Subcommittee on Commercial and Administrative Law
Committee on the Judiciary
United States House of Representatives
July 29, 1997
AMERICAN TRUCKING ASSOCIATIONS
National Ambient Air Quality Standards
Issued by the U.S. Environmental Protection Agency
Allen R. Schaeffer
Vice President, Environmental Affairs
American Trucking Associations
2200 Mill Road
Alexandria, VA 22314-4677
TABLE OF CONTENTS
A. ATA Represents the Trucking Industry
B. The Trucking Industry Plays a Vital Role in the U.S. Economy
C. The Trucking Industry Is Committed to Clean Air
II. EPA's Clean Air Standards Will Have a Profound Impact on The Trucking Industry, Which is Predominately Small Businesses
A. The Trucking Industry Operates on a Very Small Profit Margin
and Will Be Disproportionately Impacted by the New Standards.
III. EPA has Engaged in A Faulty Process relative to Small Business In Proposing and Finalizing the New Clean Air Standards
A. EPA had Ample Opportunity, but Failed to Respond to the Pleas
of Small Business Prior to Proposal of the Rule
B. EPA Ignored the Requirements of the Small Business
Regulatory Enforcement Fairness Act of 1996 ("SBREFA")
C. EPA has Systematically Excluded Adequate Input From Small Business
In Various Forums That are Integral to Implementation of New Clean Air
D. EPA's post-hoc Small Business "Paneloid" Does Not Satisfy the Requirements of SBREFA
1. ATA August 15, 1996 Letter to M. Nichols, EPA
2. Small Business group Letter to J. Glover, Chief Counsel for Advocacy,
U.S. Small Business Administration
3. ATA Letter to C. Browner (October 15, 1996)
4. EPA reply letter (12/2/96) from M.Nichols & J.Cannon to ATA
5. Letter from US DOT to OMB/OIRA
6. A Chronology of EPA's Failure To Consider Small Business
7. SBREFA is a "Pointless Exercise" (BNA 11/20/96)
1. Curriculum Vitae -- Allen R. Schaeffer
2. Disclosure of Federal Grants, Contracts, Subcontracts of ATA
Chairman Hyde and members of the Subcommittee, thank you very much for the opportunity to express the trucking industry's views regarding revisions to the National Ambient Air Quality Standards for Ozone and particulate matter issued recently by the Environmental Protection Agency (EPA). This is a matter of utmost importance to our industry. Our major concern with regard to this testimony is that EPA has engaged in a faulty process relative to small business in proposing and finalizing its new clean air standards.
A. ATA Represents the Trucking Industry
The American Trucking Associations, Inc. (ATA) is the national trade association of the trucking industry. ATA's membership includes nearly 4,200 carriers, affiliated associations in every state and 13 specialized national associations. Together, ATA represents every type and class of motor carrier in the country. We are a federation of over 36,000 member companies and represent an industry that employs over nine million people, providing one out of every fourteen civilian jobs. Examples of trucking industry segments represented by ATA and that will be affected by the new clean air standards is provided in Table 1.
|TABLE 1: Trucking Industry Segments Impacted by New Clean Air Standards
Agricultural transporters Automobile transporters
Bulk material transporters For-hire common/contract carrier
Hazardous materials transporters Hazardous waste transporters
Household goods movers Intermodal carriers
Magazine and film carriers Munitions carriers
Package delivery firms Private trucking firms
Regional and distribution carriers Specialized carriers
Towing and recovery firms Truck rental and leasing firms
Utility fleet vehicles Construction vehicles
B. The Trucking Industry Plays a Vital Role in the U.S. Economy.
The trucking industry is a major force in the United States economy, representing about 5 percent of the nation's gross domestic product.(1) It is not a uniform industry, but rather a series of diverse and interrelated industry segments, ranging from for-hire contract carriers to independent owner-operators, to parcel delivery firms. These companies transport virtually every type and kind of product and raw material used in the manufacturing and retail sectors of the economy.
As the predominant mode by which U.S. consumers receive the majority of their goods, the
trucking industry has a significant influence on the costs of finished goods and raw materials in
the economy. Over 75 percent of all communities in the United States have freight delivered
only by truck.(2) Trucking is the link in the economic supply chain from raw material to
consumer, since virtually all shipments move by truck at some point.
C. The Trucking Industry is Committed to Clean Air
The trucking industry has a long-standing record of support for measures that have contributed to the dramatic improvements in air quality that have occurred over the last 30 years. Through improvements in heavy-duty engine design, fuel specifications and maintenance, the trucking industry has significantly lowered emissions from truck engines and operations and we are committed to do more in the future. Our efforts have included support of numerous EPA and manufacturer initiatives to lower diesel engine emissions standards, adoption and use of cleaner diesel fuel, and diesel truck emissions testing programs. These and other measures are working. On average, emissions from 1996 model year trucks are about one-eighth of those from a 1987 model year truck engine (pollutants considered: NOx and particulate matter). Despite these improvements, we do know, however, that the new clean air standards will require more to be done by the trucking industry to further reduce emissions in many areas across the country.
II. EPA's Clean Air Standards Will Have A Profound Impact on the Trucking Industry
Which Is Predominately Small Business
The trucking industry will be particularly impacted by EPA's new clean air standards for both ozone and fine particles, because of the small business nature of the industry, its marginal financial performance, and the types of measures needed to comply with the new standards. The trucking industry is comprised of hundreds of thousands of small companies who are particularly sensitive to even minor variations in operating expenses, fuel prices and other factors that are unable to be fully passed on to shippers. According to the U.S. Small Business Administration, 87% of all trucking companies are defined as small business.(3) The U.S. Department of Transportation notes that 79% of the 362,288 interstate motor carriers on file operate 28 or fewer trucks.(4)
A. The Trucking Industry Operates on a Very Small Profit Margin and Would be
Disproportionately Impacted by Revised Clean Air Standards.
The trucking industry is a highly competitive industry with relatively small profit margins, where even the largest companies operate at or near a break-even point, with very low profitability for the industry as a whole. The industry is further directly affected by economic downturns in manufacturing or substantial changes in import and export balances. The average profit margin of trucking companies ranges from 2.08% to 2.36%. As an example, a typical truckload carrier would be paid $600 for moving 40,000 pounds of goods from Washington DC to Boston MA. The profit for that trip would be about $12.00 (twelve dollars). With such low profitability, the industry is particularly vulnerable to any dramatic increases in operating costs (such as from increases in fuel prices due to reformulations required to meet clean air standards), limitations on ability to operate in certain areas (time of day or day of week restrictions), or punitive programs that require the payment of various fees, penalties or taxes (fleet emissions budgets) that reduce profitability and provide no increase in productivity.
For example, fuel and maintenance of trucks -- two areas likely to be impacted by the new standards -- accounted for 17% of all operating industry operating expenses in 1994.(5) Any change that affects fuel cost or fuel economy will add to trucking costs. Small trucking companies are particularly affected by swings in petroleum prices that have been pervasive over the last few years with the increase in the types of fuels required and a decline in refinery capacity. Many small trucking companies may have had an entire year's profit wiped out because of steadily increasing fuel prices during an 8-week period in 1996 and a 2 week period early in 1997, with the situation being even worse in California.
Therefore, the fair consideration and minimization of small business impacts is of utmost and extreme importance and relevance to the trucking industry in the process of establishing any government regulation that influences core operating practices in the industry such as equipment type or specification, fuel composition and cost, or operational or other in-use types of regulations that increase the cost of doing business
Based on our discussions and involvement with many states over the last 5 years, we know that they will have no choice but to enact additional and expensive control measures on the trucking industry and other small businesses due to the stringency of the new standards. For our own industry we are well aware that efforts to meet the existing standards have virtually exhausted the conventional, low-cost measures implemented over the last 30 years that were largely focused on other larger manufacturing sectors of industry. The types of specific trucking industry control measures and estimated costs to meet the new standards are outlined below in Table 2, and range from reformulations of diesel fuel to new engine standards.
Moreover, the new standards will immediately impact strategic decisions by small business will limited dollars for investment who will be reluctant to consider moving operations into areas where these measures are likely. The standards have already begun to affect these strategic decisions.
In summary, requirements for cleaner diesel fuel, retrofitting older diesel engines, alternative fuel
requirements for truck fleets, tighter engine standards and limitations on truck operations are all
types of control measures that will be considered by each state in their development of revised
clean air plans to meet the new standards. EPA has already issued lists of counties that will not
meet new standards when it proposed the rule on November 27, 1996, so companies already
know the areas of greatest concern.
TABLE 2: Specific Trucking Impacts from a more stringent Ozone Standard
In the Chicago-Lake Michigan Air Quality Area
|Likely Control Strategy||Per-truck
|Economic Impact for
Lower Lake Michigan Chicago area only (M= Millions)
|Switch to cleaner, low-aromatic diesel fuel||increase of 10-20 cents/gal||$23 M to $69 M
(ozone season only)
|Lower diesel engine emission std in 2004. (use of catalysts, EGR, etc.)||$18,500/truck||$542 M in 2004
$564 M in 2007
|Diesel vehicle Inspection & Maintenance Program (annual loaded-mode testing)||$670/truck||$229 M in 2007|
|Re-power existing diesel vehicles w/ new engines||$15,000/engine||$101 M in 2003
$108 M in 2007
|Heavy-duty diesel vehicle scrappage program||$10,000/vehicle||$ 68 M in 2003|
|Heavy-duty diesel (HDD) alternative fuel reqs.||$15,000/vehicle||$82 M in 1999
$173 M in 2003
|Operational Controls on HDD Vehicles (speed enforcement -- 55mph, and idling restrictions)||$500- $1000/truck||$6 M in 2007|
|TOTAL EST. IMPACTS CHICAGO/MICHIGAN LAKE AREA||*******||$1.195 billion in 2007|
(Source: Sierra Research, Sacramento, CA. Report # SR96-06-01, June 4, 1996. Report
prepared for American Petroleum Institute (API), Washington, DC.)
III. EPA HAS ENGAGED IN A FAULTY PROCESS IN PROMULGATION OF NEW
CLEAN AIR STANDARD RELATIVE TO SMALL BUSINESS
Over the past year of development and the recent issuance of the final new clean air standards, it
became increasingly apparent to ATA and other small business groups that consideration of
small business issues was being excluded from both EPA's rule making process as it applies to
SBREFA, and also the EPA advisory process for the implementation of clean air standards.
A. EPA had Ample Opportunity, but Failed to Respond To the Pleas of ATA and other
Small Business Prior to Proposal of the Rule.
Before EPA made its proposal on whether to retain or revise the existing ozone and PM standards, ATA and numerous other small business groups repeatedly advised EPA of its failure to incorporate the views of small business in advance of the issuance of the proposal. On August 15, 1996, ATA sent a letter to EPA Assistant Administrator for Air and Radiation Mary Nichols that, among other things, advised her of the small business impacts anticipated on our industry and raising our concern about the SBREFA review process (Exhibit 1). Subsequently, on August 30, 1996, a group of 11 Small Businesses, including ATA, wrote to Jere Glover, Chief Counsel for Advocacy at the US Small Business Administration, expressing our concerns about EPA's impending proposals and our beliefs that SBREFA applies to the NAAQS revisions. Administrator Browner on August 15 (Exhibit 2). On October 15, 1996, ATA sent a detailed 7-page letter to EPA Administrator Carol Browner advising her of the Agency's obligations under SBREFA (Exhibit 3). ATA also participated in a small business meeting in early November 1996, where Administrator Browner was asked directly about SBREFA and the issues raised in our October letter. The response was that "we will respond to your letter," which they did, on December 2, 1996. In that response EPA articulated the view that the setting of the NAAQS standards "are not susceptible to a regulatory flexibility analysis" and that "it may appropriately certify that the ozone and PM NAAQS rulemaking actions will not, if promulgated, have a significant economic impact on a substantial number of small entities..." and that " the requirement to form a panel as required under section 609(b) of the RFA is inapplicable to these actions."(Letter from Mary Nichols and Jonathan Cannon, US EPA to Julie Waddell, ATA Litigation Center dated December 2, 1996; Exhibit 4).
Even other government agencies including the Department of Defense, and others sharply
criticized the need for EPA's proposed standards and raised questions about having adequate
understanding of the impacts before moving forward. The US Department of Transportation in
particular sharply criticized EPA's proposal and the lack of information about the resultant
impacts on transportation. (Letter from Frank Kreusi, Asst. Sec. For Transportation Policy, US
DOT to EPA; Exhibit 5).
B. EPA Ignored the Requirements of the Small Business Regulatory Enforcement Fairness
Act of 1996.
EPA's proposed standards for particulate matter and ozone fail to comply with the substantive and procedural requirements of the Small Business Regulatory Enforcement Fairness Act of 1996 ("SBREFA"), Pub. L. No. 104-121, 110 Stat. 847 (1996). Simply stated, under SBREFA, EPA was to have conducted a series of regulatory impact analyses that (1) gauge the impact of the proposed rule making on state, local and tribal governments as well as the private sector, including small business; (2) measure the costs and benefits, including the cost -effectiveness of the Agency's decision; (3) conduct scientifically valid risk assessments; and (4) minimize significant economic impacts on small business. These legal mandates require regulatory and cost accountability from EPA, because the Agency's action in each of the two NAAQS rule makings is expected to impose costs well in excess of the $100,000,000 threshold on State, local and tribal governments and the private sector.
Small businesses have been harmed by EPA's faulty process in interpreting SBREFA. No Regulatory Flexibility Analysis of the proposed rule was completed nor did EPA convene the required advocacy review panel to collect small business input and make findings on the determinations reached in EPA's initial "regulatory flexibility" submission before the rule making proceeded. An RFA is required for rules that are expected to have a "significant economic impact on a substantial number of small entities", and EPA's own analysis shows impacts exceeding the conventional $100 million threshold (See Regulatory Impact Analysis for Ozone NAAQS, EPA; Section VI-4, and 61 Fed. Reg at 65746.)
Most recently, in promulgation of the final rule on July 18, 1997, the Administrator has asserted "...for the purposes of SBREFA, this rule (Particulate matter standard) is a "major rule" (62 Fed. Reg. at 38708), and similarly for the ozone standard, that This rule is a "major rule" for the purposes of SBREFA." (62 Fed. Reg at 38893), thus affirming in both the PM and ozone instance that the resultant impacts will exceed the $100 million threshold for each of the rules.
Had EPA performed the appropriate regulatory flexibility analysis prior to the proposal being issued, it would have had a more realistic assessment of the impacts of the clean air standards on small businesses. This is the very reason that Congress required small business consultation in advance under SBREFA, as discussed in more detail below.
Moreover, these increased regulatory burdens from EPA's new standards will have the most significant impact on smaller trucking companies. They have an especially difficult time dealing with increased burdens that impact such fundamental and critical areas of their business, and are particularly less able to absorb higher operating costs such as those incurred from more expensive and reformulated diesel fuel, and operational controls. The companies are also less sophisticated and have fewer assets from which to absorb fluctuations in the economy and to ultimately fund their compliance with new regulatory mandates. Finally, these companies are less able to invest in new and cleaner technology because they teeter perilously on basic economic survival, and one minor economic recession has the potential to plunge these small businesses out of business.
Under the 1990 amendments, states are now implementing comprehensive and costly programs to reach attainment of the current standards. These ongoing efforts impose an increasing economic burden on small businesses, including ATA's members. The proposed new ozone and particulate matter standards will not only disrupt these ongoing efforts, but will impose expensive new requirements, the burden of which will disproportionately fall on small businesses. In the past, pollution control efforts have focused primarily on the largest and most cost-effective sources of emissions reductions. As these "easy fixes" have been exhausted, the additional emissions reductions needed to meet the current, and especially the proposed new standards, will increasingly focus on sources that are smaller and more expensive to control. While small businesses are already staggering under the burdens of meeting the current standards, they can be expected to bear a growing and disproportionate share of the costs of the new standards. SBREFA was specifically intended to reverse this unfortunate trend in which "small businesses bear a disproportionate share of regulatory costs and burdens." Pub. L. No. 104-121, § 202(2).
To wit, EPA's screening analysis of the particulate matter standard identified 51 industry SIC codes with small businesses that would be "significantly" affected by the proposed standards. EPA therefore concluded that "there may be ... potentially significant impacts on small establishments ... in 15 to 25 percent of all industries." Particulate Matter RIA at 8-17.
Thus, EPA concedes that 15 to 25 percent of all small businesses will be "directly" and "significantly" impacted by the proposed standards -- a conclusion that cannot be reconciled with the Agency's legal position that the proposed standards will not have a significant impact on a substantial number of small businesses.
However, the screening analysis of the impact on small business contains serious errors, such as
using a 100-employee definition of small businesses that does not comport with the definitions
used by the Small Business Administration and incorporated into the RFA and SBREFA. (For
example, the trucking industry small business definition is based on annual revenue; 61 Fed. Reg
at 3291). The predicted number of small businesses significantly impacted by the proposed rules
would have been much higher if EPA had used the proper definition of small businesses.
C. EPA has Systematically Excluded Adequate Input From Small Business in Various Forums That are Integral to Implementation of New Clean Air Standards.
In addition to the failure of EPA to comply with the SBREFA process outlined above, EPA has systematically failed to incorporate the views of small businesses --- particularly small transportation companies --- in EPA's primary sanctioned forum dedicated to advising the Agency on implementation strategies for clean air standards-- the Federal Advisory Subcommittee for Ozone, PM and Regional Haze Implementation ("FACA"), organized in 1995 by EPA at the direction of the Clean Air Act Advisory Committee. The FACA Subcommittee has been the primary advisor to EPA on the implementation strategies that may be employed to meet existing and revised NAAQS.
EPA initially selected 58 FACA members representing a variety of interests, including representatives from environmental organizations, academia, health, government, and the business community, but only 2 of the 58 were to represent the views of "small business." These two small business entities did not adequately represent the views of even a small minority of small businesses; one panelist represents the printing industry, and the other a small manufacturer of hearth products. These sectors are not even partially representative or reflective of industry sectors likely to be broadly affected by many of the control strategies that would be imposed in the face of a more stringent standard, most notably a glaring absence of transportation users input into the process.
Until the recent addition of ATA and a number of other groups to the FACA Subcommittee in response to our repeated requests, the previous 12 months of the Subcommittee's work and the balance of participants was selective and biased, being preferential toward larger business entities and environmental groups, while insensitive to small businesses and the transportation sector. This recent change does not solve the earlier bias and finally, given EPA's plan to dissolve the FACA Ozone, PM and Regional Haze Subcommittee on or around December 31, 1997, our ability to meaningfully affect any implementation strategies or guidance documents entering the process at this stage is greatly reduced.
D. EPA's Post-Hoc Small Business "Paneloid" Does Not Satisfy the Requirements of
In between the time of proposal of the standards (November 27, 1996) and their July 18, 1997 promulgation, EPA proceeded to hastily assemble a small business group in a process that EPA described as "paneloid," referring to EPA's interpretation that it was not a SBREFA panel, but only a "SBREFA-like" panel. Unfortunately, this "paneloid" process, no matter how intentioned, will never repair the Agency's failure to comply with the letter and spirit of SBREFA. EPA's efforts to rectify its failures in small business consideration through the formulation of a "paneloid" makes a mockery of the SBREFA provisions and Congress' intent in enacting them. EPA's paneloid and review panel are thus shams rather than a genuine attempt at fulfilling Congress' purpose. In addition to the substance (or lack thereof) of EPA's actions, another critical flaw is the timing of the Agency's actions. Despite repeated requests from ATA and others that EPA convene a panel prior to finalizing the proposed rule, EPA only began going through the motions after the proposed rule had been finalized and published.
By requiring agencies to consult with small businesses at "the outset in the development" of regulations (see e.g. 142 Cong. Rec S3242, S3245 (daily ed. March 29, 1996)(SBREFA Joint Managers Statement of Legislative History and Congressional Intent). Congress understood that once a proposed regulation had been drafted and published, the opportunities for small businesses to influence the design, scope and details of a regulation are greatly reduced. Many of the critical decisions will have already been made, and even though the agency has the authority to revise the proposals in response to public comment, the practical reality is that there is much less room for flexibility after a proposed regulation has been drafted and published than before.
Timing was also critical for the report of the review panel established to consider comments and issue recommendations. The intent of Congress was that the review panel's report would be placed in the docket well in advance of the close of the comment period to provide sufficient time for other parties to comment on the report. See, e.g., 142 Cong. Rec. S3242, S3245 (daily ed. March 29, 1996) (SBREFA- Joint Managers Statement of Legislative History and Congressional Intent) ("the review panel's report and related rule making information will be placed in the rulemaking record in a timely fashion so that others who are interested in the proposed rule may have an opportunity to review that information and submit their own responses for the record before the close of the agency's public comment period for the proposed rule.") (emphasis added).(6) As of July 25, EPA has not entered the SBREFA Federal "Paneloid" report into the Docket, and according to EPA staff, has no plans to until the other implementation rules are proposed by EPA. Clearly this arrangement precludes any opportunity for small business to respond to the report.
In short, EPA's post hoc "paneloid" is both untimely and manifestly a ploy that falls far short of meeting the requirements of SBREFA. The proposed standards were developed and published with essentially no input from small businesses, even though the proposed standards are likely to be the most burdensome regulations for small businesses ever adopted by a federal regulatory agency. This could hardly have been what Congress intended when it enacted SBREFA. The chronology and description of these events included in Exhibit 6 demonstrates that EPA failed entirely to comply with either the letter or the spirit of the procedural and substantive requirements of SBREFA.
ATA and other small businesses could very easily have provided valuable and timely advice to the Agency in selecting less burdensome alternatives consistent with the Clean Air Act objectives, yet were denied that opportunity. Some possible alternatives that would have been fruitful starting points for the SBREFA consultations would have included maintenance of the current standards, setting the standards at a different level, focusing on peak episodic exposures rather than overall lower ambient levels, and other alternatives.
The burdens of reducing ozone or particulate levels from the least stringent alternative consistent with the statute to the more stringent alternatives proposed by EPA will fall disproportionately on small businesses. This is because pollution reductions from large sources are usually more technically and politically feasible, and therefore are generally exhausted first before addressing small sources, which tend to be small businesses. As the standards get ratcheted tighter and tighter, small business will therefore absorb an increasing proportion of the costs for each successive increment, as States must increasingly rely on small business inventories to achieve the more stringent standards.
Now that the standards are finalized and will soon be effective, states have a mandatory duty to implement them in accordance with strict statutory deadlines and investment decisions are already being made based on these standards. Regrettably, it is too late for small businesses to suggest at that time that less burdensome NAAQS could have been fashioned, or for agencies to consider alternatives to the proposed standards that would result in less burdensome impacts on small businesses.
Congress envisioned SBREFA as "a vehicle for effective and early participation by small businesses in the Federal regulatory process" and SBREFA panels as " help[ing] to reduce counterproductive, unreasonable Federal regulations at the same time they are helping to foster the non-adversarial, cooperative relationships that most agree are long overdue between small businesses and Federal agencies"; 142 Cong. Rec. S2157 (daily ed. March 15, 1996) (Committee Legislative History for S.942) (emphasis added).
Unfortunately, EPA had a different vision for SBREFA in its rush to enact new clean air standards based on incomplete or questionable science but with considerable policy discretion. Because the analytic, consultative, and substantive requirements of SBREFA and the RFA were not applied to the new ozone and particulate matter NAAQS, unless EPA initiates a fresh new process, there will never be an opportunity to fully consider or minimize the enormous impacts of those rules on small businesses. Thus, it is perverse, to put it mildly, that the new clean air standards, likely to be among the most burdensome regulations for small businesses ever enacted, were to evade Congress' aims in SBREFA and the RFA simply because of EPA's incorrect characterization of the parties affected by the proposed standards and their false interpretation of their requirements.
EPA's proper compliance with SBREFA would hardly have been a "pointless exercise" as EPA contended. See Environment Reporter, Nov. 22, 1996, at 1539 (Exhibit 7). EPA's deliberate refusal to implement the SBREFA procedures in a faithful and timely manner has prevented the full review of less burdensome alternatives intended by Congress. As such, EPA's violations of SBREFA have irrevocably prejudiced and invalidated the outcome of this rulemaking on the recently issued standards.
We therefore urge that the new standards be rescinded, and that EPA initiate a new rule development process that incorporates each of the proper procedures and elements of SBREFA, the Regulatory Flexibility Analysis and other similar requirements.
Thank you Chairman Hyde and members of the Subcommittee for this opportunity. We would be happy to respond promptly to any questions that you may have.
E X H I B I T S
A Chronology of EPA's Disregard for the Requirements of SBREFA in the Proposal and
Promulgation of National Ambient Air Quality Standards for Ozone and Particulate
ATA first expressed in writing its concerns about EPA's plans to revise the ozone and particulate matter standards in August 1996, three months prior to publication of the proposed standards. After setting forth the major difficulties that would be presented by revising the standards, ATA notified EPA that it "will strongly advocate these views under the Small Business Regulatory Fairness Act review process." Letter from A. Schaeffer, ATA, to M. Nichols, EPA, of Aug. 16, 1996, (Exhibit 6). Later that same month, a group of consumer and business associations involved in transportation, including ATA, sent a letter to the Chief Counsel for Advocacy of the SBA, with a copy to EPA Assistant Administrator Nichols, requesting compliance with the SBREFA requirements for the NAAQS proposal and evaluation "of all appropriate regulatory options and alternatives including retaining the current standards and whether air quality benefits of changing ozone and PM standards would be commensurate with the costs." Letter from AAA-Mid Atlantic Region et al., to J. Glover, SBA, of Aug. 30, 1996 (Exhibit 7).
In the early fall of 1996, EPA indicated that it was preparing to comply with the requirements of SBREFA, including the convening of the small business advocacy review panel required by section 609(b). On September 25, 1996, ATA sent another letter to the SBA reaffirming its interest in participating on SBREFA panels and specifically requesting "appointment to the panels that will be assembled to review EPA's upcoming revisions to the National Ambient Air Quality Revisions (NAAQS) for ozone and particulate matter, both the NAAQS revision panel on the standard setting process and the implementation panel." Letter from A. Schaeffer, ATA, to K. Bromberg, SBA, of Sept. 25, 1996.
By October 1996, EPA had made no obvious progress in implementing the SBREFA requirements. Both Congress and ATA sent letters reminding EPA of its obligations under SBREFA and urgently requested EPA to comply with those requirements prior to publication of the NAAQS proposals, as required by SBREFA. Letter from Senator J. Inhofe et al to Administrator C. Browner of Oct. 9, 1996; Letter from J. Waddell, ATA, to Administrator C. Browner, EPA, of Oct. 15, 1996. Noting "that time is rapidly running out" for EPA to comply with the SBREFA pre-proposal requirements, the ATA letter alerted EPA that "immediate EPA action is needed." ATA offered that "ATA and representatives of affected small businesses in other industries stand ready to move forward at once with SBREFA's requirement for an advocacy review panel. ... If EPA acts swiftly to convene a review panel and issue its analysis, the rulemaking can go forward without the need for delay." Despite this urgent warning, EPA did not respond to ATA's letter for over one and one-half months, the critical period during which EPA's proposal was finalized.
On November 18, 1996, the Chief Counsel of the SBA delivered a letter to EPA Administrator Browner criticizing EPA's finding that the proposed ozone and particulate standards will not have a significant economic impact on a substantial number of small entities. Letter from J. Glover, SBA, to Administrator C. Browner, EPA, of Nov. 18, 1996. The SBA stated that "[considering the large economic impacts suggested by EPA's own analysis that will unquestionably fall on tens of thousands, if not hundreds of thousands of small businesses, this would be a startling proposition to the small business community." Id. at 1. The SBA's analysis concluded that EPA's position lacked any plausibility:
[I]n contrast to the regulatory application issues involved in Mid-Tex and United Distribution, small firms obliged to meet control requirements under federally enforceable ozone control provisions that implement the ozone NAAQS are "subject to the requirements" of the NAAQS. EPA cannot plausibly maintain that is "does not regulate" such entities under the Clean Air Act. The clear words of the RFA indicate that agencies can only avoid the requirements if there is no "significant economic impact" on "small entities [businesses]." EPA cannot make such a finding here." Thus, the regulatory flexibility analysis and the associated SBREFA advocacy panel requirements are mandated for this rulemaking.
Id. at 3 (emphasis in original).
The SBA therefore "urge[d] the agency to rethink its position, and convene a small business advocacy review panel as required by the new [SBREFA]."
Just one day later, on November 19, 1996, EPA Assistant Administrator Nichols announced in a trade press interview that EPA would not review the impact of the proposed standards on small businesses because it would be a "pointless exercise." Daily Environment Report (BNA), Nov. 20, 1996, at A-30 (Exhibit 5). The EPA Administrator signed the proposed rules on November 27, 1996, and they were published in the Federal Register on December 13, 1996. The preamble of the proposed rules stated that EPA was not required to comply with the requirements of SBREFA or the RFA because the proposed standards would not have "a significant economic effect on a substantial number of small businesses." EPA did indicate that it intends to voluntarily comply with the "spirit" of SBREFA, even though the various actions that SBREFA required to occur prior to publication of the proposed rule had not been followed. Once EPA Administrator Browner signed the proposed rules, Assistant Administrator Nichols and the SBA's Chief Counsel for Advocacy sent a letter to Senator Bond on the same day stating that EPA "intend[s] to do everything we can to fulfill the spirit of SBREFA on a voluntary basis," but only "after the proposal of new air quality standards for ozone and particulate matter ." Letter from M. Nichols, EPA, and J. Glover, SBA, to Senator K. Bond, of Nov. 27, 1996. On December 2, 1996, one week after the Administrator had signed the proposed rules, Assistant Administrator Nichols responded to ATA's October 15, 1996 letter by restating the arguments in the preamble of the proposed rule that the proposed standards were not subject to SBREFA. Letter from Assistant Administrator M. Nichols and General Counsel J. Cannon, EPA, to J. Waddell, ATA, of Dec. 2, 1996. The EPA letter added that "[a]lthough a panel meeting the requirements of the RFA is neither required nor practicable..., EPA plans to conduct a panel modeled on the RFA panel provisions following proposal of the new NAAQS for ozone and PM." Id. at 3 (emphasis added). Thus, even though it had ATA's letter for over one month prior to the proposal, EPA took no action to convene a panel until after the proposed standards were finalized, and even then described the panel as not being "practical."
On December 16, 1996, ATA received a short letter from EPA and SBA dated December 13 inviting ATA to participate in a discussion on the proposed ozone and particulate matter rules on January 7, 1997. ATA attended the January 7, 1997 meeting, which EPA expressly stated was not being conducted under SBREFA. EPA's appointed Small Business Advocacy Chairperson (Tom Kelly) described the meeting as a "paneloid." The paneloid meeting was attended by EPA staff and representatives of the SBA and Office of Management and Budget, as well as approximately twenty invited representatives of small business. The meeting was scheduled for only three hours, and consisted of a series of presentations by EPA staff summarizing the proposed rules and regulatory impact analyses, followed by short question and answer periods for the small business representatives. (A copy of that meeting agenda is attached at the end of this Exhibit.) The meeting essentially amounted to a briefing by EPA regarding the contents of its proposal -- not the extensive, cooperative joint exploration of alternatives required by SBREFA. In the question and answer periods, the questions asked by the small business representatives were generally answered by a polite "thank you" or by a statement that the issue "had already been considered." The EPA staff at the meeting were simply going through the motions of meeting with the small business representatives. There was no serious effort to discuss any alternatives to the proposed rules, which were treated as a fait accompli.
At the January 7 paneloid meeting, EPA announced that it intended to convene an inter-agency
review panel to review the small business comments and make recommendations, even though
such a panel was not required since SBREFA did not apply. EPA said it would accept comments
to the review panel on or before January 28, 1997 -- just three weeks after the formation of the
review panel was first announced. SBREFA requires that the statutory review panel issue its
report well before the close of the public comment period so that other interested parties,
including small businesses, are given an opportunity to comment on its recommendations. Here,
however, the EPA panel report on the proposed NAAQS ultimately was not completed until July,
and not placed in the docket until prior to the July 18 publication of the final rule, clearly not in
time for parties, including ATA, to meaningfully comment on it before the close of the public
comment period, thus entirely defeating the aim of the statute.
A P P E N D I C E S
1. Curriculum Vitae -- Allen R. Schaeffer, Vice President, Environmental Affairs
2. Disclosure of Federal Grants, Contracts, Subcontracts of ATA
Allen R. Schaeffer
Vice President, Environmental Affairs
American Trucking Associations, Inc.
2200 Mill Road, Alexandria, VA 22314-4677
Prior to joining ATA in May of 1987, Mr. Schaeffer worked extensively in medical research,
conducting human exposure studies on a variety of environmental and occupational agents in
clinical pulmonary research at the Johns Hopkins University and Francis Scott Key Medical
Center, and served as Senior Research Specialist for a pharmaceutical company from 1986-1987,
where he audited clinical trials of devices and drugs and interfaced with medical researchers and
the Food and Drug Administration. He also conducted environmental audits of pharmaceutical
Mr. Schaeffer received his Masters Degree in Environmental Health Sciences-Engineering from
the Johns Hopkins University School of Hygiene and Public Health in 1986, where he
coordinated human exposure research on the health effects of air pollutants, industrial chemicals
and indoor air quality. He received his Bachelors degree in Life Sciences from the University of
Maryland College Park in 1983. He has over fifteen years experience in environmental,
occupational, and public health.
Mr. Schaeffer has coordinated ATA's policy efforts on a number of legislative and regulatory
issues, including the Alternative Motor Fuels Act, the reauthorization of the Clean Air Act
Amendments of 1990, fleet provisions in the Energy Policy Act of 1992, and EPA's decision not
to list used oil as a hazardous waste in 1992. He has also coordinated industry efforts that have
successfully upheld key provisions of the 1990 Clean Air Act Amendments relative to fleet
vehicles and alternative fuels. Most recently, after serving on an industry standards
development committee for over 3 years, he secured EPA endorsement of that standard as the
recommended diesel emissions testing standard protocol to be applied uniformly nationwide.
Mr. Schaeffer has also worked directly on many environmental issues at the state level, serving
as principal advisor to the state trucking associations on environmental policy. He also works
closely with the ATA Research Foundation on environmental and energy research projects and is
the founder and organizer of that organizations medical advisory board.
(Allen R. Schaeffer -- Curriculum Vitae, page-2- )
He was appointed in 1997 to the U.S. EPA's Federal Advisory Committee on Ozone, Particulate
and Regional Haze, a group of 75 federal, state, local, business, academic and environmental
experts on implementation of clean air policies. Mr Schaeffer has served since 1995 as the
Secretary of the Foundation for Clean Air Progress, a 501(c)(3) organization dedicated to
education about air quality. Since 1996, he has also served as Chairman of the Transportation
Coalition for Clean Air, a Washington, DC-based organization that focuses on clean air and
transportation issues relative to motor vehicle fleets.
He is active in a number of organizations including the Transportation Research Board, the Air
and Waste Management Association and the American Public Health Association. He serves on
ATA's Environmental and Technical Advisory Groups, The Maintenance Council, and the
Society of Automotive Engineers. Mr. Schaeffer has also been an elected member of the Board
of Directors of the ATA Federal Credit Union, chartered in 1955, serving as Chairman of the
Board since 1995.
1. ATA Statistics Department, Alexandria, VA. February 28, 1997.
2. Rand McNally, Skokie, IL. October 1996. Letter to Ken Simonson, ATA.
3. U.S. Small Business Administration, Washington DC.
4. Office of Motor Carriers, U.S. Department of Transportation, Washington DC.
5. American Trucking Trends, 1996. ed, page 15. American Trucking Associations, Alexandria, VA.
6. 0 Under other statutes, Congress has likewise understood the critical importance of timing in review functions, and the courts have strictly enforced such timing requirements. For example, the National Environmental Policy Act ("NEPA"), which requires agencies to consider environmental impacts prior to action, has a parallel structure to SBREFA, which requires agencies to consider economic impacts on small businesses before taking action. The courts have strictly enforced the timing requirements of NEPA that agencies consider environmental impacts before agencies take action. See Foundation on Economic Trends v. Heckler, 756 F.2d 143, 157 (D.C. Cir. 1985); Sierra Club v. Marsh, 872 F.2d 497, 500 (1st Cir. 1989).