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Environmental Regulation and Small Business

October 26, 2016
The EPA is known for its vital role in protecting human health and the environment, its primary mission since its creation in 1970. However, for some, especially those in the corporate world, EPA is often synonymous with one thing—regulatory burden, but its relationship with small businesses takes a different turn.

By Grace Venit, C’17

During my time interning for the EPA, I have had the opportunity to attend various Congressional oversight hearings relevant to the Agency. During one hearing, conducted by the House Judiciary Committee’s subcommittee on Regulatory Reform, Commercial, and Antitrust Law, titled “Assessing the Obama Years: OIRA and Regulatory Impacts on Jobs, Wages, and Economic Recovery”, the EPA was mentioned several times. For example, one congressman blamed the EPA along with several other federal agencies for stifling the growth of small businesses in his district. In another hearing conducted by the committee on science, space, and technology, the Congress members complained that the Agency was not doing enough to consider the concerns of small entities, particularly small business in the rulemaking process. Despite all the criticism EPA receives from Congress, in my experience, the Agency does a substantial amount to involve small entities in the rulemaking process and to take their recommendations seriously.

In fact, the Regulatory Flexibility Act of 1980 requires EPA to “balance the social goals of federal regulations with the needs and capabilities of small businesses and other small entities in American society” IN TEXT: [1]. It was later amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA), which strengthened RFA’s analytical and procedural requirements, authorized the judicial review of certain RFA requirements, and established the Congressional Review Act (CRA). As its name makes clear, this amendment was meant to further protect small businesses from undue regulatory burden. However, it is important to note that the RFA does not require agencies to minimize regulatory burdens on small entities. It does, however, require them to either certify that the rule will not have a significant economic impact on a substantial number of small entities or to do three things: 1) prepare a Regulatory Flexibility Analysis, 2) conduct a Small Business Advocacy Review Panel before issuing the proposed rule, and 3) issue a Small Entity Compliance Guide for the final rule [2].

One of the main tasks I was given in my first weeks at EPA was to analyze past Small Business Advocacy Review Panel reports, specifically looking at how many panel recommendations were considered in the proposed rule and whether or not they were ultimately implemented in the final rule. EPA is required to conduct a Small Business Advocacy Review Panel whenever a rule will have a significant economic impact a substantial number of small entities.

In addition to analyzing these reports, I have had the opportunity to sit in on a few Small Business Advocacy Review Panel meetings. These panels are composed of EPA employees and representatives from various small entities that may be impacted by the rule being developed, as well as members from SBA and OMB. During these panel meetings, the Office responsible for developing and promulgating the rule in question will present the goal of the rule being developed as well as its potential impacts on small entities. The small entity representatives (SERs) are given the opportunity to provide their thoughts on the rule and how it will affect their business. In my experience, EPA staff highly values the opinions of the small entity representatives since they can provide vital information on how their industry really works and how the proposed rule would or would not be most effective.

As a result of both analyzing these reports and attending multiple panels, I’ve learned that the EPA’s relationship with small entities is not as black and white as some, especially those in Congress, might make it seem. For example, at one of the Small Business Advocacy Review Panel meetings I was able to attend, it was very clear that the small entity representatives strongly supported the Agency’s proposal to regulate a toxic substance often used in furniture refinishing and bathtub remodeling. If not handled correctly, this substance can be extremely toxic—even deadly. One of the SERs, the owner of a small furniture remodeling company who had once been hired for a project in the White House, strongly supported the EPA’s proposed regulation. From his point of view, the regulation would prevent the average person from purchasing and improperly handling this chemical instead of hiring a professional like himself. In this way, the proposed regulation would not only keep people safe, but it would actually benefit small business. This example not only shows that environmental regulations are not always at odds with the goals of small business as some might have you believe, but also how much the EPA depends on the input of small business to create the most efficient outcome possible. These panels take a significant amount of time and effort from all parties involved and, in my opinion, demonstrate the Agency’s willingness to not work against small entities, but with them.

Works Cited

  [1] “Regulatory Flexibility Act”. Wikipedia. July 2016. Web.<https://en.wikipedia.org/wiki/Regulatory_Flexibility_Act>.

  [2] “Action Development Process Webcast Series: The Regulatory Flexibility Act.

(RFA) and the Small Business Regulatory Enforcement Fairness Act (SBREFA)”. EPA’s Office of Policy. Web <https://usepa.sharepoint.com/sites/OA_Community/ADPTraining/ADP Training Webinars/RFA and SBREFA/Additional Content/PPT RFA and SBREFA.pdf>.

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