May 23, 2002


The Honorable Jeffrey R. Holmstead
Assistant Administrator for Air and Radiation
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, N.W.
Washington, D.C.  20460

Subject:    Proposed Rule; Control of Emissions from Land-
       based Recreational Engines, 67 Fed. Reg. 21613 (May
       1, 2002)

Dear Administrator Holmstead:

The Office of Advocacy of the U.S. Small Business
Administration (Advocacy) was established by Congress
pursuant to Public Law 94-305 to represent the views of
small business before Federal agencies and Congress.  One of
Advocacy's primary functions is to monitor agencies'
compliance with the Regulatory Flexibility Act (RFA),(1) and
to work with Federal agencies to ensure that their
rulemakings are supported by analyses.

On May 1, 2002, EPA published the above-referenced notice of
proposed rulemaking (NPRM).  An earlier NPRM for these
vehicles addressing air pollution from tail pipes was
published on October 5, 2001.(2) The earlier NPRM followed
the recommendations of a Small Business Advocacy Review
Panel, convened pursuant to Section 609 of the RFA, and was
supported by an adequate initial regulatory flexibility
analysis (IRFA).

Advocacy is writing today because it appears that, in the
May 2002 NPRM, EPA failed to comply with the RFA.  Whenever
an agency is required by the Administrative Procedure Act
(APA)(3) to publish an NPRM for notice and comment, the
agency must provide either an IRFA or a certification of "no
significant economic impact on a substantial number of small
entities" with the requisite statement of factual basis.(4)
EPA did not provide either.

EPA has requested comment on finalizing specific
requirements for fuel tanks.  These requirements are
completely new.  The IRFA for the earlier NPRM addressed
tail pipes, not fuel tanks.  EPA did not make any apparent
effort to describe the impact or any flexibility for the
small entities affected by these new requirements.  As such,
affected entities have arguably been denied the right to
comment under the APA.

For these reasons, Advocacy recommends that EPA take
additional steps to comply with the RFA.  Section 603 of the
RFA requires an IRFA, however, EPA has asserted that the
fuel-tank requirements would, on average, impose minimal
burden.  If, after considering the impact on small entities,
which are likely to be significantly higher than average,
EPA finds that these requirements will not have a
significant economic impact on a substantial number of small
entities, EPA may certify the new proposal in lieu of
preparing an IRFA.  However, the Agency must provide a
factual basis for a certification.(5) In any event, EPA
should take these additional steps prior to publishing a
rule in final form, so that affected small entities will
have an opportunity for notice and comment.

At a minimum, EPA should prepare a final regulatory
flexibility analysis (FRFA) that estimates the cumulative
effects of the rule (including both the tail-pipe and gas-
tank requirements) on small entities and considers less-
burdensome alternatives, and publish the FRFA with the final
rule for public comment.

Advocacy stands ready to assist EPA in its consideration of
these options.  If there are any questions, please contact
Austin Perez of my staff, (202) 205-6936.

Sincerely,

Thomas M. Sullivan
Chief Counsel for Advocacy


Austin R. Perez
Assistant Advocate


Cc:  Dr. John Graham, Administrator, Office of Information
and Regulatory Affairs

ENDNOTES

1.  5 U.S.C.  601, et. seq.
2.  66 Fed. Reg. 51098 (October 5, 2001).
3.  5 U.S.C.  553.
4.  5 U.S.C.  603, 605.
5.  5 U.S.C.  605.