Washington, DC, Jun 27, 2012 -

The House Small Business Committee, led by Chairman Sam Graves (R-MO), today held a hearing to examine the Environmental Protection Agency’s (EPA) compliance with the Regulatory Flexibility Act (RFA), with a specific focus on the Agency’s Boiler MACT and Lead, Renovation, Repair and Painting regulations.

Although long ignored by federal agencies, the RFA requires agencies to consider the effects of their rules on small businesses and other small entities before implementing them.  If the impact is significant, they are to consider alternatives that are less burdensome. Despite the importance of the RFA to the small business community, federal agencies, as today’s witnesses attested, regularly ignore the requirements of the RFA.

“Small business owners continue to cite compliance with government regulations as one of the most important problems facing them today,” said Chairman Graves. “Small firms bear a regulatory cost that is about 35 percent higher than the cost of regulatory compliance for large businesses. So, it only makes sense for federal agencies to pull back on the rate of regulations as we try to reignite our stagnant economy by creating a better environment for small business job creation. The Regulatory Flexibility Act is an important statutory process that helps protect small firms from activist bureaucrats in the federal government, but unfortunately, many agencies, like the EPA have ignored its intent. When the EPA fails to perform robust regulatory flexibility analysis, the EPA fails to meet its RFA obligations, which in turn fails America’s small businesses.”

On February 8, 2011, Chairman Sam Graves joined House Judiciary Chairman Lamar Smith (R-TX) to introduce the Regulatory Flexibility Improvements Act of 2011 (HR 527), which strengthens the RFA. It passed the House on December 1, 2011 and awaits Senate action. The legislation would close loopholes used by agencies to avoid compliance with the RFA, require a better assessment of the impacts that regulations will have on small businesses, force agencies to perform better periodic review of rules, and grant the Chief Counsel for Advocacy at the Small Business Administration greater powers for enforcement of the RFA.  

For related hearing documents, click here.

Notable witness quotes:

Keith W. Holman, Legal and Policy Counsel at the U.S. Chamber of Commerce, Environment, Technology and Regulatory Affairs Division in Washington, DC said, “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 (1) 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. 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 EPA to simply ignore the recommendations of Panel members, it has happened in recent years.”

Jeff Brediger, Director of Utilities at Orrville Utilities in Orrville, OH said, “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 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 of legal challenges, reconsideration, and re-proposal.  When asked about the status last week, EPA indicated it is “still working on it.”   

David Merrick, President of Merrick Design and Build Inc. in Kensington, MD said, “The [Small Business Regulatory Enforcement Fairness Act of 1996] 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 businesses. It does not seem to work when EPA rushes the process or avoids it altogether.