1 
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Business Regulatory Enforcement Fairness Act (SBREFA). That amendment set out 

a process to allow small business stakeholders to constructively guide the U.S. 

Environmental Protection Agency (EPA) toward regulatory solutions that can 

maximize environmental safeguards while minimizing regulatory burden. We 

believe that EPA makes better decisions when it fully considers the views of small 

businesses and tailors its regulatory proposals based on those views. It would be 

unfortunate if EPA chooses to ignore constructive advice from NARI and other small 

business groups based on a legal interpretation. 

NARI is hopeful that EPA will look to our membership for advice when the agency is 

looking at ways to protect the public from lead paint dangers caused by 

construction. NARI shares EPA's goal in wanting to protect homeowners and their 

families. When EPA solicits input from NARI, our on-the-ground expertise will help 

the agency craft regulations that work. 

Q: The National Association of the Remodeling Industry (NARJ) has several 

certifications and its members, like you, pride themselves as going beyond compliance 

to perform the best service for your customers. You probably go beyond what EPA 

requires as well. If you are already following best practices and going beyond what 

the EPA requires, do you in fact run in to problems with EPAs RRP rules? 

A: Luckily, I have not been subjected to an EPA enforcement action. And, if my goal 

to protect my customers were all that mattered, I would have nothing to worry 

about. However, the paperwork requirements worry me and other remodelers 

because there is always a chance we do not file something correctly. For that 

reason, I would like EPA to move towards performance standards, where I can focus 

my attention on protecting my customers' families. That approach would alleviate 

the headaches I have worrying about whether a "renovate right" brochure is stapled 

to the correct job file folder and whether my records are arranged properly. 

Q: In your testimony,you commented that EPA is not enforcing enough against noncertified contractors. Can you please elaborate on why NARI wants EPA to do a better 

job enforcing its rules? Would additional enforcement require additional EPA funding 

to follow your advice? 

A: Currently, law-abiding remodelers are at a competitive disadvantage. We are 

spending time and money to make sure we are compliant with EPA's RRP rules. 

Some of the costs associated with EPA requirements make our jobs more expensive. 

Unfortunately, in this economy, many homeowners choose lower-priced contractors 

who are not EPA-certified. EPA's failure to enforce against non-certified contractors 

has bolstered that underground economy. NARI does not believe cracking down on 

non-certified contractors is a matter of EPA prioritizing its efforts and, therefore, 

such an effort would not require additional EPA funding. 

2 
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Q: Lead dust can be dangerous to everyone, especially those who work on site. Would 

restoring an opt-out put your workers at risk? 

A: NARI agrees that lead dust can be dangerous for workers. NARI conducts 

preparation programs for its certifications. These programs all include safety topics 

such as the EPA's and OSHA's requirements for dealing with lead issues. Restoring 

an opt-out to EPA's rules, that would allow for homeowners to choose a less costly 

remodeling alternative when no children or pregnant women are at risk, would not 

change a remodeler's obligation to follow OSHA's Lead in Construction regulations. 

Adherence to OSHA's Lead in Construction rules protects a remodeler's employees 

when they are doing work on homes built before 1978. 

Q: Are there any other dangers you foresee in restoring the opt-out, such as lead dust 

dangers to children or pregnant women, or cost-cutting by remodelers using the optout inappropriately? 

A: The biggest danger to homeowners and their families is a lack of knowledge and 

appreciation for the dangers of lead paint. That lack of understanding exists now. In 

June 2011, NARI conducted a survey of 930 homeowners, on their understanding of 

LRRP. Fifty-three percent of those surveyed were unaware of this rule. Fifty-nine 

percent indicated they would do the work themselves to save money, and 51 % 

specified they wished for the alternative to opt-out of the rule. Twenty-nine percent 

replied that they would likely hire a non-EPA certified contractor to do the work in 

order to save money on a home improvement. The lack of awareness has serious 

consequences. For instance, many do-it-yourselfers pose a serious risk to 

themselves and their families because they do not know about the dangers of lead 

dust. Educating the public on hazards from lead that may be caused by construction 

activities is a challenge that NARI wants to take on with EPA's help. Restoring the 

opt-out will not affect the importance of educating the public on lead poisoning. 

3 
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SQUIRE() 

SANDERS 

Submitted via www.regulations.goy 

EPA Docket Center 

Environmental Protection Agency 

Mailcode 2822T, 

1200 Pennsylvania Ave., NW 

Washington, DC 20460 

February 21, 2012 

SquIre Sandals (US) UP 

4900 Key Tower 

1'Zl PublIc Square 

Cleveland, Ohio 44114 

0+12164798500 

F +12164798780 

squiresanders.com 

DougIasA fIIIdMIiams 

T +1 216479 8332 

douglas.~com 

RE: Docket 10 No. EPA-HQ-OAR-2002-OOS8, National Emission Standards for Hazardous 

Air Pollutants for Major Sources: Industrial, Commercial, and Institutional Boilers and 

Process Heaters (76 Federal Register 80598, December 23, 2011) 

This comment is submitted on behalf of American Municipal Power, Inc. ("AMP"). AMP is a 

nonprofit corporation serving a membership composed of 129 public power members in seven states, 

These comments are submitted on behalf of AMP's generating members who operate fossil fuel utility 

boilers in the Ohio cities of Orrville, Painesviile, Shelby, Dover, and Hamilton. Each of these cities 

operates one or more municipal utility boilers serving electric generators of 25 megawatts or less, which 

have been included in the Industrial, Commercial, and Institutional Boiler and Process Heater MACT 

("Boiler MACT") Source Category. 

AMP submitted extensive comments on the Boiler MACT rule proposed June 4, 2010,' and 

submitted a Petition for ReconSideration of the final rule published March 21, 2011.2 AMP incorporates 

those comments and petition (including all attachments) by reference here, and requests that EPA 

include in the administrative record for this rule making all documents submitted to EPA Docket No. EPAHQ-OAR-2002·0058 at any time. 

EXECUTIVE SUMMARY 

AMP supports EPA's decision to fe-propose the National EmiSSion Standards for Hazardous Air 

Pollutants for Major Sources: Industrial, CommerCial, and Institutional Boilers and Process Heaters 

("Boiler MACT") in response to the numerous public comments and petitions for reconsideration 

submitted to EPA. The rule as proposed at 76 Fed. Reg. 80598 (Dec. 23, 2011) {"Proposed Rule"}, 

however, fails to correct the most fundamental fla,?s articulated in public comments and petitions. The 

175 Fed. Reg. 32005 (June 4, 2010), 

'76 Fed. Reg. I 5608 (March 21, 2011) (hereinafter "March 2011 rule"). 

36Of11::esin17Countries 

SqUre_(US)Ll.Pispartorlhe_legalpmdl:eSqUre_wt>::Il~~!hrough.runberorsepamielegal_ 
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SQUIREC' 

SANDERS 

rule remains unduly burdensome and unsupportable, particularly for small, coal-fired municipal utilities. 

Small municipal utilities have faced disproportionate impacts under each iteration of this rule, and will 

continue to face disproportionate impacts under the Proposed Rule. Municipal utilities play an 

important role that is not filled by any other entity. Municipal utilities provide rellable and cost 

competitive electric service to small communities, increase electric grid reliability, attract high-quality 

jobs to local communities, and act as a buffer to price spikes and supply shortages during times of peak 

usage. These are important functions that the Proposed Rule threatens to regulate out of existence. 

EPA has the regulatory authority to avoid that adverse result. By adopting the changes recommended 

below, EPA can fulfill its duties under the Clean Air Act without disrupting the vital public services that 

small municipal utilities provide. 

EPA appropriately nequested comment on the impact of the reconsidered rule on small entities. 

76 Fed. Reg. 80625. As discussed in greater detail below, the emission limits for the coal-fired 

subcategories have become significantly more stringent on reconsideration, which increases the 

disproportionate burden on small entities in these subcategories, including AMP's generating members. 

Therefore. it is appropriate as part of the reconsidered rule for EPA to revisit the recommendations to 

mitigate the burden on small entities that came out of EPA's Regulatory Flexibility Act process for small 

businesses and other small entities. The Small Business Advocacy Review Panel, which EPA convened to 

identify ways EPA could reduce the impact of the Boiler MACT rule on small entities, identified the 

health-based emission limit ("HBEl") as the most important step EPA could take to reduce the crushing 

cost burden on small entities like municipal utilities. The Panel's recommendation Is even more apt on 

reconsideration; the most important change EPA can adopt to reduce the rule's adverse Impact on 

municipal utilities Is to allow small entities the opportunity to petition for a Site-speCific HBEt for HC!. 

Without this relief, scrubber technologies for HCI impose significant costs on small entitieS that cannot 

be justified based on environmental benefits. An HBEl would allow those small utilities whose emissions 

do not pose a threat to human health or the environment to avoid millions of dollars in unnecessary 

compliance costs and allow them to remain viable and cost competitive electricity providers in their 

communities. EPA has the opportunity to mitigate the stranglehold this rule will place on small entities, 

many of whom are being heralded as the engines of job growth in this economy. Given our economic 

circumstance, and the disproportionate impact of this rule on small entities, it would be arbitrary and 

capricious for EPA to set aside one of the key tools Congress provides to EPA In the Clean Air Act for 

mitigating unnecessary costs. At minimum, EPA should provide this alternative to small entities when 

they can demonstrate their HCI impact falls below a health-based threshold. 

EPA has unquestionable authority to adopt HBELs under section 112(d)(4) for pollutants "for 

which a health threshold has been established." A health threshold has been established for HCI below 

which concentrations have no measurable adverse health effects. In 2004, EPA concluded that 

technology-based limits for these pollutants were unnecessary, in certain circumstances, to assure the 

"ample margin of safety" required by section 112(d)(4). EPA has changed course with no adequate 

explanation as to why the thorough ana lysis it completed in 2004 - and defended rigorously thereafteris no longer sufficient. EPA should exercise its authority to provide critical nelief for small entities. 

consistent with the recommendations of the Small Business Advocacy Panel. in the form of a sitespecific health based option for the HCI emission limit. 
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EPA should also provide the maximum time allowed by law for facilities to come into compliance 

with the final Boiler MACT rule. AMP supports EPA's decision to reset the 3-year compliance date with 

the publication of the reconsidered rule. EPA should also use its authority under section 112(i) to 

provide a categoricall-year compliance extension for all units installing additional controls to meet the 

rule requirements. Municipal utilities face additional challenges in implementing necessary changes 

within a three-year window due to the special political process that municipal utilities must follow. 

Many municipalities face multiple layers of approvals, public notice requirements, and complicated 

bidding processes that are not shared by those in the private sector. For municipal utilities, it is 

imperative that EPA grant as much time as possible for sources to come into compliance. 

AMP supports EPA's decision to require work practice standards during periods of startup and 

shutdown. However, AMP does not support the additional work practices (and their aSSOCiated 

recordkeeping and reporting obligations) EPA added to the Proposed Rule. The additional work practice 

standards EPA is requiring will place a significant burden on small utilities, who have limited personnel 

available to track the training, oxygen measurements, and other data EPA is requesting for startup and 

shutdown events. Boiler operators are already employing best practices for reducing emissions during 

periods of startup and shutdown, both to comply with EPA's requirement to operate equipment 

consistent with good pollution control practices and for business reasons. EPA's extra requirements 

merely serve to increase paperwork and the likelihood of inadvertent technical deviations without 

providing any environmental benefit. 

AMP also supports EPA's acknowledgment that units should have a bright line to determine 

when units are subject to a numeric emission limit and when they are subject to a work practice 

standard. However, AMP does not support a blanket definition of startup and shutdown for all units 

using a 25 percent load threshold. Each boiler has a different point at which operation becomes 

Hstable" and is no longer Ustarting up" or "shutting down." For coal-fired stoker units, this is generally 

around 60 percent load. For pulverizers, it is around 50 percent, though these values can differ from 

unit to unit. Boiier operators must be able to make adjustments during these startup and shutdown 

periods to maintain safe operation of the boiler and to avoid damaging equipment. The startup and 

shutdown of any unit will be dependent on a variety of factors, and cannot be defined in terms of either 

load or timing for all types of units across the board. Facilities must be able to establish unit-specific 

startup and shutdown definitions to ensure safe operation of their boilers. 

AMP supports EPA's decision to not require specific startup fuel for any units or subcategory. 

Not all fuels are available in all locations, and most sources are only permitted to burn specific fuel 

types. EPA has not performed a cost/benefit analysis to evaluate the economic and environmental costs 

of installing new natural gas pipelines to get the gas to units in remote locations or the cost of 

retrofitting existing units to accommodate a new fuel for startup purposes. EPA appropriately defers to 

local decisions on how to safely and efficiently start a boiler. AMP continues to support EPA's 

determination to regulate without dictating fuel choices and EPA's decision to not require speCific 

startup fuels for units in this source category. 

AMP also supports EPA's decision to require work practice standards in lieu of numeric emission 

limits for dioxin/furan. As noted by AMP and many other commenters, the dioxin/furan levels from the 
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SQUIRE" 

SANDERS 

units in the Boiler MACT source category are too low to be reliably measured or controlled. EPA has 

ample authority under section 112(h) to require a tune-up work practice standard in lieu of a numeric 

emission limit to facilitate efficient combustion to minimize organic HAP in these circumstances. 

EPA should also impose a work practice standard in lieu of a numeric CO limit, as it did in the 

Utility MACT rule.' Unlike most other sources subject to the Boiler MACT rule, AMP's generating 

members compete with larger utilities subject to Utility MACT. In the Utility MACT rulemaking, EPA 

determined that work practices were appropriate to control organic HAP, because organic HAP were too 

low to reliably measure, even in these larger utility boilers. EPA can also justify CO work practices for the 

small utilities subject to Boiler MACT. They also have organic HAP too low to reliably measure and they 

are small entities in need of relief. EPA also discovered that, due to these low levels of organic HAP, it 

was not possible to establish a CO limit that would act as a supportable surrogate for utilities. EPA did 

not perform this detailed analysis for sources subject to the Boiler MACT rulemaking, but the organic 

HAP results submitted to EPA for small utilities and other small entities in this source category indicate a 

significant amount of data that is below the level of reliable measurement. EPA cannot assume that CO 

is an appropriate surrogate for the small utilities in this source category given this information. Because 

CO cannot be used as a surrogate for small utilities, and because organic HAP levels are likely too low to 

measure reliably for these entities, it is appropriate to establish a work practice standard for CO in the 

final rule instead of a numeric emission limit for the small utilities subject to Boiler MACT. 

EPA set emission limits that are unachievable for any existing source by improperly calculating 

MACT floors. By selecting the top performing 12 percent of sources for each pollutant to establish 

MACT standards, rather than the top performing 12 percent of sources across all pollutants, EPA has 

flouted its statutory obligation to set standards based on the performance of "sources." See CM § 

112(d}. Furthermore, these standards were based on inadequate and biased data. In the case of CO 

limits for pulverized coal units, EPA established emission standards for hundreds of sources based on 

test results of only two units and then failed to adequately incorporate variability into the emission 

limits. EPA also tied its own hands by collecting limited stack test data from a subset of high-performing 

sources and failed to use available "emissions information" to estimate emissions from sources lacking 

test data. This resulted in EPA considering snap shots of emissions information from only a small subset 

of the best-performing units and led to unreasonably stringent MACT standards that do not represent 

the top 12 percent of all sources "for which the Administrator has emissions information." EPA must recalculate MACT floors in a manner consistent with the requirements of section 112 of the Act. 

AMP supports EPA's inclusion of a limited use boiler subcategory. limited use boilers spend a 

significant portion of their operating time in start-up and shut-down mode, and operating times are 

often unpredictable. This makes it impossible to schedule and test these units at or near full load. 

Furthermore, these units generally would not collect sufficient data to establish 30-day averages for 

operating limits. To demonstrate compliance with the emission limits and operating limits, these sources 

would be required to operate more often than they would otherwise, resulting in increased emissions. 

Defining a limited use subcategory that restricts operation of these boilers to 10 percent of their annual 

rated capacity, instead of 10 percent of annual operating hours, would ensure that sources could 

'77 Fed. Reg. 9304. 9369 (Feb. 16,2012). 
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continue to use these backup units in a limited way with limited emissions without the complications of 

defining an operating hour for units with extended periods of startup or shutdown or inadvertently 

creating incentives for unsafe or inefficient operation. 

AMP does not support EPA's use of operating limits as a means of demonstrating continuous 

compliance with the emission limits. By requiring sources to operate at the minimum (or maximum, as 

applicable) value established during a performance test, EPA is imposing a more stringent emission limit 

on the source every time a source tests below its allowable emission level. This serves as an 

impermissible beyond-the-floor emission limit that EPA adopted without considering costs or other 

criteria required by statute. Operating parameters may be appropriate triggers for corrective measures 

to ensure a control device is properly operating. To that end, AMP supports EPA's proposed removal of 

the CO CEM requirement and use of an 02 trim system in its place. Most facilities already operate trim 

systems to help monitor combustion, and are familiar with their operation. Furthermore, their location 

at the source of combustion is a more accurate measure of combustion efficiency than a downstream 

monitor in the stack. 

AMP supports a 30-day averaging period for all operating parameters. Municipal utility boilers 

may experience a variety of load conditions and other variables that may affect performance, and 

proViding a 30-day averaging period will give these units necessary flexibility to demonstrate 

compliance. AMP further requests EPA to clarify that the 30-day rolling average also applies to 

operating load and oxygen limits. These parameters currently do not have a defined averaging period, 

and this clarification is necessary to avoid confusion in the regulated community. 

EPA should also clarify that the emission limits, work practice standards, and operating limits 

apply Oat all times the affected unit is operating" and not Hat all times." The current language of the 

Proposed Rule creates an ambiguity that could be interpreted to require sources to meet control device 

operating limits and demonstrate compliance when the emiSSion unit is not operating and is not 

generating emissions. This would create an unreasonable and unnecessary burden for small 

municipalities that struggle to keep on top of already onerous record keeping and monitoring 

requirements. EPA should take this opportunity to clarify the rule and avoid this absurd result. 

EPA should also clarify that sources do not automatically reset operating limits during each stack 

test. If the purpose behind operating limits is to establish a benchmark operating rate that is indicative 

of compliance, sources should be able to demonstrate compliance with any operating limit that was 

established during a compliant stack test. EPA should clarify that sources have the option of resetting 

operating parameters with subsequent stack tests, but are not required to do so. 

AMP appreciates EPA's willingness to abandon its unsupportable PM CEM requirement for coalfired units greater than 250 mmBtu/hr, but does not support EPA's proposal to require PM CPMS for 

these units instead. like the PM CEMS, PM CPMS are unproven technology and redundant in light of the 

Compliance Assurance Monitoring and opacity monitors already in use by all of AMP's generating 

members. Requiring a PM CPMS adds no environmental benefit but it does add significant cost. EPA 

has offered no explanation for requiring additional monitoring on a subset of units (>2S0 mmBtu/hr), 
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while relying on other parametric monitoring (such as continuous opacity monitors already installed) for 

other units. This requirement is arbitrary and unreasonable and should be removed from the final rule. 

AMP appreciates the multitude of flexible compliance alternatives EPA has incorporated into the 

proposed rule, including the TSM alternative, the CEM and fuel analysis options, and the output-based 

limits. AMP also appreciates the flexibility of the emissions averaging provisions, but requests that EPA 

make adjustments to the Proposed Rule to make it more usable for municipal utilities. First, the 10 

percent penalty provision should be removed. EPA did not include such a penalty in the 2004 rule, and 

offers no explanation for including it in this rule. The rule as written contains adequate safeguards to 

ensure emission limits are met. Second, EPA should remove the restriction on units equipped with a 

CEM or PM CPMS. Units that demonstrate compliance using stack tests are capable of developing 30-

day averages based on their stack tests and utilization records to create an apples-to-apples comparison 

to units utilizing a CEM. Excluding units operating CEMs and PM CPMS creates a disincentive to use 

these flexible compliance options and it excludes many small entities from this regulatory relief, 

because, like AMP's small entities, they operate one or more units with continuous monitoring. EPA 

has articulated no justification for either the 10 percent penalty or the exclusion of CEM/PM CPMS units, 

and should remove these restrictions from the final rule. 

AMP appreciates EPA's efforts to mitigate the impact of this rule in certain instances, but more 

is needed to focus this relief on the small entities disproportionately affected by this rule. AMP also has 

serious concerns about the achievability and legality of the emission limits and compliance methods 

contained in the Proposed Rule. On behalf of its generating members, AMP respectfully requests that 

EPA adopt the changes recommended herein in the final Boiler MACT rule. 

I. EPA Should Adopt a Health-Based Emission limit for Hel 

EPA has long recognized its authority to adopt health-based emission limits ("HBEls") pursuant 

to CM § 112(d)(4). Section 112(d)(4) authorizes EPA to consider, U[wlith respect to pollutants for which 

a health threshold has been established ... such threshold level, with an ample margin of safety, when 

establishing emission standards under [H2(d)J." Congress's intent in including section 112(d)(4) was to 

avoid setting HAP emission limits that go well beyond what is needed to protect the public. In 

formulating this section of the CAA, Congress recognized that "!flor some pollutants a MACT emissions 

limitation may be far more stringent than is necessary to protect public health and the environment."" 

As a result, Congress included section 112(d)(4) as an alternative standard setting mechanism for HAPs 

"where health thresholds are well-established ... and the pollutant presents no risk of other adverse 

health effects, including cancer .... '" 

In the 2004 Boiler MACT rule, EPA determined that the MACT floor limits established for HC) 

were in some cases more stringent than necessary to protect public health, and established an HBEl as a 

compliance alternative for solid fuel-fired boilers. The HCI limits EPA found more stringent than 

necessary were 0.02 Ib/mmBtu and 0.07 Ib/mmBtu for new and existing units, respectively.6 Since that 

4 S. REP. No. 101-228 (1990) at 171. ; ld 

669 Fed. Reg. at 55270. 
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time, EPA has continued to impose even more stringent HCI limits on solid fuel-fired boilers. In the 

March 2011 Rule, EPA imposed an HCI limit of 0.035 Ib/mmBtu on existing units. Despite 

recommendations and numerous comments from the regulated community (including the Small 

Business Advisory Review Panel), EPA declined to include an HBEt in that rule. In the Proposed Rule, 

EPA has proposed an HCI limit that is more than 30% more stringent than the March 2011 rule and 

almost 70% more stringent than the 2004 rule for solid fuel-fired units. These significantly more 

stringent limits only bolster support for EPA's initial 2004 determination and the recommendations of 

the Small Business Advisory Review Panel ("SBA Review Panel"). EPA has articulated no explanation for 

abandoning its 2004 approach or ignoring the advice of the SBA Panel. A final rule that does not include 

an HBEt option would be unsupportable. 

a. It Would Be Arbitrary for EPA to Ignore the Advice of the Small Business Advocacy 

Panel Given the Increased Stringency of the Hel Umits 

The Regulatory Flexibility Act ("RFA") requires EPA to analyze the impacts of its rules on small 

entities (including small government entities) for rules that will have a Significant impact on a substantial 

number of small entities.7 To assist with this analysis, EPA convened the SBA Review Panel to 

recommend ways the Agency could alleviate the rule's impacts on small businesses and governments. 

The Small Business Advocacy Review Panel identified HBEts as "the most important step EPA could take 

to mitigate the serious financial harm the Boiler MACT would otherWise inflict on small entities using 

solid fuels nationwide .... "s All of AMP's generating members now anticipate needing controls to 

comply with the proposed HCllimits. Even the best-performing AMP member must now concede that 

fuel management may not be a sufficient strategy to meet an emission limit of 0.022 Ib/mmBtu. Given 

the increased stringency of the HCllimit in the Proposed Rule, it is likely that many more entities would 

be forced to Install controls than under the March 2011 rule. 

EPA estimated a median compliance cost for small public entities of $1.1 million, with cost·torevenue ratios greater than 10 percent." EPA has estimated no change in costs for these entities, despite 

proposing more stringent emiSSion limits on coal-fired units for nearly every pollutant. Furthermore, 

AMP provided EPA with additional cost information in the 2010 AMP Comments that demonstrated 

many entities will experience significantly higher annual costs. The City of Orrville and the City of 

Painesville have independently evaluated the cost of controlling HCI emissions at their coal-fired electric 

utilities and determined that the capital cost for a single unit would reach $5-16 million, with annual 

operating costs between $900,000 and $1.2 million. The City of Painesville operates three boilers, and 

the City of Orrville operates four. These facilities would incur $3-4 million in operating costs each year 

tor Hel control alone.'" Many small entities will be unable to absorb these unnecessary costs and be 

forced to severely curtail or Shutdown operations entirely. This would Significantly hinder municipal 

75 U.S.C. § 603. 

• SBA REVIEW P !\NEL, FINAL REPORT at 23 (emphasis added). 

• Memorandum from Tom Walton to Brian Shrager, re: Regulatory Impact Results for the Reconsideration Proposal 

for National Emission Standards for Hazardous Air Pollutants for Industrial, Commercial, and Institutional Boilers 

and Process Heaters at Major Sources (Dec. 1,20 II). 

W This represents $33,000 per customer in capital costs and an additional $3,QOO per customer for annual operating 

CQsts. 
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utilities' ability to provide reliable electrical services to their communities, grid support during high 

demand periods to avoid brownouts, and quality work opportunities for local residents. Adopting MACT 

standards that force small entities to severely curtail or eliminate operations is contrary to the intent of 

Congress, which has stated that "MACT is not intended to ... drive sources to the brink of shutdown." 

HOUSE REP. No. 101-490, Part 1 (1990) at 328. But that is precisely what will happen to small entities 

under the Proposed Rule unless changes are made. 

Adoption of an HBEL for acid gases would significantly reduce this cost burden for small entities 

by allowing them to meet emission limitations that are protective of human health and the environment 

without spending millions on unnecessary control equipment and operating costs. Under both the RFA 

and the Unfunded Mandates Reform ACT ("UMRA"), EPA is obligated to consider the costs of its rules on 

small government entities and to analyze the costs of alternative regulatory approaches. EPA has not 

done so. EPA never analyzed the significant costs that might be avoided by offering an HBEL option for 

HCI, despite the fact that the SBA Review Panel's number one recommendation was adoption of an 

HBEL 11 Instead, EPA vaguely asserted a lack of information and implementation issues that do not exist. 

In the final March 2011 rule, EPA cited the "potential environmental impacts and cumulative impacts of 

acid gases on public health."" EPA performed a thorough analysis of the HBEL alternative in 2004, and 

concluded it could establish an HBEL that was protective of human health and the environment with an 

ample margin of safety. Furthermore, the 2004 HBEL alternative required each source wishing to use 

the HBEL to perfonm a site-specific risk analysis to ensure that the public would be adequately 

protected. 

EPA further attempted to justify its exclusion of an HBft option by citing the co-benefits of 

collateral non-HAP emission reduction that would occur under the technology-based limitation. 

Specifically, EPA cited reductions in S02, non-condensable PM, and other non-HAP acid gases.13 The 

Clean Air Act does not permit EPA to consider non-HAP collateral emission reductions in setting 

standards. Section 112(d}(2) provides an express list of factors that EPA may consider in setting section 

112(d) standards. That list includes "the cost of achieving such emission reduction, and any non-air 

quality health and environmental impacts and energy requirements." (emphasis added). This list does 

not include consideration of non-HAP air quality benefits, which are likely to be minimal at best. In the 

coming years, many of these sources will be required to reduce S02 and PM emissions because of other 

regulatory requirements, such as the revised NAAQS standards. It would be unreasonable for EPA to 

base Its refusal to include an HBEL on reductions in pollutants that are already managed by other 

programs. EPA cannot support Its refusal to properly analyze the HBEL option under the RFA and UMRA 

by Citing non-existent "potential" impacts and air quality benefits that are likely to occur with or without 

the Boiler MACT rule. 

EPA has articulated no legitimate reason for ignoring the advice of the SBA Review Panel, which 

was convened for the express purposes of helping EPA to analyze the impact of the Boiler MACT rule on 

small entities. The Panel's recommendations are even more relevant now that EPA has proposed to 

1.1 EPA properly analyzed the costs savings in 2004, and determined it would save approximately $2 billion in 

unnecessary control costs. 

'2 76 Fed. Reg. at 15643. 

IJ 75 Fed. Reg. at 32032. 
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reduce the HCI limit by an additional 30 percent. EPA did not adequately consider and analyze 

regulatory options to reduce the impact of the rule on small government entities as required by the RFA 

and UMRA, and has acted arbitrarily and capriciously in rejecting the SBA Review Panel's 

recommendations using meritless arguments. 

b. It Would Be Arbitrary for EPA to Disregard Its Prior Adoption of Health-Based Emission 

limits 

When EPA first promulgated the Boiler MAO rule in 2004, it included HBELs for HCI and 

manganese. These standards required a site-specific risk assessment to demonstrate that emissions 

from the site were low enough to protect human health with an ample margin of safety. The standards 

also required actual emission testing to verify emisSion rates used in the risk assessment, and required 

sources to include relevant site parameters such as stack height and fence locations in its Title V 

operating permit." These standards required accountability, and were more than adequate to protect 

human health and the environment without forcing struggling small entities to invest millions in 

unnecessary control equipment. EPA and the Department of Justice vigorously defended these HBELs in 

the final 2004 rule and in the ensuing litigation. EPA dedicated 17 pages of its brief to explaining why its 

HBELs complied with the requirements of section 112(d)(4). In that brief, EPA acknowledged making the 

following determinations: (1) both HCI and manganese have reference concentrations and have not 

been shown to be carCinogenic, (2) the HBELs provided an ample margin of safety, (3) ffhealth-based 

standards would not reduce the HAP-related health benefits from the rule because only those facilities 

with emissions that did not pose a health risk would qualify for the alternative standards," (4) it is 

inappropriate to consider potential cumulative risks until the residual risk stage of the NESHAP process, 

and (5) "the potential collateral benefits of controls were not a proper reason to impose control costs 

under the HAPs program on facilities with HAP emissions that did not pose a public health risk.» EPA 

argued that each of these positions was reasonable, in accord with the law, and entitled to deference. 

EPA has offered no explanation for its about-face on this issue. 

Although EPA has discretion in setting HBELs, "a reasoned explanation is needed for 

disregarding facts and circumstances that underlay or were engendered by [a] prior policy." FCC v. Fox 

Television Stations, Inc., 129 S. Ct. 1800, 1810 (2009). EPA has offered no explanation for its change in 

position, or even acknowledged its prior defense of HBELs in the 2004 Boiler MACT rule. In particular, 

the two main arguments EPA relies upon for refuSing to establish an HBEL for HCI the concern over 

cumulative risks and collateral benefits - are directly contrary to the conclusions EPA reached in items 

(4) and (5) above. EPA's failure to acknowledge its prior determination and failure to explain why it has 

raised as questions issues that previously were resolved render its decision not to propose HBELs 

arbitrary and capriciOUS. 

14 See 69 Fed. Reg. at 55227-28. 
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c. Including a Health-Based Emission Limit Alternative for Small Entities Is Supported by 

the Record 

AMP and numerous other commenters provided EPA with significant legal and factual support 

for including HBELs in the final rule, and demonstrated that EPA's concerns were unfounded. EPA has 

offered no legitimate justification for ignoring this data and refusing to adopt an HBEL EPA's actions are 

even more problematic in light of the Proposed Rule, in which EPA has imposed even more stringent HCI 

limits than in the March 2011 rule. Municipalities have been hit particularly hard by the economic 

downturn, as federal and state money and local tax revenues have declined sharply since 2008. They 

face severe budget constraints that are driving difficult resource allocation choices. Congress gave EPA a 

tool to mitigate cost when relaxed limits are adequately protective, and EPA should use this tool to 

mitigate some of the burden on small entities and small governments. Given all of the data now before 

the Agency, it would be arbitrary and capricious for EPA to publish a final rule that sets HCI limits that 

are far more stringent than necessary to protect human health and the environment. 

EPA could avoid this arbitrary and capricious finding and avoid violating the RFA by crafting an 

HBEL alternative for those units operated by qualifying small entities under the RFA. EPA has ample 

authority for adopting an HBEL for HCI, and doing so here would harmonize EPA's actions with the 

findings it made - and never refuted - in the 2004 Boiler MACT rule. If EPA is unwilling to include a 

blanket HBEl for HC! in the final rule, the rule should, at minimum, include a provision allowing small 

entities to petition for an HBEL on a site-specific basis. Because the petition process would be limited to 

small entities, the number of potential petitions would be limited to a manageable number. Site-specific 

evaluations would allow for an evaluation of potential cumulative impacts from nearby sources and 

provide sources an opportunity to demonstrate that they can adequately protect human health and the 

environment without wasting millions of dollars on unnecessary controls. Preserving the possibility of a 

site-specific HBEl through a petition process will provide necessary relief to small entities without 

compromising human health or the environment and without necessitating a complete rewrite of the 

HCI standards in the final rule. 

II. EPA Should Reset the Compliance Date to Provide Existing Sources with the Maximum 

Compliance Time Allowed by Law 

EPA proposed resetting the Boiler MACT compliance date for existing sources to the date three 

years after publication of the reconsidered final rule. is AMP supports resetting the compliance date, 

and encourages EPA to use the discretion granted under CAA § 112(i)(3} to grant a categorical i-year 

extension to all sources installing control equipment to comply with the standards. The uncertainty 

generated by the complicated history of this regulation has made it impossible for sources to begin 

compliance planning prior to issuance of the final reconsidered rule. Even now, sources are uncertain of 

the final emissions limits, what controls may be necessary to achieve these limits, and whether they will 

be regulated by the Boiler MACT rule or the CISWI rule. The Boiler MACT rule will establish limits for 

multiple pollutants that require multiple controls and facilities cannot analyze the trade-offs posed by 

15 76 Fed. Reg. at 80605. 
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various control options until the final emission limits are published." Sources must also be cognizant of 

other regulations imposing emission limits for different pollutants when adopting a Boiler MACT control 

strategy. For example, a facility cannot implement a CO reduction strategy that will result in a NOx 

increase if the facility is located in a non-attainment area or is otherwise subject to stringent NOx 

emission limits. Some control options may affect pollutants subject to a National Ambient Air Quality 

Standard and changes in the concentration, temperature, velocity and height of the exhaust gas may 

adversely impact air dispersion modeling results triggering new concerns and complications, These 

complexities will require extensive and detailed planning that cannot take place until EPA finalizes the 

Boiler MACT emission standards. 

Approximately 1600 bOilers will be required to reduce emissions to comply with the expected 

final Boiler MACT rule. EPA estimates that investments in control equipment will cost more than $5 

billion. As noted in the comments submitted by Paul Noe of the American Forest and Paper Association, 

submitted on behalf of a group of industry representatives (hereinafter "AF&PA Industry Comments"), 

these costs are significantly underestimated and are more likely to exceed $14 billion, In a challenging 

economy, justifying and acquiring the necessary capital for these improvements will require lengthy 

negotiations with banks and other financial institutions, Facilities requiring control upgrades will be 

required to devote significant resources to capital planning purposes, This burden is particularly acute 

for municipal utilities that do not have personnel dedicated exclusively to environmental compliance 

planning, Municipally-owned utilities must work through their local councilor other political 

organization to initiate capital planning, solicit and approve bids, finalize compliance plans and allocate 

necessary funding, which adds significant time to an already complicated compliance planning process. 

For the City of Orrville, the entire process from initial planning to installation of control equipment is 

expected to take 4,5 years, assuming no significant adverse public reaction or delays.'7 

The 1600 sources expected to require new control equipment or retrofits will also place an 

enormous demand on state permitting and regulatory authorities, engineering design firms, stack 

testing companies, and fabricators. Sources subject Boiler MACT will not only be competing with each 

other for access to qualified engineers and equipment they will also be competing with sources subject 

to the updated NOx and S02 NMQS, the Cross-State Air Pollution Rule, the Utility MACT, and various 

Risk and Technology Review sector rules. Given these realities, it is appropriate for EPA to establish the 

latest compliance date allowed by law, 

In particular, as it has done in at least one prior MACT standard, EPA should grant a categorical 

one-year extension to the proposed 3-year compliance date. In promulgating MACT standards for 

marine tank vessel loading operations, the Agency determined that the rule "shall allow existing sources 

regulated solely under section 112 four years to be in full compliance with the emiSSion control 

I. For example, presence ol'SO, can have a significant negative impact on the Hg removal that is achieved by 

activated carbon injection, and use of catalysts for NOx and CO control can oxidize SO, in nue gas to SO,. 

However, presence of SO, in nue gas tends to improve PM collection efficiency of ESP" by lowering ash resistivity 

and also may improve dioxin capture. 

17 See Declaration of Harm, Boiler MACT Major Source Administrative Stay (Apr. 22, 2011) (included as 

Attachment A). 
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requirements promulgated under section 112."18 EPA observed that "section 112(i) of the Act 

specifically allows EPA to provide sources with a waiver of up to 1 year to achieve full compliance" and 

that a categorical extension was warranted in that case because "standards containing similar 

compliance dates for a large number of sources would result in numerous facilities competing for a 

limited number of experienced contractors in order to meet the standards at the same time."" Thus, 

EPA clearly has construed § 112(i}(3j{Bj as authorizing categorical compliance extensions. 20 

III. EPA Should Retain the Work Practice Standard Adopted in the March 21, 2011 Final Rule 

During Periods of Startup and Shutdown 

AMP supports the inclusion of work practice standards for periods of startup and shutdown, but 

sees no need (and EPA has articulated no reason) to adopt work practice standards different from those 

adopted in the March 2011 Boiler MACT rule. In that rule, EPA properly determined that it was not 

feasible to establish numeric emission limits for periods of startup and shutdown due to the limited 

duration of startup and shutdown and the increased emissions that could result from requiring 

extended operation in this mode to facilitate testing to quantify emissions. Furthermore, the stack test 

data relied upon to establish emission limits does not reflect periods of startup and shutdown. In lieu of 

numeric emission limits, EPA developed a work practice standard pursuant to CAA § 1i2(h) that 

required sources to minimize emissions during periods of startup and shutdown using the 

manufacturer's recommended procedures or the procedures of a unit of similar design." In the 

Proposed Rule, EPA proposed additional work practice standards, claiming that "!gjeneral duty 

requirements do not constitute appropriate work practice standards under section 112(h).N22 EPA 

provided no reason for this change in position. Nothing in CM § 112(hj suggests that a work practice 

standard of minimizing emissions using accepted emission reduction procedures is inadequate. 

a. Additional Work Practice Standards During Startup and Shutdown 

Are Unnecessary 

The additional work practices EPA has proposed create unnecessary recordkeeping and 

reporting burdens that increase costs without any additional environmental benefits. The duty to 

minimize emissions consistent with recommended procedures would necessarily include adherence to 

good combustion practices. Boiler operators have a business incentive to operate their boilers as 

efficiently as possible. Furthermore, optimal O2 concentrations will vary by boiler and design. Many 

existing units, and aU of AMP members' generating units, were constructed prior to 1970, and do not 

have manufacturer's instructions indicating optimal O2 concentrations. "Similar units" that are 

Significantly newer may not necessarily share the same 0, optimization range. For these units, bolier 

operator knowledge and general good combustion practices for Similar units would be a more 

"60 Fed. Reg. 48388, 48392 (Sept. 19, 1995). 19 ld 

2Q The DC Circuit decision in the PCWP MACT case, NRDC v. EPA, 489 F.3d 1364 (D.C. Cir. 2007), does not take 

away EPA's authority to grant categorical I-year compliance extensions. For further analysis of this opinion, see 

AF&PA Industry Comments. 

2, 76 Fed. Reg. at 15642. 

2276 Fed. Reg. 80615. 
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appropriate benchmark for optimal combustion than a numeric O2 concentration that mayor may not 

represent the most efficient combustion for that unit. 

Similarly, the proposed boiler operator training requirements are unnecessary and serve only to 

create additional recordkeeping and reporting requirements and increase the cost of the rule. The 

Proposed Rule already requires boiler operators to "at all times, operate and maintain any affected 

source, including associated air pollution control equipment and monitoring equipment, in a manner 

consistent with safety and good air pollution control practices for minimizing emissions.,,23 To satisfy 

this condition, and to operate the boiler in a safe manner, boiler operators receive appropriate training. 

Adding a training work practice standard adds nothing to the rule except additional recordkeeping and 

reporting requirements that do not serve any beneficial environmental purpose. 

These additional record keeping and reporting requirements impose particular hardship on small 

municipal utilities that do not have personnel dedicated solely to environmental compliance. Each 

additional recordkeeping and reporting obligation created by the Boiler MACT rule must be carried out 

by boiler operators in addition to their general operating duties. Superfluous record keeping and 

reporting obligations that serve no environmental purpose should be eliminated wherever possible to 

avoid unnecessary compliance costs that could be better allocated to meaningful emission reduction 

investments. This is particularly the case here, where EPA has offered no reason for abandoning Its 

previous work practice approach. 

b. Startup and Shutdown Definitions Must Be Established on a Site-SpeCific Basis 

EPA has included a threshold of 2S percent load in its definitions of startup and shutdown.24 

Setting a threshold for all units is inappropriate, particularly a threshold based on percent load. Some 

units have a minimum stable operating load that is higher than 2S percent (e.g., stable operation for a 

stoker boiler may not be reached until 60 percent load). In addition, some control devices cannot be 

turned on until exhaust gas temperatures reach a certain level, and must be shut off before the 

temperature dips below this threshold. The ESPs at the City of Painesville, for example, cannot be 

turned on until the exhaust temperature reaches at least 2S0 degrees Fahrenheit. At lower exhaust gas 

temperatures, stack gas can condense on the precipitator plates and cause corrosion. The temperature 

is dependent on multiple factors, and is not necessarily correlated to a speCific load level. AMP agrees 

that periods of startup and shutdown should be defined for each unit to clearly identify when numeric 

emission limits apply; however, facilities must be able to define periods of startup and shutdown on a 

site-specific basis to properly identify the appropriate parameterjs) indicative of stable operating 

conditions. 

c. It is Inappropriate to Establish Time Limitations on Startup and Shutdown Periods 

EPA requested comment on whether a maximum time should be included in the startup and 

shutdown definitions. Such a requirement is unnecessary, as safety and proper operation of the boiler 

and associated equipment dictate the amount of time that is needed for startup and shutdown. This 

13 76 fed. Reg. al 80629. 

24 76 fed. Reg. at 80654. 
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Statement for the Record for the 

House Committee on Small Business 

Regulatory Flexibility Act Compliance: Is EPA Failing Small Businesses? 

June 27, 2012 

National Federation of Independent Business (NFIB) 

1201 F Street, NW Suite 200 

Washington, DC 20004 

National Federation of Independent Business 

1201 F Street NW * Suite 200 * Washington, DC 20004' 202-554-9000 • Fax 202-554-0496 • www,NFIB,com 
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The National Federation of Independent Business (NFIB) appreciates the opportunity to submit 

this statement for the record to the Committee on Small Business for the hearing entitled 

"Regulatory Flexibility Act Compliance: Is EPA Failing Small Businesses?" NFIB is the 

nation's leading small business advocacy organization representing over 350,000 small business 

owners across the country, and we appreciate the opportunity to provide our perspective on this 

issue. 

The disproportionate burden placed on small business by regulation in general, and 

environmental regulation in particular, has been well documented. In response to this negative 

impact on small businesses, Congress in 1996 passed the Small Business Regulatory 

Enforcement and Fairness Act (SBREFA) which amended the Regulatory Flexibility Act (RF A) 

to require agencies to take additional analyses into account before promulgating rules affecting 

small businesses. As part of this important reform, the Environmental Protection Agency (EPA) 

was specifically required to conduct Small Business Advocacy Review (SBAR) panels made up 

of small business owners prior to issuing a proposed rule when the EPA expects the rule will 

have a significant impact on a substantial number of small entities. 

NFIB has found these panels to be effective when EPA provides a full-faith effort to not only 

conduct SBAR panels, but heed the recommendations of those panels. Unfortunately, there 

remain instances where the agency ignores the requirement or fails to listen to ways to make 

rules more cost effective. As a result, excessive environmental regulation continues to plague 

small businesses, evidenced by a 201 0 U.S. Small Business Administration Office of Advocacy 

study that found that small businesses with 20 or fewer employees spend an alarming 364 

percent more per employee per year to comply with such regulation than their larger 

counterparts. I 

To illustrate challenges small businesses have faced with regard to the EPA's adherence to the 

spirit of the RF A and SBREF A, this statement will focus on the agency's Lead: Renovation, 

Repair and Painting (LRRP) rules. 

An example of the EPA recently ignoring the advice of an SBAR panel is the agency's May 6, 

2010 LRRP rule that removed a provision known as the opt-out.2 The opt-out, originally part of 

the EPA's 2008 LRRP rule, allowed a homeowner to forego certain lead-safe practices if the 

homeowner certified that he or she occupied the residence and that no children under the age of 

six or pregnant women live in the home. The opt-out stemmed from the 1999 SBAR panel report 

that the EPA should consider limiting the scope of the rule to pre-1978 housing as well as accept 

comment on other ways to make the rule more cost-effective. 3 The opt-out provision was 

originally implemented in the spirit of this recommendation. 

Yet with no new data to inform its decision, the EPA removed the opt-out. That single decision 

doubled the number of homes covered by the LRRP nIle to 78 million and added more than $336 

million per year in compliance costs to the regulated community. 

Worst of all, the EPA limited input from small businesses during this decision making process. 

Instead, the EPA worked primarily with the interest groups that sued them, ultimately coming to 

a legal settlement that required the agency to get rid of the opt-out. Small businesses were only 

National Federation of Independent Business 

1201 F Street NW * Suite 200 * Washington, DC 20004 * 202·554+9000 * Fax 202·554+0496 * www.NFIB.com 
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able to offer comment after a plan forward had been put in place. This type of action is surely not 

in the spirit ofthe RF A or SBREFA. 

As a result, small businesses are now forced to seek a legislative solution to the problem the EPA 

created. NFIB strongly supports the Lead Exposure Reduction Amendments Act (H.R. 5911), a 

bi-partisan measure recently introduced recently by Rep. John Sullivan. This bill would reinstate 

the opt-out and significantly reduce the cost of the rule to small businesses while protecting the 

health of children under six. It is unfortunate that such a bill is necessary, but we hope that it will 

receive the support of the Committee. SBREF A was passed by Congress with the goal that the 

EPA would take the recommendations ofSBAR panels seriously, so that Congress would not 

have to move after the fact to make commonsense changes to regulations. Had the EPA simply 

stuck to its original decision, the issue would be moot. 

As a result of this experience, small businesses are now concerned about how the EPA will listen 

to their recommendations pertaining to the upcoming RRP rule on public and commercial 

buildings. On one hand, the EPA has already sought small business input and appears willing to 

convene an SBAR panel prior to issuing a proposed rule. On the other hand, the agency is under 

a court-ordered deadline stemming from a settlement agreement with interest groups that did not 

represent small businesses at all. 

Further troublesome is the fact that the EPA has admitted, and its science advisory board has 

corroborated4

, that there is little data at this time to justify a rule covering public and commercial 

buildings. 

It is our hope that the Committee on Small Business holds the EPA to its requirements under the 

RFA and SBREF A as the agency proceeds on this rule that will surely have a significant impact 

not only on small businesses in the remodeling industry, but those small business owners looking 

to upgrade their facilities in order to be able to compete. 

Thank you again for the opportunity to provide comments on the EPA's adherence to the RF A. 

NFIB remains eager to work with members of the Committee on Small Business to provide 

regulatory relief to our nation's small business job creators. We also look forward to working 

with the Committee to help ensure that the EPA adheres to its responsibilities under the RF A in 

all of its current and future rulemakings. 

I http://www.sba.gov/advo/researchlrs37Itot.pdf 

275 Federal Register 24802-24819 

3 Final Report a/the Small Business Advocacy Review Panel on EPA's Planned Proposed Rule: Lead-Based Paint; 

Certification and Training; Renovation and Remodeling Requirements. March 3, 2000 

4 U.S. EPA. Approachfi>r Developing Lead Dust Hazard S'tandardsfor Public and Commercial Buildings. SAB 

Review Draft. December 6-7,2010. 

National Federation of Independent Business 

1201 F Street NW"* Suite 200" Washington, DC 20004"* 202-554-9000"* Fax 202-554-0496"* www.NFIB,com 
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House Committee on Small Business 

Regulatory Flexibility Act Compliance: Is EPA Failing Small Business? 

June 27, 2012 

Statement for the Record by the 

National Association of Home Builders 

1201 15th Street NW 

Washington, DC 20005 

This written statement is respectfully submitted on behalf of the National Association of Home Builders 

(NAHB) in order to highlight the Environmental Protection Agency's non-compliance with the Regulatory 

Flexibility Act (RFA). NAHB is a national federation representing more than 120,000 members involved 

in single family and multifamily home building, land use planners and developers. 

The nation's housing industry has suffered the worst economic downturn since the Great Depression 

and continues to bear the brunt of staggering unemployment (18% in construction), lack of access to 

capital, and increasing regulatory and administrative hurdles that threaten housing's recovery. With the 

new home construction market still at historic lows, the effort to find work in retrofitting and upgrading 

older housing (remodeling) has been attractive to many builders. Unfortunately, recent amendments 

and changes to the EPA's Lead Renovation Repair and Painting rule (RRP) have further constrained small 

businesses in the remodeling industry that are making every effort to comply. These changes have 

significantly increased the cost associated with the rule and the EPA has never reevaluated the impact of 

this regulation, which was one of the many safeguards that the RFA is expected to provide. 

Background 

In 2008, the EPA finalized the RRP rule establishing new requirements for contractors and remodelers 

working in homes built before 1978. The RRP rule prescribes a series of safe work practices, contractor 

certification requirements, and cleaning verification as a way to address impacts aSSOCiated with the 

disturbance of lead-painted surfaces in older housing. Specifically designed to address potential lead 

exposures to children under six years of age and pregnant women, the RRP rule requires contractors and 

remodelers working in older homes to obtain certification from the EPA and to undergo an eight-hour 

training course on lead-safe work practices. The RRP rule applies to all work performed by contracted 

"for hire" professionals and, importantly, does not apply in cases where homeowners undertake 

renovation work themselves. 

NAHB supports the RRP rule as finalized in August 2008. In fact, NAHB members conducted extensive 

research on a number of older, vacant homes with known lead hazards in order to help develop the list 

of "prohibited work practices" that ultimately became a part of EPA's final regulation. After the rule was 

finalized, NAHB immediately began working to ensure our members, and the remodeling industry at 
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large, were aware of the rule, its provisions for lead-safe work practices, and the value of hiring leadsafe trained contractors. 

Removal of the "Opt Out" Provision and Non-Existent Test Kits 

The first important change to the RRP was finalized on July 6, 2010, and eliminated a consumer's ability 

to waive compliance requirements if no children under six or a pregnant woman resides in the home. 

Not only does this change further restrict a consumer's choice about critical renovation work in older 

homes, but it also dismantles everything EPA originally included in the 2008 RRP to ensure that it was 

not overly costly to small businesses. As a means of regulatory flexibility, the EPA allowed homeowners 

in pre-1978 homes that do not have young children or a pregnant woman to waive a contractor's 

compliance obligations, or "opt out" of the RRP, when undertaking renovation work. The EPA stated 

that the inclusion of the "opt out" provision decreased the number of homes subject to the RRP from 

77.8 million down to 37.6 million.' Furthermore, EPA states that the removal ofthe "opt out" costs an 

additional $507 million for small businesses in the first year alone.' 

Thus, without even giving the original rule a chance to work, the EPA immediately amended it by taking 

away a key measure that made it easier for small businesses to absorb the regulatory impact. According 

to the U.S. Census Bureau's American Community Survey, approximately 38,317,131 owner-occupied 

housing units built before 1979 do not have a child under six living there, roughly 88.5% of all the 

housing stock in the U.s. built before 1979.' With the removal of the "opt out" provision, those 

homeowners no longer have the option of foregoing the costs of compliance with RRP when hiring a 

professional remodeler to work on an older house. For the small contractors, these additional costs 

have to be passed onto the consumer which increases the chances a consumer will hire another, likely 

uncertified, contractor to do the work, or worse, do the work themselves and actually increase the 

likelihood of disturbing lead-based paint. The restoration of the "opt out" provision would allow 

households that do not have young children or pregnant women the chance to undertake professional 

renovation work - most frequently energy efficiency upgrades - without facing compliance costs for a 

regulation that legitimately does not apply to anyone in the household. 

In addition to incorporating the "opt out" to reduce the number of homes subject to RRP, the 2008 RRP 

also relied on the predicted existence of a test kit that, at the time the rule was enacted, was not 

available. EPA expected the more accurate test kit to be commercially available by September 1, 2010, 

and explicitly rejected other options to reduce cost ofthe regulation because ofthe anticipated test kit.' 

The new test kit (Phase II) was to supposed to replace the first version (Phase I), which EPA 

acknowledges has a significantly high false-positive result rate. If contractors use the kits to test pre1978 homes for lead before renovation work begins and results are negative, {meaning there is no 

1 U.s. EPA, Economic Analysis for the TSCA Lead, Renovation, Repair, and Painting Program Opt-Out and 

Recordkeeping Proposed Rulefor Target Housing and Child-Occupied Facilities, ES-2. (October 2009). 

2 Economic Analysis for the 2009 Proposed Rule (page ES-4) 

3 U.s. Census Bureau, American Community Survey. 2007 Public Use Microdata Files. 

473 Fed. Reg. 21712 (April 22, 200B). 
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presence of lead-based paint) then they can bypass RRP compliance. However, with an overly-sensitive 

test kit with false positive rates ranging from 47%-78%, RRP requirements will be imposed onto 

renovations where there is no lead present at regulated levels. EPA said it was committed to having 

more accurate kits, thereby reducing the number of false positives and saving costs on RRP compliance. 

In fact, EPA's cost calculations rely upon the availability of the Phase II kits beginning in September 2010. 

As of today. Phase II test kits are still not available and EPA has no estimate as to when they will be 

available. 

Although EPA is still allowing contractors to use Phase I test kits, the entire benefit of having better kits 

that would reduce the compliance costs for small businesses has been entirely overlooked. After 

months of informal pleas to EPA to adjust the RRP to account for the substantially higher compliance 

costs, NAHB formally petitioned EPA to undertake a rulemaking and develop a revised economic analysis 

on September 27, 2010. The EPA has never responded to NAHB's petition or other requests about the 

test kits. With inaccurate and overly-sensitive test kits, and the removal of the "opt out," there is little 

opportunity for relief for remodelers undertaking renovation work in pre-1978 homes. All of the 

attempts by EPA to mitigate costs of compliance with RRP have been subverted by removing the "opt 

out" proviSion and by never delivering a reliable test kit to the market for contractors or accounting the 

resulting increase on compliance costs. 

Regulatory Flexibility Act & EPA Compliance with Section 609(b) Panel Requirement 

Section 609(b) of the RFA, as amended by the Small Business Regulatory Enforcement Fairness Act of 

1996 (SBREFA) and the Dodd-Frank Wall Street Reform & Consumer Protection Act (Dodd-Frank), 

requires three agencies to solicit small business input beyond the normal notice-and-comment channels. 

The EPA, the Occupational Safety & Health Administration (OSHA), and the newly formed Consumer 

Financial Protection Bureau (CFPB) must all work with the Small Business Administration's Office of 

Advocacy (SBA) and the White House Office of Management & Budget's Office of Information & 

Regulatory Affairs (OIRA) to convene a Small Business Advisory Review (SBAR) panel of small entity 

representatives before completing an Initial Regulatory Flexibility Analysis in conjunction with a 

proposed regulation. Section 609(a) requires the "covered agencies," (EPA, OSHA, and CFPB) to convene 

a panel "when any rule is promulgated which will have a significant economic impact on a substantial 

number of small entities." An agency is not required to convene a SBAR panel where the agency 

certifies that the proposed rule will not have a significant impact on a substantial number of small 

entities (SISNOSE), or where the agency seeks a waiver from the panel requirement from SBA (section 

609(e)). 

Despite the clear requirements presented in section 609(b), EPA has failed to comply with the spirit, and 

in many cases the letter, of the RFA. Since the RFA was amended to include section 609(b), EPA has held 

42 SBAR panels, according to information on its web site. Over this same time period (1997 to 2012), 

EPA has enacted literally thousands of regulations. In the semiannual regulatory agenda for the second 

half of 2011, the agency listed 62 regulations as in the "final rule stage," that is, where publication of a 

final or interim final rule is the next step. As EPA has stated, not every regulation or amendment is listed 
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in the Semiannual Regulatory Agenda. Thus, in only 6 months, EPA anticipated finalizing more 

significant regulations than it held panels for in 15 years. 

Along with the addition of section 609(b), SBREFA amended the RFA by adding section 611, which allows 

judicial review of several ofthe act's provisions, such as an agency's certification of no SISNOSE and the 

sufficiency and timing of final regulatory flexibility analyses. However, section 611 does not provide 

judicial review for SBAR panels. Because there is no agency with authority to implement or enforce the 

RFA, the sole instrument that regulated entities have to ensure that agencies comply with the RFA is 

judicial review. 

Panels provide small businesses a rare opportunity to directly participate in the rulemaking process and 

engage with regulators on the rules that impact them. NAHB urges Congress to amend the RFA to allow 

for judicial review of all ofthe act's provisions. 

NAHB recently encountered a situation where the court held that there is no way to judicially challenge 

an agency's decision concerning SBAR panels. NAHB challenged EPA's removal of the aforementioned 

"opt-out" provision. The agency was sued, and in 2009 agreed as part of a legal settlement to propose 

revisions to the 2008 Rule, including the removal of the "opt-out" provision ("Opt-Out Amendment.") 

EPA adopted the Opt-Out Amendment as proposed in 2010. Given that the RRP Rule applies 

overwhelmingly to small businesses, EPA acknowledged that the Opt-Out Amendment would 

substantially impact a significant number of small entities, and it issued an Initial Regulatory Flexibility 

Analysis with its proposal. However, instead of convening a SBAR panel, as the RFA requires, EPA 

instead relied on a panel it convened in 1999. This panel, while focused on the issue of a lead-based 

paint regulation for remodeling activities, did not mention, much less evaluate, the inclusion of an OptOut provision in the rule. In its comments, NAHB called on the agency to convene a sBAR panel and the 

EPA refused. NAHB filed suit against EPA's promulgation of the Opt-Out Amendment, and sought to 

challenge the agency's failure to convene a SBAR panel by demonstrating that the lack of a panel 

rendered the Final Regulatory Flexibility Analysis illegally insufficient (fundamentally flawed). 

On June 22, 2012, the D.C. Circuit decided the case in EPA's favor and held that it did not have 

jurisdiction to review any claims related to the SBAR panel provision in the RFA. Because the Panel had 

never considered an opt-out, and was not able to take factors such as the currently poor economic 

health of the industry into account, EPA may have decided the issue differently if it had the benefit of 

new information from small entities. Thus, under the current RFA, EPA can make unilateral and 

unreviewable decisions about whether and how to convene a SBAR panel, which is likely resulting in 

regulations that heavily and unnecessarily burden small entities. 

Conclusion: 

NAHB members worked closely with EPA during the development of the original RRP and hoped that it 

could be implemented, as finalized, and help promote healthy, lead-safe renovation work. 

Unfortunately, the EPA is redesigning the RRP into a regulatory nightmare that will discourage critical 

efficiency upgrades and increase costs for renovations in older homes. 
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As you considering the impact of regulatory burdens on small businesses today, NAHB respectfully asks 

the Committee to consider the additional burdens placed on our industry. Furthermore, NAHB urges 

the Committee to require EPA to undertake a rulemaking and new economic analysis to demonstrate 

the full cost of compliance now that there is no qualifying test kit, and restore the "opt out" so that our 

small business members can return to work and help consumers save energy and improve the value and 

efficiency of their largest store of personal wealth: their home. 
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[B 

REAlTOR~ 

NATIONAL 

ASSOCIATION of 

REALTORS· 

Dalr \.:'t!lltllO 

Clucfl\:crutlH'()ffi«'f 

GOVERNMENT AFFAIRS DIVISION 

www.RE.\LTOR.org 

July 11, 2012 

lnc Honorable Sam Grayes 

Chairman 

Committee on Small Business 

l;,S, flousc of Representatives 

Washington, D.c. 20515 

Dear Chairman Graves: 

On behalf of the 1 million members of the National Association of 

REA];rOHS", thank YOll for holding this hearing on the U.S. Environmental 

Protection Agency's (1'1',\) compliance with the Regulatory Flexibility Act (RE\). 

When fully complying with this important law, the EPA has repeatedly 

demonstrated it can protect the environment and reduce unnecessary rCh'IUlatory 

burden on small businct's as well. 1iofC recently however, the Agency appears 

only to be going through the motions rather than fully embracing this proven law. 

\X,'e would urge the EP"'\.. to reverse course and take advantage of the RPA to 

produce smarter, safer regulations in the [unlre. 

Background 

The RF r\ sets basic procedures for consulting stakeholders and preparing 

regulatory impact analysis that considers small business. Historically, federal 

agencies ha\'e ignored the small business impact of one-slze-fits-al1 regulation. 

Regulations create an uneven playing field among businesses: By raising less 

revenue over which to spread the cost, small businesses are disadvantaged relative 

to their large competitors when it comes to regulatory compliance. Yet, 

maintaining competition not only keeps prices low but also provides jobs, 

innovation and growth in the economy. Protecting the environment is an 

important public policy goal. but so is eliminating excessive regulatory burden on 

small business. 111is law simply reminds the regulatory agencies to pursue both 

objectives where possible. 

EPA is Not Convening Small Business Panels 

In addition to analysis and consultation, the EPA - one of the biggest issuers of 

one-size-fits-all regulations - must convene a panel with SBA's Office of 

Advocacy and the Office and Management Budget to review the draft analysis, 

consult small businesses, and make recommendations including ways to write a 

rule so it meets el1vironmentallaws but tninimizes t-mall business impacts; by law. 

a panel has just 60 days to do all this. This ensures the Agency has timely 

feedback on the regulatory options and data it is considering to make decisions. 

However, the EPA docs NOT appear to be convening panels required by the 

RFA in several rulemakings, including: 

\'('aters Subject to the Clean Water l\Ct. There has been a long-nmning 

legal dispute over which waters are subject to federal regulation. The Act 

refers to "navigable" (boat-able) waters but when the EPA tried to expand 

the term via regulation) it was overturned by the U.S. Supreme Court. 
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Twice. Most recently the EPA is proposing to expand the term through guidance. By doing this - via guidance 

instead of regulation, the Agency would avoid the RFA and miss another opportunity to understand the impacts 

and options for small business. Guidance is one loophole in the RF~ \ that should be closed. 

Lead Paint in Commercial Buildings. In this case, the EPA correctly decided that a panel is required before 

proposing a regulation (http://www.cpa.gov / rfa/lcad-pncb.html). Rut the court-ordered deadline for the 

proposal is July 20, 2012 and the Agency has yet to formally convene one. \X"e question how an agency can 

take full advantage of a 60-day panel process when the deadline is less than 2 weeks a\vay. 

Greenhouse Gases. The EPA may choose not to holt! a panel upon certifying a regulation will not have "a 

significant economic impact on a substantial number of small entities" (sec. 609). The basis of the 

certification for the Endangerment Finding however, was this action was not itself a rule. For the Tailoring 

rule that followed, nPA's rationale was it delayed Clean Air Act permit requirements resulting in a "positiye 

impact" on small business (74 Fed. Reg. 55348). However, the SBA, which monitors RFA compliance, 

wrote: 

"EPA's RFA certification accompanying the proposed GHG endangerment finding 

is grounded on the narrow, technical argument that the finding, in and of itself, docs 

not actually impose any direct requiremcnt~ on small entities. Once finalized, 

however, the G HG finding legally and irrevocably commits the agency to regulating 

GHGs under the Clean Air ,\ct," 

Also the law refers to "impacts," not "'negative impacts.n Even if we accepted the EPA's argument that the 

law is only for "minimizing" impacts, the Agency could have decided on "good goveflUTIent" grounds to 

hold a panel anyway. ;\ panel could have explored ways to maximize the rule's benefits. Instead, the 

Agency again opted for a hyper-technical reading and exploited another potential loophole of the RF,\. 

Small Business Panels Are Being Severely Hampered 

'I11e EPA has issued guidelines for what arc '"significant economic impacts" and a "substantial numbers" of small 

business. However, the Agency appears to have underestimated these impacts in several rulemakings, raising 

questions about whether the Agency is incon-ectly certifying rules. 

Lead Paint in Residential Buildings. According to EPA, the testing requirements would cost $300 million 

per year (2010$). IIowever, industry research ha~ shown that the true impact was closer to $420 million 

annually. 'Ibis was before the EPA unilaterally deleted the opt-out provision expanding the requirements to 

many childless homeowners who will now have to pay more for contractors certified in lead-safe work 

practices that benefit no one. 

• Lead Paint in Commercial Buildings. By consulting small businesses, the RFA produces better data and 

options for regulatory decision making; this is the secret of the law's success in producing smarter 

regulations. The commercial1ead paint rule is a perfect candidate for the RF A. EPA's own science advisory 

board has reported on the lack of data related to lead hazards on children in and around commercial 

buildings. It is puzzling how an Agency could produce the safest regulation without this data. 

The Agency also appears to be narrowly interpreting which small businesses to consult under the RFA. The EPA 

would invoke another Rh\ loophole (Mid-Tex v. FERC, 773 F.2d 327 (1985)). 

Lead Paint in Commercial Buildinp-s. NAR submitted small bu~iness owners for panel participation, but 

these regulations involve the work practices of femodelers. Although the cost of heightened work practices 

is likely to be passed through to the building owners, they were not deemed "directly impacted" and 

therefore not eligible fOf participation. By this logic, real estate agents, who mostly assist but occasionally 

wiII sell, buy, or manage their own properties, arc not likely to be consulted on any rulemaking, and it would 

be the EPA's loss. REAl:rORS@ operate according to strict ethical guidelines and often have the best, firsthand information about the market to be regulated as well as how small businesses are most likely to 

respond. Nothing in the Mid-Tex decision would preclude the Agency from consulting additional small 

businesses. The goal here should be to make the most of a process that eliminates excessive regulatory 

impacts. not to invoke hyper-technical readings that exclude small representatives who may not be directly 

regulated but could bear the full impact of the rule in any case. 
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Conclusion 

Thank you again for this hearing and the opportunity to comment on EPA compliance with the RI'A. Preserving 

competition is as important to the Nation as environmental protection, and this important law ensures that the EPA 

strives for both where possible. The RFA merely forrnalizes procedures for conducting regulatory analysis and 

consultation; it docs not prevent agencies from regulating nor should it sIo\v them down if they are conducting 

adequate analysis and consultation already. \X!e would urge the EPA to halt the recent trend and re-embrace a law 

proven to produce smarter, safer mlcmakings for lead paint, waters of the U.S., and greenhouse gases. 

Maurice "fv10e" Vcissi 

2012 President, National Association of REAlTORS" 
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March 1. 2011 

Lucinda Power 

Office of Policy 

Regulatory Management Division 

U.S. Environmental Protection Agency 

Washington, DC 

Transmittal via e-mail 

Dear Ms. Power: 

{\ 

Design Build 

GR()UP 

Thank you for the opportunity to comment on the pre~panel outreach materials for the Renovation, Repair, and Painting 

Program for the Exterior of Public and Commercial Buifdings, 

Design Build Group is a fun service remodeling company based in Odenton. Maryland. We have 5 employees and last year 

we had approximately $2.4 million in revenues. We work on residential and commercial remodeling projects and we are 

EPA Lead-Safe Certified. I am President of the Greater Baltimore Chapter of the National Association of the Remodeling 

Industry (NARI), 

A large part of Design Build Group's business is devoted to demolition projects, both complete and partial (where the 

exterior is demolished, but the internal structure/skeleton is retained). Because of the unique nature of our work. much of 

the ideas EPA has for Exterior RRP may not be practicable. I offer these insights to provide EPA with information on how 

to tailor their approach without the unintended consequence of ignoring how Exterior RRP will impact demolition work. 

Q: What work practices do you follow now when encountering lead-based paint on the exterior of public and 

commercial buildings? 

A: The main work practice [ utilize is applied for all our jobs and that is to maintain our site. That means to keep 

the site free from clutter, dust, and other stuff that conveys sloppiness, unprofessional conduct, or unsafe work 

practices. 

Q: How do you currently handle waste from jobs that involve lead-based paint from the exteriors of public and 

commercial buildings? 

A: The waste from our projects goes into dumpsters on-site. Here in Maryland. the majority of dumpster waste is 

handled through transfer stations where workers separate the waste. We have the option of maintaining different 

dumpsters and separate the waste ourselves, but it is too expensive for us to do that. The reason I mention how 

we handle construction debriS in Maryland is because that makes the idea of bagging waste from demolition 

projects impracticable. Not only would bagging waste be cost prohibitive at my work site. the transfer stations do 

not want the waste in dumpsters to be in bags because it takes loo much time for them to open the bags and 

separate the waste. 

Q: Can you think of ways to add nexibility to this rulemaking for small businesses? 

A: Yes, [believe that it may be good to map out different scenarios because the work practices are so different. 

Scenario 1 could be complete demolition. It may make sense to limit complete demolition during high winds for 

/'\ 

NARI 

(4 to} 674-2646 

Page 1 of2 

(4~D) 614~DJ78 I MHICtf usc:)} 
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fear that dust and debris may cause harm. Scenario 2 could be partial demolition. Again, it may make sense to 

limit partial demolition during high winds for fear that dust and debris may cause harm. Scenario 3 could be 

rehabilitating building exteriors, Scenario 3 would involve grinding and scraping - where work practices and EPA 

regulation may make sense. 

Here (below) are some descriptions of the costs estimates related to Exterior RRP: 

Sample Project: 15.000sfStrlp Mall Renovation, Approx. 300·x50·. 20' High (10 tenants) 

Scenario 1 - Complete Demolition 

Cost of implementing LRRP work practices: Potentially impossible to implement. The heavy equipment and size 

of structural members would prevent any type of containment. Creating vertical containment wOlild completely 

cost prohibitive. 

Scenario 2 - Partial Demolition & Rehabilitation 

Cost of implementing LRRP work practices: Extremely expensive. Depending on the size of and extent of facade 

restoration it could increase costs by 20 w 2Sk if only the front was repaired or rehabilitated. If a complete 

restoration was called for it could rise to 40 w 50k depending on the extent of containment. The cost of site postings, 

clean up and personal safety equipment would be a minor portion of the cost. 

Scenario 3 - Partial Rehabilitation and/or painting 

Cost of implementing LRRP work practices: Expensive. The containment costs for the stripping. sanding or 

grinding are where the majority of costs are. The cost of site postings, clean lip and personal safety equipment 

would be a minor portion of the cost. The estimated costs would depend on so many variables induding the extent 

of paint failure, temperature, moisture, etc. Preparation of paint surfaces is very labor intensive so the costs 

associated for LRRP would be exacerbated by tlme, I.e. more suits. respirators. etc. Maintaining plastic 

containment in windy conditions would be problematic and expensive. 

Remember these three scenarios are based on a fairly small building. Imagine the cost of containing a ten story 

building. 

Another important thing to remember about the renovating and remodeling business is this: Every job is unique and 

challenging. The scale and level of difficulty varies between every job whether it Is commercial or residential. No two jobs 

ever seem to be the same. How we implement a one size fits all rule (LRRP) is what creates the true challenge. 

How can I stay In business. playing by the rules. when the majority do not? 

[would like to thank you for choOSing Design Build Group, Inc, and giving us the opportunity to participate in the 

review process. 

Sincerely yours, 

Design Build Group, Inc. 

Kevin R. Nau President I CEO 

designbufldgroup.net t PO Box '539 I Odentoll,!"-lO 

Page 2 of2 

(410) 2646 ! (410) 674~0278 ! MHIC1t 
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MIKE COFFMAN 

ARMED SERVICES COMMITIEE 

1222 LONGWORTH HOUSE OFfICE BUILDING 

WASHINGTON, DC 20515 

(202) 225-7882 

NATURAL RESOURCES COMM1TIEE (!lougr£ss of 14£ 1Ittttf£~ ~fat£s 

iliou!l~ of lIi.eprc!IJ!ltfafitlJ1!l 

mlUlqingtnn,llI0l20515-0606 

DISTRICT OFFICE: 

9220 KiMMER DRIVE 

SUlTE.220 

SMALL BUSINESS COMMITTEE 

BALANCED BUDGET 

AMENDMENT CAUCUS 

CHAIRMAN 

Congressman Mike Coffman Statement For The Record 

House Small Business Committee Hearing 

"Regulatory Flexibility Act Compliance: 

Is EPA Failing Small Businesses" 

June 27,2012 

LONE TREE, CO 80124 

{nO) 283-9772 

Mr. Chairman, I commend you for holding this hearing today on the effects the Environmental 

Protection Agency (EPA) may be having on small businesses. 

In particular, I want to highlight an issue with the EPA that has been of significant concern to 

small business owners and local government officials in my congressional district in Colorado. 

The EPA is currently in the process of promulgating stormwater regulations which will have a 

devastating impact on the business community and on local governments. Most storrnwater 

runoff is created when rain and snowmelt flow over land or impervious surfaces. As the runoff 

flows over these surfaces such as paved streets, parking lots, and building rooftops, it at times 

accumulates debris, sediment or other pollutants that could adversely affect water quality if the 

runoff is discharged untreated. 

While it may be necessary to establish rules governing these runoff waters due to environmental 

concerns; the EPA and the U.S. Army Corps of Engineers (USACE) are currently moving 

forward with new regulations without regard for the profound financial impact these rules will 

have on the taxpayers of Colorado, businesses and to homeowners. 

For this reason, I have urged the House Appropriations Committee to include in the FY 2013 

Interior Appropriations Bill language requiring the EPA to conduct and submit, for approval by 

Congress, a study before expanding or promulgating any new stormwater rule or regulation. 

Douglas County, Colorado, estimates compliance with just a few of the proposed regulations 

would cost the county taxpayers and businesses in excess of $370 million. And these types of 

costs will not only be felt in Colorado, but in every state and county across the United States. 

An unclear expansion of the definition of which waters are protected by the CW A, by 

implementing a one-size fits all approach, will have a negative impact on the successeS Colorado 

has already achieved. 
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I thank you Mr. Chairman for the opportunity to speak on this issue today and would ask the 

Committee to urge the EPA to conduct a study and report to Congress prior to developing new 

stormwater permit regulations to determine the financial impacts to taxpayers, businesses, and 

homeowners. 

Sincerely, 

f.tI/~,.--.. -- Mike Coffman 

Member of Congress 
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BAKER BOlTS ll.P 

July 21, 2010 

BY ELECTRONIC SUBMISSION 

Document Control Office (7407M) 

Office of Pollution Prevention and Toxics (OPPT) 

Environmental Protection Agency 

1200 Pennsylvania Avenue, NW 

Washington, DC 20460-0001 

Thomas C. Jackson 

RE: EPA Regulatory Docket Number EPA-HQ-OPPT-2005-0049 

Dear Sir or Madam: 

HOUSTON 

LON::JON 

WASHINGTOt. 

On behalf of the American Architectural Manufacturers Association, the 

Associated General Contractors, the Institute of Real Estate Management, the National 

Association of the Remodeling Industry, National Association of REAL TORS®, the National 

Lumber & Building Material Dealers Association, the Painting & Decorating Contractors 

Association, Plumbing-Heating-Cooling Contractors Association, Real Estate Roundtable, the 

Vinyl Siding Institute, and the Window and Door Manufacturers Association, please find 

attached our comments on the U.S. Environmental Protection Agency's proposed amendments to 

the rule for the Renovation, Repair and Painting ("RRP") Program as it applies to target housing 

and child-occupied facilities (the "Rule"). EPA has proposed amendments to the Rule -

published in the Federal Register (Volume 75, No. 87) on May 6, 2010 - to require dust wipe 

testing and clearance testing in specified circumstances. The proposed amendments suffer from 

several different flaws, each of which individually mandate that the proposed amendments be 

withdrawn. 

First, EPA lacks the authority under the Toxic Substances Control Act ("TSCA") 

to impose dust wipe testing or clearance testing requirements on renovators. Rather, the Agency 

has statutory authority only to suggest guidelines for the conduct of RRP activities. The 

proposed amendments to the Rule would go beyond the boundaries of guidelines and impose 

work practice standards for RRP activities. Further, EPA has not established that all the RRP 

activities being regulated create lead-based paint hazards. While RRP activities may disturb 

lead-based paint, no evidence has been presented to support a finding that a hazard would 

automatically result from such activities. Similarly, EPA has not satisfied the statutory 

requirement of conducting a "study of certification" to determine which, if any, RRP activities 

create lead-based paint hazards. Consequently, EPA has failed to establish a necessary predicate 

for the regulation ofRRP activities. 

Second, EPA's proposed amendments to the Rule are inconsistent with TSCA 

because they eliminate the distinction between abatement and renovation. The proposed 

amendments would effectively transform renovators performing RRP activities into abatement 
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RAKER HOTTS LLP 

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contractors. The dust wipe testing and clearance testing, as contained in the proposed 

amendments, would require renovators to remove all lead hazards from a work site regardless of 

whether the lead hazard was present before the RRP activities began. The dust wipe tests and 

clearance tests require the renovator to perform abatement-type work even after Congress has 

been careful to distinguish RRP activities from abatement activities. If the proposed 

amendments go into effect, renovators, while obligated not to create lead-based paint hazards, 

would be under an untenable duty to abate lead-based paint hazards that preexist the RRP 

activities. 

Third, EPA has acted in an arbitrary and capricious manner in imposing dust wipe 

testing and clearance testing requirements through the proposed amendments to the Rule. Under 

previous versions of the Rule, dust wipe testing and clearance testing were not required because 

of cost and liability concerns. EPA explicitly considered the cost and liability factors, among 

others, when it declined to include dust wipe testing and clearance testing requirements in the 

Rule previously. EPA has now changed course without offering a reasoned explanation, such as 

new data or circumstances, to justifY its decision. Further, the amendments only exacerbate 

issues relating to: (I) the costs for renovators to comply with the proposed amendments, and (2) 

the liability that will effectively be imposed on renovators that do not abate preexisting leadbased paint hazards. In addition, any benefits provided by the proposed amendments would be 

minimal because the existing cleaning verification requirements have been deemed effective by 

EPA. Finally, the unintended harm resulting from proposed amendments would outweigh any 

benefits it provides because people who would be priced out of hiring a licensed, professional 

renovator to perform RRP activities will likely perform such work themselves or hiring 

unlicensed contractors, thereby increasing the likelihood that a renovation project would result in 

the creation oflead-based paint hazards. 

Fourth, EPA has violated the Regulatory Flexibility Act in proposing amendments 

to the Rule without convening a new Small Business Advocacy Review Panel. The Regulatory 

Flexibility Act requires that such a panel convene when a rule is promulgated that will have a 

significant economic impact on a substantial number of small entities. This obligation is also 

triggered when an existing rule is amended. By adding the dust wipe testing and clearance 

testing requirements to the Rule, EPA will profoundly impact numerous small entities. The 

failure to convene a Small Business Advocacy Review Panel to review the proposed 

amendments is a violation of clear, binding statutory authority. 

The groups represented by this letter and attached comments support efforts to 

reduce the incidence of lead exposure, but are troubled that the proposed amendments are not 

tailored to meet that goal. The attached comments fully outline the concerns of these trade 

associations and their belief that the Rule, as it currently stands, effectively and efficiently 

protects the public from lead exposure. Of course, industry members are always open to 

additional ways in which to better protect the public. Unfortunately, the proposed amendments 

to the Rule do little in that regard yet would impose considerable costs. 

If you have any questions, please contact me at (202) 639-7710. 
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BAKER BOTTS UP 

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Sincerely, 

Thomas C. Jackson 

Enclosure 
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COMMENTS REGARDING EPA'S PROPOSED AMENDMENT TO THE 

LEAD; RENOVATION. REPAIR AND PAINTING RULE! 

In 1992 Congress passed the Residential Lead-Based Paint Reduction Act, 

commonly referred to as "Title X." Pub. L. 102-550, tit. X (codified in part at 15 U.S.C. 

§§ 2681-92). Among other things, that title added a new Subchapter IV to the Toxic Substances 

Control Act, 15 U.S.c. § 2601 et seq. ("TSCA"), and as part of that subchapter directed the U.S. 

Environmental Protection Agency ("EPA") to develop regulations to reduce exposure to lead by 

enacting requirements for individuals involved in maintenance, remodeling and construction 

activities in certain types of buildings, including "target housing." 15 U.S.c. § 2682. "Target 

housing" is defined, with some exceptions, as "any residential structure built prior to 1978 where 

a child under six resides or is likely to reside." See 42 U.S.C. § 485 I b(27). 

In April 2008, EPA published its regulation concerning the Lead Renovation, 

Repair and Painting program for renovation, repair and painting ("RRP") activities in target 

housing. 73 Fed. Reg. at 21692 (April 22, 2008) (the "Rule" or "LRRP Rule"). The purpose of 

the Rule is to "reduce exposure to lead hazards created by renovation, repair, and painting 

activities that disturb lead-based paint." /d. Under the Rule, new requirements for renovation 

work practices were established. The renovation work practices include a requirement that 

renovators engage in what EPA refers to as "cleaning verification" to ensure that the work area 

has been cleaned in accordance with the requirements set forth in the Rule. 71 Fed. Reg. at 

1613-14. The verification procedure includes both a visual inspection of the work area after the 

required cleaning steps have been conducted as well as the use of a "white glove" test. [d. at 

1630. These work practice requirements apply to all commercial enterprises engaging in RRP 

activities but do not apply to homeowners who conduct RRP activities themselves. Id. at 1602. 

For the second time in less than two years, EPA has proposed changes to the 

Rule. See 75 Fed. Reg. 24802 (May 6, 2010), 40 C.F.R. §§ 745.81 - 745.82; see also 75 Fed. 

Reg. 25038 (May 6, 2010). "Specifically, EPA is proposing to require dust wipe testing after 

many renovations covered by the Rule." [d. at 25039. EPA is also proposing requirements for 

clearance testing in some instances, as well as requirements related to training, certification and 

accreditation. Id. However, the proposed amendments to the Rule regarding dust wipe testing 

and clearance testing suffer from a number of serious legal deficiencies and should be 

reconsidered by the Agency. 

I. EPA Lacks the Authority Under the Toxic Substances Control Act to Impose Dust 

Wipe Testing or Clearance Requirements on Renovators 

There are several key respects in which the proposed amendments to the Rule, to 

the extent they include requirements for any form of dust wipe testing or clearance testing, would 

I These comments are submitted on behalf of the following groups: American Architectural Manufacturers 

Association (AAMA), the Associated General Contractors (AGC). the Institute of Real Estate Management (IREM), 

the National Association of the Remodeling Industry (NARI), National Association of REAL TORS® (NAR), the 

National Lumber & Building Material Dealers Association (NLBMDA). the Painting & Decorating Contractors 

Association (PDCA), Plumbing-Heating-Cooling Contractors Association (PHCC), Real Estate Roundtable (RER), 

the Vinyl Siding Institute, and the Window and Door Manulacturers Association (WDMA). 

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exceed the statutory authority Congress granted to EPA under Title X. For the reasons set forth 

below, EPA should withdraw its proposal to add these requirements in light of the limits on its 

authority. 

A. EPA can only issue guidance concerning renovation work practices" 

Based on the plain language of the statute, EPA lacks authority under TSCA to 

promulgate regulations requiring any form of clearance testing because such requirements are 

part of work practice standards, which can only be the subject of Agency guidelines. Section 

402(a)(l) of TSCA only authorizes EPA to promulgate regulations "to ensure that individuals 

engaged in [lead-based paint] activities are properly trained; that training programs are 

accredited; and that contractors engaged in such activities are certified." 15 U.s.c. § 2682(a)(I) 

(emphasis added). Moreover, while the statute also grants EPA authority to create standards for 

"lead-based paint activities," such activities are defined, in the case of target housing, as "risk 

assessment, inspection, and abatement." 15 U.S.C. § 2682(b)(J). Accordingly, work involving 

renovation, repair and painting is not included under the "lead-based paint activities" definition. 

In enacting Section 402( c), Congress was very careful to distinguish between 

lead-based paint activities and RRP activities and that section does not explicitly authorize EPA 

to promulgate regulations affecting the work practice standards for RRP activities, e.g., requiring 

clearance testing. Instead, Congress authorized EPA to "promulgate guidelines for the conduct" 

of RRP activities and to require certification of RRP firms that are engaged in activities that 

create lead-based hazards. 15 U.S.c. § 2682(c)(I) and (3). The statute also requires EPA, after 

undertaking certain studies, to revise the regulations developed for abatement and other leadbased paint activities to apply to RRP activities. Id. § 2682(c)(3). Thus, Congress intended that 

EPA would apply appropriate certification requirements developed in connection with leadbased paint activities to RRP contractors but that work practice standards - including clearance 

testing requirements - would remain the subject of guidelines, not regulations. 

Further, the plain meaning of the statute is supported by the fact that the provision 

requiring EPA to engage in a study prior to promulgating regulations for RRP activities (Section 

402(c)(2» is entitled "Study of certification" and the provision concerning subsequent 

promulgation of regulations (Section 402(c)(3» is headed "Certification determination." See 

I.NS. v. National Center Jor Immigrants' Rights. Inc., 502 U.S. 183 (1991) (section titles can 

serve as aids to the construction of statutory language where the language is ambiguous); see 

also Bell v. Reno, 218 F.3d 86 (2d Cir. 2000) (the title of a section is an indication of its 

meaning). In contrast to the preceding provision concerning guidelines for work practice 

standards, the focus of Section 402(c)(2) and (3) is the certification of contractors. Therefore, 

the focus of rulemaking deve lopment under Section 402( c )(3) must be on certifications of 

contractors and any attempt by EPA to require contractors to comply with work practice 

standards such as any form of clearance testing is beyond EPA's statutory authority. 

1 Lead-safe work practices do provide health and safety benefits. However, EPA is without the authority to require 

such practices. Nevertheless, contractors that comprise the regulated community endeavor to use work practices that 

protect human health and the environment. 

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B. EPA has not established that all the activities being regulated create lead-based paint 

hazards 

EPA's proposed dust wipe testing and clearance testing requirements also exceed 

the Agency's authority because EPA has not established that the activities it seeks to regulate 

create lead-based paint hazards. Any activity that does not create a lead-based paint hazard 

"does not require certification" under Section 402(c)(3) and cannot be regulated by EPA. See 

Comments by the National Ass'n of Home Builders regarding EPA's Proposed Rule: Lead 

Renovation, Repair and Painting Program, Published in the Federal Register, January 10, 2006 at 

71 FR 1587, Section lI(C) ("NAHB LRRP Rule Comments") (May 25, 2006). ("In those cases 

where EPA has not demonstrated that typical RRP activities create lead hazards, the Agency is 

prohibited from addressing them in this rule"). Such RRP activities may only be subject to EPA 

guidelines. See 15 U.S.C. § 2628(c)(I). 

The Agency may not impose the type of clearance requirements it has proposed 

because it has failed to demonstrate that RRP activities create the type of hazard that is a 

predicate for regulation under Section 402( c). The statute does not authorize EPA to regulate 

RRP activities simply because they disturb lead-based paint, as RRP activities may do. Instead, 

Section 402(c)(3) requires EPA to promulgate regulations with respect to RRP activities only 

where such activities create a lead-based paint hazard. The statute does not provide specific 

authorization to EPA to regulate RRP activities that do not create a lead-based paint hazard. 

Consequently, from that silence EPA lacks authority to regulate RRP activities unless they create 

a lead-based paint hazard. See, e.g., In re Haas, 48 F.3d 1153, 1156 (11th Cir. 1995) (where 

Congress knows how to say something but chooses not to, its silence is controlling). Therefore, 

because Section 402 is silent as to EPA's authority to regulate RRP activities that do not cause a 

lead-based paint hazard, such authority is lacking. 

EPA does not address this aspect of the extent of its regulatory authority in the 

proposed amendments because it has purported to find that all RRP activities that disturb leadbased paint create a lead-based paint hazard. However, there is a lack of evidence to support 

such a conclusion. Generally, most RRP activities either eliminate or reduce the potential for 

future lead-based paint hazards. For example, the Mercatus Report stated that "evidence 

collected [in EPA's Study] following the passage of the statute has indicated that lead hazards 

created by renovation and remodeling work are minimal, and RRP work removes chipping and 

deteriorating paint two of the leading causes of elevated blood-lead levels." See Comments of 

the Regulatory Studies Program, Mercatus Center, George Mason University at 30 (May 25, 

2006) ("Mercatus Report"). 

Other studies have reached similar conclusions. NAHB's own study noted that 

"when considering lead dust loading on surfaces throughout a single property, results showed 

that overall all but one of the properties evaluated showed lower levels of lead dust when R& R 

contractors completed the work than when they arrived." NAHB, Lead-Safe Work Practices 

Survey Project Report 2 (Nov. 2006) (the ''NAHB Report") (emphasis added). Moreover, the 

Wisconsin Department of Health and Family Services ("WDHFS") noted that "our experience in 

Wisconsin is that professional renovation is rarely the cause of lead poisoning in children." 

Wisconsin Department of Health and Family Services, Comments: Lead; Renovation, Repair, 

and Painting Program; Proposed Rule (emphasis added). 

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In light of these studies, an ample basis exists in the record for concluding that 

most RRP activities do not create lead-based paint hazards, but rather minimize and even 

eliminate such hazards. As discussed above, the statute limits EPA's regulatory authority to 

those activities that actually create a lead-based paint hazard, which means that RRP activities 

would generally be exempt from EPA's authority under Section 402(c)(3). To the extent that 

EPA is without authority to promulgate enforceable regulations with respect to such activities, it 

is likewise prohibited from requiring renovators engaged in RRP activities to conduct dust wipe 

testing or clearance testing. 

C. EPA has not satisfied the requirement to conduct a study to determine which types 

of renovation activities create lead-based paint hazards because the studies the 

Agency conducted are flawed 

EPA also is without authority to promulgate dust wipe testing or clearance testing 

requirements for RRP activities because the Agency has not satisfied the prerequisite of 

conducting a congressionally-mandated study as set forth under the relevant statute for imposing 

regulatory requirements on RRP activities. Prior to promulgating any regulations involving RRP 

activities, EPA was required to conduct a "Study of certification" to determine which of the 

"various types of renovation and remodeling activities ... disturb lead and create a lead-based 

paint hazard on a regular or occasional basis." 15 U.S.C. § 2682(c)(2). Thus, EPA cannot 

promulgate any regulations affecting RRP activities until after it has satisfied the "Study of 

certification" requirements. 

The Agency has undertaken a four-part study (the "Study") in an attempt to 

satisfY the study requirement, but the administrative record provides an ample basis for 

questioning the validity of the Study and its conclusions. One of the most comprehensive 

critiques of the Study comes from the Mercatus Center at George Mason University, which 

conducted a "careful and independent analys[isJ employing contemporary economic scholarship 

to assess [the] rulemaking proposal[] from the perspective of the public interest." Mercatus 

Report at I. According to the Mercatus Report, the conclusions made in EPA's Study did not 

match its content. ld. at 23. For example, based on a review of EPA's own data, the Mercatus 

Report concluded that: 

• Phases I and II of the Study "failed to find a connection between elevated blood-lead 

levels and workers' exposure to considerable amounts of lead-contaminated dust;" 

and 

• "[TJhe Wisconsin [Phase III] study cannot claim that any RRP work increases the risk 

of elevated blood-lead levels in children." 

ld. at 10,21; see also NAHB LRRP Rule Comments, Section II(B)(4). 

Several members of the peer review panel involved in evaluating the Study also 

raised concerns about various aspects of the methodologies employed. For example, EPA 

reported that "[i]n regard to the Wisconsin blood-lead registry, another issue of concern among 

the reviewers was how representative the registry is of the state population." See Phase IV 

Report at 1.3. However, the Study failed to adequately address these and other concerns. In 

other words, contrary to EPA's conclusions, the Agency's own Study failed to show that 

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unregulated RRP activity contributed to increased blood-lead levels in either RRP workers or in 

children residing in homes that were being remodeled. NAHB likewise pointed out in its prior 

comments to EPA that "the studies cited do not illustrate a definitive link between renovation 

and remodeling activities and lead poisoning in children." See NAHB LRRP Rule Comments, 

Section II(B). 

EPA has based its decision to regulate RRP activities on the conclusions made in 

the Study, when the underlying data suggest that there is little, if any, need for such regulation. 

Because the conclusions of the Study are not supported by the underlying data, EPA has not 

satisfied the requirements of Section 402( c )(2) because it has not adequately determined the 

"extent to which persons engaged in various types of renovation and remodeling activities ... 

are exposed to lead in the conduct of such activities or disturb lead and create a lead-based paint 

hazard" as required by Congress. 15 U.S.C. § 2682(c)(2). Therefore, EPA is not entitled to 

"utilize the results of the study" as a justification for promUlgating dust wipe testing and 

clearance testing requirements for RRP activities. 15 U.S.c. § 2682(c)(3). 

II. EPA's Proposed Requirements Are Inconsistent With the Statute Because They 

Eliminate the Distinction Between Abatement and Renovation 

The imposition of dust wipe testing and clearance testing requirements as 

proposed by EPA is inconsistent with the intent of Congress because at a fundamental level it 

eliminates the distinction between abatement contractors on the one hand and renovators on the 

other. "Abatement is intrinsically very different from remodeling," and this reality is reflected in 

the statute, which sets forth separate regulatory schemes for "lead-based paint activities," 

including abatement, and renovation and remodeling. NAHB LRRP Rule Comments at 23 (May 

25, 2006). Moreover, those regulatory schemes differ in key respects. For example, Section 

402(a) requires that all abatement contractors be properly trained and certified and that all 

abatement activities conform to work practice standards promulgated by the Agency. In 

contrast, Congress gave EPA flexibility in determining whether contractors engaged in RRP 

activities should be subject to regulatory requirements. 

The legislative history of Title X supports the conclusion that Congress believed 

RRP activities and lead-based paint activities were distinct and that each required a different 

level of government regulation. For example, the Senate Committee on Banking, Housing and 

Urban Affairs recognized that not all RRP activities would create lead-based paint hazards and 

that, unlike lead-based paint activities (risk assessment, inspection, abatement), not all RRP 

activities would require the use of certified workers. As the Committee stated: 

Although the committee is aware that some home remodeling and 

renovation projects which have not incorporated lead reduction 

measures have aggravated lead-based paint hazards, and caused 

poisoning of workers and children, not all such projects are 

inherently dangerous. The level of hazards is a function of the 

extent to which lead-based paint is disturbed and the amount of 

dust lead generated. The committee recognizes that some federally 

funded renovation projects in housing containing lead-based paint 

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will not require certified workers because it will not involve 

significant dust generation or the disturbance of painted surfaces. 

S. Rep. No. 102-332 at 121 (1992) (emphasis added). 

In fact, many RRP activities are more closely related to a category of activities 

referred to as "Interim Controls" in the bill before the Committee (which included "repairs, 

maintenance, [and] painting") than they are to abatement and other lead-based paint activities. 

"Interim Controls would be measures which temporarily reduce human exposure or likely 

exposure to lead-based paint hazards. These measures would include specialized cleaning, 

repairs, maintenance, painting, temporary containment, ongoing monitoring of lead-based paint 

hazards or potential hazards, and the establishment and operation of management and resident 

education programs." ld. at 115. In the bill it reported out, the Committee chose not to impose 

any training and certification requirements on individuals carrying out interim control measures, 

stating that: 

These activities typically involve less potential for generating 

dangerous levels of dust, and are not much different from the types 

of activities routinely carried out by housing residents and 

maintenance personnel. 

S. Rep. No. 102-332 at 121 (1992) (emphasis added). 

EPA itself has recognized that abatement activities and renovation differ in 

fundamental respects. In issuing the LRRP Rule, the Agency acknowledged that "[t]he purpose 

of an abatement project is to permanently eliminate lead-based paint and lead-based paint 

hazards." 71 Fed. Reg. at 1613. As a consequence, EPA concluded, it is "perfectly appropriate" 

to require an abatement contractor to undertake testing once the work is completed to ensure that 

the lead-based paint hazards have in fact been eliminated. ld. In contrast, EPA recognized that 

"renovations may be performed for many reasons, most of which have nothing to do with 

eliminating lead-based paint hazards." Id. at 1613-14. The Agency further recognized that "if 

clearance testing using dust wipes were required after every renovation job, it could have the 

effect of holding the renovation firm responsible for abating all lead dust hazards, including such 

hazards that may have existed in the area before the renovation commenced." Id. at 1614. 

To the extent that EPA imposes clearance testing requirements, the Agency will 

effectively eliminate any distinction between renovation and abatement. Id. at 250050 ("EPA is 

proposing to require renovation firms to follow a clearance process similar to that performed 

after abatement projects ... "). Indeed, the amended Rule would impose more requirements on 

renovators, who have to follow specified cleaning requirements, than contractors performing 

abatement projects. Even the dust wipe testing requirements in the amended Rule impermissibly 

blur the distinction between abatement and renovation. For instance, dust wipe testing will 

effectively make renovators responsible for any lead dust left in the residence after the job that is 

in excess of applicable standards unless the renovators incur the additional costs associated with 

baseline testing. Consequently, whether the task carried out is one of renovation or abatement, 

the company perfonning the work must meet the cleanliness standards regardless of conditions 

that existed prior to the commencement of the work. 

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Accordingly, notwithstanding the fundamental distinction between abatement and 

renovation, the imposition of dust wipe testing and clearance testing requirements imposes 

essentially the same burden on the renovator as the abatement contractor, i. e., to leave the work 

area in a clean, relatively dust-free (and therefore lead dust-free) condition. In the case of 

abatement contractors, remedying pre-existing conditions and rendering the work area free of 

lead is precisely the point of the work. However, the purpose of a renovation project is to change 

the appearance of the home in some fashion without regard to the presence of lead, and it is 

therefore inappropriate to impose liability on renovators for failing to remedy pre-existing 

conditions. Thus, the imposition of dust wipe testing and clearance testing requirements would 

erode the distinction between abatement contractors and renovators in critical respects, which is 

contrary to the intent of Congress to maintain the distinction between the two types of 

contractors. 

III. EPA's Proposed Imposition of Dust Wipe Testing and Clearance Requirements is 

Arbitrary and Capricious 

Even if EPA had authority under the statute to impose clearance testing and other 

requirements on renovators, EPA's proposed amendments would still be legally deficient 

because they are arbitrary and capricious. As the U.S. Supreme Court has stated, an agency's 

decision will be vacated if it "has relied on factors which Congress had not intended it to 

consider, entirely failed to consider an important aspect of the problem, offered an explanation 

for its decision that runs counter to the evidence before the agency, or is so implausible that it 

could not be ascribed to a difference in view or the product of agency expertise." National Ass'n 

of Home Builders v. Defenders of Wildlife, 127 S. Ct. 2518, 2530 (2007). Moreover, EPA must 

articulate an explanation that includes "a rational connection between the facts found and the 

choice made." Kennecott Greens Creek Min. Co. v. Mine Safety & Health Admin., 476 F.3d 946, 

952 (D.C. Cir. 2007). A court should uphold EPA's action only if the court can discern a 

"reasoned path" from the facts and considerations before the Agency to the decision it reached. 

United Distribution Cos. v. F.E.R.C., 88 F.3d 1105,1187 (D.C. CiT. 1996) (per curiam). 

Accordingly, if EPA has offered an explanation for its decision that runs counter 

to the evidence before it, a court should find the Agency's action to be arbitrary and capricious. 

American Coke & Coal Chemicals Inst. v. Environmental Protection Agency, 452 F.3d 930, 941 

(D.C. Cir. 2006). Here, EPA's explanation for its rulernaking decisions run counter to the 

evidence in the record that was before the Agency. 

A. lbe Agency has simply changed its mind without citing any new data or 

circumstances to justify its new direction 

When changing a final rule, an agency must provide a reasoned explanation for 

the change. See C & W Fish Co., Inc. v. Fox, 931 F.2d 1556, 1561 (D.C. Cir. 1991); see also 

Williams Gas Processing-Gulf Coast Co. v. FERC, 475 F.3d 319, 326 (D.C. CiT. 2006) (stating 

that an agency may change its past practices, especially under changed circumstances, so long as 

it provides a reasoned explanation for its action). If an agency fails to explain its reassessment, 

then the courts will decline to find that the agency had an adequate basis for its decision. Fox, 

931 F.2d at 1561. In amending the Rule to include dust wipe testing and clearance testing 

requirements, EPA has reversed course without citing any data or other information that has 

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come to light since April 2008 that casts doubt on its prior position. See 75 Fed. Reg. at 25057 

(References). Rather, it appears that the Agency simply changed its mind even before it 

implemented the Rule as the result of the settlement ofa lawsuit. See 75 Fed. Reg. at 25044. In 

the absence of a reasoned explanation for the change in the Rule regarding dust wipe testing and 

clearance testing, the Agency's decision is arbitrary and capricious. 

B. The Agency notes the concerns which led it to reject dust wipe testing and 

clearance requirements for renovation activities but fails entirely to explain how 

its new proposal is justified in the face of those same concerns 

EPA gave "significant weight to the cost ... and liability concerns" in crafting 

the Rule. See 75 Fed. Reg. at 25046. In proposing to amend the Rule, EPA concedes that the 

imposition of dust wipe testing and clearance testing will make renovation and remodeling 

activities more expensive. See 75 Fed. Reg. at 25044 ("EPA also recognized that dust wipe 

testing and clearance as required after abatements can be expensive."). Further, the Agency 

acknowledges that the amendments will prompt renovation and remodeling contractors to take 

measures to protect themselves against future liability. Id. at 25045 (noting that EPA considered 

the "white glove" method an alternative to clearance in order to protect contractors against 

liability for pre-renovation dust). However, EPA has not adequately explained why it reached a 

different conclusion on dust wipe testing and clearance testing when the factors to be balanced 

remained unchanged. See id. at 25046. ("EPA has continued to balance these considerations in 

today's proposal, but has preliminarily concluded that, for certain jobs, the additional benefits of 

dust wipe testing, and in some cases clearance, warrant imposing these additional 

requirements."). Such a course of action is arbitrary and capricious. 

C. The costs of the proposed amendments outweigh the minimal benefits of the 

proposed new requirements, particularly in light of EPA's conclusions regarding 

the effectiveness of the existing cleaning verification requirements 

EPA's imposition of dust wipe testing and clearance testing requirements is also 

arbitrary and capricious because the costs of the proposed requirements will outweigh their 

benefits. Currently, renovators clean up and conduct a visual inspection of the work area after 

completing a project. EPA itself has noted that this type of cleanup typically reduces the 

percentage of lead in the affected areas by over 99%. See EPA, Final Summary Report 8 

("[S]imple broom and shop-vacuum cleanup resulted in substantial reduction in the total amount 

oflead available to occupants."); see also Mercatus Report 10-11; 75 Fed. Reg. at 25049 (stating 

that in the Dust Study "experiments, cleaning verification was needed to reduce average dust 

lead levels below the standards"); id. at 25051 ("the Dust Study suggests that it would be 

unlikely for a surface that had been cleaned and had gone through the cleaning verification 

process to fail another round of cleaning verification"). As NAHB documented in its report, 

because such cleanups are so effective most homes are less likely to have current or future leadbased hazards after the RRP activities have occurred than they were before the RRP activities 

took place. NAHB Report at 2 ("the post-work samples collected from all surfaces were lower 

than the pre-work dust samples in all of the activities evaluated"); see also 75 Fed. Reg. at 25049 

("Cleaning verification is useful because it combines fine cleaning properties with feedback to 

the certified renovator on the effectiveness ofthe post-renovation cleaning process."). 

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In contrast to the benefits of the existing regime, the only benefits proffered by 

EPA for its proposed changes are (I) providing more information to the owners and occupants of 

the affected buildings, and (2) changed behavior on the part of the contractors during the cleanup 

after renovation. See 75 Fed. Reg. at 25060. However, these assumed benefits are insufficient to 

justify the proposed amendments. First, improvement of the population's "understanding and 

awareness of dust-lead hazards" - while a worthy objective - should not be the primary reason 

behind the proposed change. The Agency could enlighten citizens regarding the dangers of lead 

dust in more cost-effective ways than requiring contractors to undertake dust wipe testing and 

clearance testing. 

Indeed, information regarding these dangers is already available and the means of 

dissemination are mandated by Congress. Section 1018 of the Residential Lead-Based Paint 

Hazard Reduction Act of 1992 provides a direct avenue for EPA to reach owners and occupants 

of target housing, and establishes a clear process for informing owners and occupants about the 

potential for lead-based paint exposure and health impacts. See Residential Lead-Based Paint 

Hazard Reduction Act of 1992, Pub. 1. 102-550, § 1018. Section 1018 requires sellers and 

lessors of target housing to provide prospective buyers and tenants with a lead hazard 

information pamphlet. Id. at § 1018(a)(l)(A). In addition, the sale or rental contract must 

include a "lead warning statement," alerting the prospective buyer or tenant that, because of the 

age of the home, lead-based paint may be present. The statement describes the health risks 

associated with lead-based paint with emphasis on young children and pregnant women. [d. at 

§1018(a)(2)-(3). Any known lead-based paint hazards must be disclosed, and any documentation 

pertaining to these hazards must be presented to the buyer/tenant. Id. at § 1018(a)(l)(B). 

Furthermore, a prospective buyer or tenant also has at least a 10-day opportunity to have the 

property tested for lead before becoming obligated under the contract. Id. at § 1 0 18(a)(2)(C). 

The penalties for noncompliance are steep and include federal monetary penalties 

as well as civil remedies for the buyer or tenant when the seller, lessor, or any agents involved in 

the transaction fail to comply with Section 1018 or the implementing regulations. Thus, Section 

1018 is a powerful tool that provides EPA with direct access to the occupants of target housing 

even before they enter the home. 

As EPA has recognized, Section 402 does not grant it authority to regulate home 

owners or occupants who choose to perform their own renovation activities.' Nor does Section 

402 authorize EPA to disseminate information to owners and occupants. Thus, Section 402 and 

its implementing regulations4 fail to provide EPA with any authority to provide information to 

residents or change residents' behavior under Section 402. 

3 See Lead; Renovation, Repair, and Painting Program; Lead Hazard information Pamphlet; Notice of Availability; 

Final Rule, 73 Fed. Reg. 21692, 21708 (Apr. 22, 2008) CEPA thus interprets the statutory directive to regulate 

remodeling and renovation activities found in TSCA section 402(c)(3) as applying to contractors and not a broader 

category of persons, such as homeowners."); see also Lead; Requirements for Lead-Based Paint Activities; 

Proposed Rule, 59 Fed. Reg. 45872, 45873-4 (Sept. 2, 1994), 

4 F.g" 73 Fed. Reg. 21692 (Apr. 22, 2008). 

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Instead, Congress has provided two methods for information dissemination to 

owners and occupants, including Section 1018, which is discussed above. The other statutory 

mechanism for providing information to residents regarding lead-base paint hazards is found in 

TSCA Section 406. That provision requires EPA to produce an informational pamphlet 

describing lead-based paint hazards that may be present in a home built before 1978, the risks 

these hazards pose to occupants of the property, the role renovation may play in creating these 

risks, methods for evaluating and reducing hazards, and information on how to locate contractors 

that specialize in lead-based paint hazard evaluation and reduction. See TSCA, § 406(a). Then, 

Congress specifies the method for dissemination of this pamphlet "each person who performs 

for compensation a renovation of target housing [must] provide a lead hazard information 

pamphlet to the owner and occupant of such housing prior to commencing the renovation." 

TSCA, § 406(b). However, there is no mention of any other form of information dissemination 

within Section 406(b), and Section 402 is silent on the issue. Long-standing rules of statutory 

interpretation clearly state that where Congress "knows how to say something but chooses not to, 

its silence is controlling." In re Hass, 48 F.3d 1153, 1156 (II th Cir. 1995); see also discussion 

irifra, p. X. 

Thus, not only does EPA have a mechanism to directly reach owners and 

occupants of target housing in a cost-effective manner that provides information at a time when 

exposure to lead hazards may be prevented entirely, but Congress is clear on the role the 

renovator contractor is to play in informing residents about lead-based paint hazards. The 

Agency has no authority under Section 402 to require information dissemination to residents 

through a requirement imposed on the renovation contractor. 

The other benefits city by EPA for dust wipe testing and clearance testing relates 

to the change in behavior of the contractor that EPA hopes to see as a result of the imposition of 

these requirements. In effect, the Agency is citing this changed behavior as one of the reasons 

for the proposed amendments without having any information as to how the proposed 

requirements would actually benefit the populations of concern. Given that RRP activities 

generally do not result in lead-based paint hazards and standard cleanup procedures result in the 

removal of almost all of the lead from the work area, the dust wipe testing and clearance testing 

procedures will result in minimal benefit. 

At the same time, the costs associated with dust wipe testing and clearance testing 

will be significant. These costs include not only the expense of administering the dust wipe 

testing and clearance test itself, but also include the opportunity costs associated with delays in 

completing projects and a resulting inability to take on additional projects due to the clearance 

testing. In addition, as EPA itself has recognized, renovators may feel compelled to document 

pre-existing conditions due to liability concerns, which would further increase costs. See 71 Fed. 

Reg. at 1614. These costs associated with dust wipe testing and clearance testing outweigh the 

minimal benefits of clearance testing and call into question the rationales for imposing such 

requirements. 

As noted above, visual inspections following a typical post-project cleanup are 

extremely effective and, according to EPA's own Study, typically reduce the lead concentration 

in a home by over 99%. While this method of inspection is effective, simple and inexpensive, 

dust wipe testing and clearance testing are more time-consuming and more expensive. It would 

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be arbitrary and capricious for EPA to require more expensive and complicated dust wipe testing 

and clearance testing that would provide little additional benefit as opposed to a simpler, more 

efiective, and less expensive visual test, especially after EPA itself has admitted the many 

drawbacks associated with these proposed requirements. 

D. The proposed rule will actually undermine EPA's goal of minimizing risk to 

young children and other exposed populations 

The dust wipe testing and clearance testing requirement will actually undermine 

the very goal that EPA seeks to achieve, i.e., overall reduction of lead-based paint hazards. As 

renovators incur the costs associated with dust wipe testing and clearance testing, they will pass 

some of those costs along to their customers in the form of higher prices for services. NABB's 

survey demonstrates that most homeowners are unwilling to absorb significant costs for dust 

wipe testing and clearance testing. NAHB, Report on Lead Paint Test Survey (April 2007). As a 

result of the higher prices occasioned by dust wipe testing and clearance testing, some 

homeowners may elect to postpone renovations, meaning that areas with lead-based paint will 

remain in homes longer. In other cases homeowners - who will not be subject to EPA's 

regulatory requirements - will undertake such activities on their own, or will hire underground 

and/or unregulated contractors. In either case, the work may be done in a way that causes more 

lead dust and cleanups may not be as thorough. 

As noted by NABB, the Mercatus Center, and others, the unintended consequence 

of the imposition of dust wipe testing and clearance testing requirements on professional 

renovators will be that more children and other people will be placed at risk for lead poisoning 

due to deteriorating homes. See NAHB LRRP Rule Comments at Section II(C)(2); see also 

Mercatus Report at 30. As the U.S. Court of Appeals for the Seventh Circuit has stated, a court 

'''is not obliged to stand aside and rubberstamp [its 1 affirmance of administrative decisions that . 

. . frustrate the congressional policy underlying a statute.'" Local 15 Int'l Brotherhood of Elec. 

Workers, AFL-CIO v. N.L.R.B., 429 F.3d 651, 656 (7th Cir. 2005). Thus, it would be arbitrary 

and capricious for EPA to impose requirements that will lead to an increased risk to the very 

population EPA is striving to protect. 

IV. EPA's Refusal to Convene a New Small Business Advocacy Review Panel Violates 

the Regulatory Flexibility Act 

In the preamble of the proposed LRRP Rule Amendment, EPA states that it has 

complied with its obligation under the Regulatory Flexibility Act ("RF A"), including its 

responsibility to convene a Small Business Advocacy Review ("SBAR") Panel. More 

specifically, EPA alleges that the SBAR Panel which was convened in 1999, and discussed in the 

preamble to the original LRRP Rule, satisfies any obligation the Agency might have to convene 

a SBAR Panel as a consequence of proposing the LRRP Rule Amendment. EPA is mistaken in 

this assumption. 

EPA must convene a SBAR Panel any time "a rule is promulgated which will 

have a significant economic impact on a substantial number of small entities." 5 U.S.c. § 

609(a). EPA's obligation to convene a SBAR Panel is not limited to situations in which an 

entirely new rule is being proposed. Instead, this obligation is triggered by any rulemaking -

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even the amendment of an existing rule - that would result in a significant economic impact on a 

substantial number of small entities. For example, EPA convened a SBAR Panel to review 

proposed changes to existing regulations related to the certification of pesticide applicators. See 

EPA, Panel 33b: Certification of Pesticide Applicators (Revisions). 

By adding dust wipe testing and clearance testing requirements, the proposed 

LRRP Rule amendments would significantly alter the regulatory reach - and consequently the 

economic impact of the LRRP Rule. EPA itself has recognized that the changes associated 

with the proposed amendments would result in a significant economic impact on a substantial 

number of small entities. See 75 Fed. Reg. at 25061. For example, according to EPA's 

economic analysis related to the proposed LRRP Rule amendments, the additional requirements 

would cost small entities between 0.4% and 2.6% of their annual revenue. Id. Therefore, it is 

apparent that the proposed amendments trigger EPA's obligation to undertake a RFA/SBREFA 

Screening Analysis and ultimately convene a new SBAR Panel. 

EPA attempts to avoid this obligation under the RFA by stating that it "believes 

that the conclusions it made in 2008 regarding these recommendations are applicable to this 

proposal." Id. Despite these claims, the proposed amendments to the LRRP Rule represent a 

major departure from the original LRRP Rule and would result in a significant economic impact 

on a substantial number of small entities. As such, the proposed amendments trigger EPA's 

obligations to comply with the RF A, including an obligation to convene a SBAR Panel. To date 

EPA has failed to discharge this duty. As a result, EPA must delay the promulgation of the 

proposed amendments until after these obligations have been fully satisfied. 

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Douglas County Business Alliance 

420 Jerry Street 

The Honorable Sam Graves 

Chairman 

Castle Rock, CO 80104 

House Committee on Small Business 

U.S. House of Representatives 

Washington, DC 20S1S 

Dear Chairman Graves: 

On behalf of our over 2,500 members of the Douglas County Business Alliance, which is 

made up of the Castle Pines Chamber of Commerce, Castle Rock Chamber of Commerce, 

Castle Rock Economic Development, Denver South Economic Development Partnership, 

Highlands Ranch Chamber of Commerce, Lone Tree Chamber of Commerce, Northwest 

Douglas County EDC and Parker Chamber of Commerce, we submit the following 

statement for the record in today's hearing on Regulatory Flexibility Act Compliance: Is 

EPA Failing Small Businesses? 

NACo strongly supports the Clean Water Act and the goals of the EPA that are intended 

to protect our nation's water resources. NACo has concerns with the EPA's recent 

endeavor to promulgate new regulations during which the EPA appears to have not 

considered and incorporated public, State and Local government's comments; provide 

flexibility to incorporate geographically-specific and cost effective requirements; and 

conduct a study that includes a comprehensive cost benefit analysis. 

What the EPA is currently advancing would have serious financial implications for local 

governments and their constituents at a time when this country is struggling to recover 

from one of the worst recessions in modern history. 

In April 2011 the EPA/USACE issued draft guidance that was intended to "increase 

clarity and to reduce costs and delays in obtaining CWA permits." During the review of 

the draft guidance a large number of stakeholders, including organizations such as 

NACo, National League of Cities, and the National Conference of State Legislatures, 

found that the draft could substantially expand the definition of "Waters of the U.S.", 

included in the CWA. These interpretations have far-reaching implications for local 

governments by: 

• increasing costs for pUblic and private-sector projects, including maintenance activities; 

• potentially affecting U.S. Counties' National Pollutant Discharge Elimination System 

(NPDES) programs; 

• raising the likelihood of third party lawsuits; and 

• potentially lengthening permit timelines, resulting in project delays. 
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Additionally, through public outreach, the EPA provided details on new requirements 

that the EPA intends to include in the updated Storm water General Permit. These 

additions included an expansion of boundaries in permit areas under the National 

Pollutant Discharge Elimination System (NPDES) which could include the entire 

jurisdictional boundaries of cities and counties, a requirement for municipalities to treat 

stormwater volume as a pollutant, and a requirement that municipalities develop a 

program requiring existing site owners to address discharges from their properties 

(retrofits). This expansion would impose an unfunded mandate and dramatically 

increase the financial burden on local governments and businesses, including rural areas 

not currently subject to these regulations. 

We urge the Committee to move forward with legislation putting a halt to the EPA's 

efforts until such time an impact study can be done and sound evidence can be 

produced to show there is in fact a problem and the solution proposed is thoroughly 

vetted, cost effective and flexible to provided geographically specific solutions. At a 

time when businesses are struggling and people are out of work, we should not be 

promulgating a one size fits all regulation that causes further harm to our businesses 

and those they employ. For this reason we hope Congress will move to pass bi-partisan 

legislation in the House in the form of HR 4965. 

This is common-sense legislation requiring EPA to follow the current rule-making 

process and would prohibit them from moving forward until such impact studies are 

done. 

Respectfully, 

Frank Gray 

Castle Rock Economic Development 

Chairman, Douglas County Business Alliance 

DCBA is a coalition of business organizations with a mission to provide a single voice for the Douglas County business community. 

Key issues to DCBA members include transportation, water, business-friendly public policy, education, tax policy and sustainable 

development. 

The Douglas County Business Alliance 

Castle Pines Chamber of Commerce, Castle Rock Chamber of Commerce, castle Rock Economic Development, Denver South 

Economic Development Partnership Highlands Ranch Chamber of Commerce, lone Tree Chamber of Commerce ,Northwest Douglas 

County EOC, and Parker Chamber of Commerce 

www.douglascountybusinessalliance.com 
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Tel 303 290 6611 

F" 303290 9141 

6880 S. Yosemite Court, Ste 200 

Centennial, Cototado 80112 

The Honorable Sam Graves 

Chairman 

House Committee on Small Business 

U.S. House of Representatives 

Washington, DC 20515 

Dear Chairman Graves: 

(A) COLORAOO CONTRACTORS 

ASSOCIATION 

On behalf of the over 350 members of the Colorado Contractors Association ('CCA'), which is 

made up of civil infrastructure contractors (road, bridge, rail, airfield, water, sewer, and 

stormwater) and suppliers of equipment, materials and professional services, we submit the 

following statement for the record in today's hearing on Regulatory Flexibility Act Compliance: 

Is EPA Failing Small Businesses? 

CCA strongly supports the Clean Water Act and the goals of the EPA that are intended to 

protect our nation's water resources. CCA has concerns with the EPA's recent endeavor to 

promulgate new regulations during which the EPA appears to have not considered and 

incorporated public, State and local government's comments; provide flexibility to Incorporate 

geographically-specific and cost effective requirements; and conduct a study that Includes a 

comprehensive cost benefit analysis. 

What the EPA is currently advancing would have serious financial implications for local 

governments and their constituents at a time when this country Is struggling to recover from 

one of the worst recessions in modern history. 

In April 2011 the EPA{USACE issued draft guidance that was intended to "Increase clarity and to 

reduce costs and delays In obtaining CWA permits!' During the review of the draft guidance a 

large number of stakeholders found that the draft could substantially expand the definition of 

"Waters ofthe U.S.", included in the CWA. These interpretations have far-reaching implications 

for local governments by: 

• increasing costs for public and private-sector projects, Including maintenance activities; 

• potentially affecting National Pollutant Discharge Elimination System (NPDES) programs; 

• raising the likelihood of third party lawsuits; and 

• potentially lengthening permit tlmelines, resulting in project delays. 
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r" 303 290 6611 

Fa)! 303 290 9141 

6880 S. Yo~e Court, Ste 200 

centennial, Colorado 80112 

(A) COLORADO CONTRACTORS ASSOCIATION 

Additionally, through public outreach, the EPA provided details on new requirements that the 

EPA intends to include in the updated Stormwater General Permit. These additions included an 

expansion of boundaries in permit areas under the National Pollutant Discharge Elimination 

System (NPDES) which could include the entire jurisdictional boundaries of cities and counties, 

a requirement for municipalities to treat stormwater volume as a pollutant, and a requirement 

that municipalities develop a program requiring existing site owners to address discharges from 

their properties (retrofits). This expansion would impose an unfunded mandate and 

dramatically increase the financial burden on local governments and businesses, including rural 

areas not currently subject to these regulations. 

We urge the Committee to move forward with legislation putting a halt to the EPA's efforts 

until such time an impact study can be done and sound evidence can be produced to show 

thene is in fact a problem and the solution proposed is thoroughly vetted, cost effective and 

flexible to provided geographically specific solutions. At a time when businesses are struggling 

and people are out of work, we should not be promulgating a one size fits all regulation that 

causes further harm to our businesses and those they employ. For this reason we hope 

Congress will move to pass bi-partisan legislation in the House in the form of HR 4965. 

This is common-sense legislation requiring EPA to follow the current rule-making process and 

would prohibit them from moving forward until such impact studies are done. 

~?;7 ~Oody----...... 

Colorado Contractors As iation 

Director of Owner-Agency Relations 
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Auociated BuRdara ami Contnu:ton. Inc. 

June 27, 2012 

The Honorable Sam Graves 

Chairman 

House Committee on Small Business 

U.S. House of Representatives 

Washington, D.C. 20515 

The Honorable Nydia M. Velazquez 

Ranking Member 

House Committee on Small Business 

U.S. House of Representatives 

Washington, D.C. 20515 

Dear Chainnan Graves and Ranking Member Velazquez: 

On behalf of Associated Builders and Contractors (ABC), a national association with 74 chapters 

representing more than 22,000 merit shop construction and construction-related firms, [ am 

writing in regard to the full committee hearing titled, "Regulatory Flexibility Act Compliance: [s the 

Environmental Protection Agency (EPA) Failing Small Businesses?" 

ABC believes that all federal agencies, including EPA, must be held accountable for full compliance 

with existing rulemaking statutes and other obligatory requirements when promUlgating regulations to 

ensure the policies are feasible and cost-effective for small businesses to implement. Unfortunately, 

delays and attempts to circumvent the regulatory process result in increased uncertainty and increase 

the likelihood of rules and policies that will negatively impact our country's largest contributors to job 

creation. 

ABC members have expressed concern about several pending EPA rulemakings and sub-regulatory 

actions from a small business standpoint: 

• Lead Renovation, Repair and Painting (RRP) Program for Commercial and Public 

Buildings: Having already implemented regulations for residential construction, EPA now 

plans to regulate lead exposures in renovation, repair and painting practices in commercial 

buildings. Despite feedback from a broad coalition of industry stakeholders-inclnding 

fundamental differences between residential and nonresidential environments-<:oncerns 

persists that EPA will take an inflexible approach to this rulemaking, which impose 

unnecessary costs and threaten businesses and the jobs they create. In addition, it is unclear 

whether EPA will obtain sector-specific data to ensure sound analysis (despite being required 

to do so by the Toxic Substances Control Act) prior to issning a proposed rule. The rulemaking 

is currently at the "pre-rule" stage, with stakeholders waiting for EPA to convene its requisite 

Small Business Advocacy Review (S-BAR) panel. 

• Post-Construction Stormwater Runoffi EPA plans to regulate stormwater runoff after the 

"active" phase of construction. Despite warnings from industry about the varied, localized 

nature of this issue, concerns remain that the EPA will take a rigid, one-size-fits-all approach to 

stonnwater control, creating unnecessary costs in the process. In addition, it is unclear whether 

the EPA has the appropriate authority under the Clean Water Act to regulate post-construction 

stonnwater discharges. While EPA has conducted its mandated S-BAR panel, the agency has 

yet to release the impact analysis from those meetings. Despite this, the EPA plans to issne a 

proposed rule in 2013. 
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• Clean Water Protection "Guidance"; In May 2011, EPA, in coordination with the U.S. Ann~ 

Corps of Engineers (USACE), issued a draft guidance document titled, "IdentifYing Water 

Protected by the Clean Water Act" (CWA). This guidance would significantly expand thl 

scope of the CW A beyond Congressional intent. The proposal is a prime example of de fact. 

"regulation by guidance," which should have followed established administrative procedure 

for creating federal rulemakings, including analysis under the Regulatory Flexibility Ac1 

Beyond the obvious procedural missteps, ABC . is concerned the proposal will result iJ 

increased need for unnecessary pennits, which will establish new bureaucratic hurdles to jol 

creation and economic growth. The guidance is currently under review by the Office 0 

Information and Regulatory Affairs (OIRA). 

We appreciate your attention to this important matter and look forward to working with th. 

subcommittee to ensure that EPA upholds its statutorily mandated commitments to small business. 

Sincerely, 

Kristen A. Swearingen 

Senior Director, Legislative Affairs 

4250 North Fairfax Drive. 9th Floor' Arlington. VA 22203 • 703.812.2000 • www.abc.org 
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June 26, 2012 

The Honorable Sam Graves 

Chainnan, House Small Business Committee 

U.S. House of Representatives 

2361 Rayburn House Office Building 

Washington, D.C. 20515 

Re: Regulatory Flexibility Act Compliance: Is EPA Failing Small Business? 

House Small Business Committee Hearing, June 27, 2012 

Dear Representative Graves: 

On behalf of the National Association for Surface Finishing (NASF), we thank Representative 

Graves for convening this hearing, Regulatory Flexibility Act Compliance: Is EPA Failing 

Small Business, regarding assessing the impact of regulations on small business. NASF 

appreciates the opportunity to submit this information regarding the unnecessary regulatory 

burdens imposed by EPA on the surface finishing industry through the proposed chromium 

electroplating national emission standards for hazardous air pollutants (NESHAP), EPA Docket 

No. EPA-HQ- OAR-2010-0600. Provided below are the concerns of the NASF on how EPA 

ignored the significant impacts of this proposed rulemaking on a substantial number of small 

businesses. 

1 
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Summary of the Surface Finishing Industry 

The NASF has nearly 2,000 members that include metal finishing companies, metal finishing 

suppliers, and individual and professional members. The NASI' represents the business, 

management, technical and educational programs as well as the regulatory and legislative 

advocacy interests of the surface finishing industry to promote the advancement of the North 

American surface finishing industry globally. 

The surface finishing industry plays a vital role in the lives of consumers and in the nation's 

economic future. The industry'S role in corrosion protection alone provides an estimated $200 

billion annual economic benefit to the nation. Surface finishing ensures that the products people 

use every day last longer, work better, and look better. 

Metal finishing operations are performed in two ways: 1) as a "captive" operation or department 

of a manufacturing company; and 2) on ajob-shop basis where the work is performed under 

contract for the owner of the product or material that is to be finished. Over 80 percent of the 

job-shops in business employ fewer than 75 people, while nearly 40 percent employ fewer than 

20 people. Most job-shop surface tinishing firms are family-owned businesses, located in urban 

areas, with a large percentage of minority employees. 

Small Business Impacts of Proposed Rule 

As part of its residual risk and technology review of the chromium electroplating NESHAP, EPA 

issued a proposed rule on October 21,2010. Pursuant to the Regulatory Flexibility Act (RFA) 

EPA did not convene a Small Business Regulatory Enforcement Fairness Act (SBREF A) panel 

for this proposal because it did not propose any significant new regulatory requirements that 

would negatively impact small businesses. After receiving comments on this proposed rule 

(based primarily on a review of residual risk), EPA negotiated an extension of the rulemaking 

deadline with the Sierra Club. 

2 
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Accordingly, EPA issued a supplemental proposed rule on February 8, 2012 that set new 

proposed emission limits that are 50 percent more stringent than the existing standard. In the 

supplemental proposal, EPA concluded that the residual risk was acceptable, but the new 

proposed emission limits could be achieved easily and cost effectively. 

In preparation for the supplemental proposal, EPA made plans to convene a SBREF A panel to 

assess the potential impact of the rule on chromium electroplating operations, all of which are 

small businesses. Just prior to the negotiated deadline for the supplemental proposal, EPA 

withdrew its request for a SBREF A panel. The stated rationale for the withdrawal was that EPA 

had identified a low cost technology option for achieving the new proposed emission limits that 

would minimize the impact of the rule on small businesses. Coincidentally, EPA would not have 

had enough time to complete the SBREF A panel process before the negotiated deadline for the 

supplemental proposal. 

Inexplicably, EPA reached its conclusion on the low cost technology optiontvith no credible 

data. Chromium electroplating facilities comply with the existing NESHAP with the use offilme 

suppressants (to comply with existing surface tension level for chromium plating baths) or more 

expensive pollution control equipment (to comply with the existing emission limits). Facilities 

currently use a PFOS-based fume suppressant to comply with the existing regulatory standard. 

These PFOS-based fume suppressants are being phased out globally and will be banned within 

three years as part of this rulemaking. In the supplemental proposal, EPA concluded that 

facilities could use non-PFOS fume suppressants to replace the current PFOS-based fume 

suppressants and that these non-PFOS fume suppressants would reduce chromium emissions 

below the new proposed emission limits cost effectively. 

EPA reached this conclusion despite the fact that it provided no evidence that the use of nonPFOS fume suppressants (or the use of any fume suppressant) could achieve the new proposed 

emission limits. In addition, EPA did not seek input from the small businesses impacted by this 

rule regarding this flawed conclusion. The only effective technology option to comply with the 

new proposed emissions limits is to install expensive pollution control equipment. 

3 
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Had EPA convened a SBREFA panel on the supplemental proposal (as it had originally 

planned), it would have received substantial input from chromium electroplating facilities and 

suppliers ofnon-PFOS fume suppressants that the new proposed emission limits cannot be met 

with the simple addition offume suppressants, as EPA contends. The NASF has provided EPA 

with information demonstrating that non-PFOS fume suppressants cannot be used to meet the 

proposed emission limits, but EPA has not retreated from its inaccurate conclusion. EPA has 

used this technically flawed analysis to short-circuit the SBREF A process intended to minimize 

the impact ofthe rule on small business. EPA, the regulated industry, and the general public 

would have benefitted greatly from a SBREFA panel assessment of the potential impacts of this 

rule on small businesses. 

In addition to the issues discussed above, NASF remains concerned about this rulemaking 

process for numerous, additional reasons that are summarized below. 

New Rule Is Not Needed Because Existing NESHAP Has Successfully Reduced Chromium 

Emissions by Over 99.7 Percent 

It is not clear why EPA insists on imposing additional regulatory controls on the surface 

finishing industry in this new rulemaking, when few, if any, environmental beneflts are expected 

from this rule. Since the implementation of the chromium electroplating NESHAP in 1995, the 

chromium electroplating industry has reduced chromium emissions by over 99.7 percent. By all 

accounts, it would appear that the existing chromium electroplating NESHAP has already been a 

huge environmental success. In addition, EPA has also concluded that the residual risk from 

chromium electroplating emissions is acceptable. Imposing unnecessary regulatory controls 

based on flawed analysis and no credible data appears to be inconsistent with current 

Administration policy to avoid unnecessary regulatory burdens on U.S. manufacturing. 

The Administrative Process for this Rulemaking Is Flawed 

EPA admittedly lacks real-world data and knows very little about the facilities in the industry 

and the trends associated with chromium electroplating. EPA has relied on limited data and 

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flawed models in this rulemaking. Contrary to the provisions of the Clean Air Act regarding 

RTRs, EPA contends that despite failing to identify any new control technology for chromium 

emissions and concluding that the risks associated with chromium electroplating are acceptable, 

it can proposed new emission limits for chromium electroplating because it erroneously believes 

that the new emission limits can be achieved relatively easily and cost effectively. The proposed 

rule would impose unnecessary burdens on a critical industry of small businesses and jeopardize 

economic growth and jobs creation with no environmental benefit and no risk reduction. The 

NASF data on facility closures (see below) demonstrate how vulnerable the chromium 

electroplating industry is relative to additional regulatory burdens. 

EPA Has Overestimated Chromium Emissions 

EPA has used a flawed model and data inputs to significantly over-estimated chromium 

emissions estimates. NASF provided EPA with survey results for both higher emissions and 

lower emissions facilities that show trends of emissions that are 80 percent lower than EPA's 

estimates based on the following factors: 

o significant number offacilities are closed (approximately 30-35%), 

o significant number of facilities no longer have hexavalent chromium processes 

(approximately 30-35%), and 

o significant number of facilities report chromium emissions that are substantially 

lower than EPA's estimates. 

EPA Has Concluded that Residual Risk Is Acceptable 

EPA concluded that residual risk is acceptable, and this is based on EPA's overestimated 

chromium emissions. After chromium emissions estimates are corrected, the residual risk will 

be even lower, and few, if any, facilities would pose a cancer risk greater than one in a million. 

Furthermore, EPA's proposed new emission limits would not result in any meaningful emissions 

reductions or any risk reduction. 

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EPA Has Not Identified Any New Technology Options to Control Chromium Emissions 

EPA has not identified any new technology to control chromium emissions. In fact, EPA has 

referenced data used to revise the NESHAP in 2004 as support for the proposed new emission 

limits in this rulemaking. As discussed briefly above, EPA has not provided any data in the 

record regarding emissions reductions from the use ofnon-PFOS fume suppressants, which is the 

technology option identified by EPA to reduce emissions. EPA does not accurately represent the 

technology option and the associated costs needed to meet the new proposed emission limits. 

Consequently, EPA does not have data to support the new proposed emission limits based on the 

technology option identified in the rule. 

On behalf of the National Association for Surface Finishing (NASF), we appreciate the 

opportunity to submit this information as part of the record tor this hearing. If you have any 

questions or would like additional information, please contact me at 202-257-3756 or 

jhannapel@thepolicygroup.com. 

Respectfully submitted, 

Jeffery S. Hannapel 

The Policy Group 

On Behalf of the National Association for Surface Finishing 

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