Advocate Summary

Issue:  Effluent Limitation Guidelines (for Transportation Equipment Cleaning Industry)
Advocate:  EPA – Small Business Advocacy Office – Tommy Kelly
Date of Interview: 6/19/02

Basic Background
The Clean Water act, well let me begin by saying most often what comes out of Congress looks like it was built by a committee, and that’s because that’s what Congress does. And that’s a great thing usually unless you want something with a simple working premise, when you start compromising you start getting things that don’t make good logical sense. The Clean Water Act I think defies that it really is quite logical. And the premise for it is that, in a society were we are all using the nation’s water ways, we all have an obligation to our neighbors no to abuse. And we realize that some pollution is inevitable and unavoidable, that the polluter should pay for the cost to his neighbor for injecting that pollution. The Clean Water Act has set up a system that there are certain minimum requirements that every water discharger must meet. The Effluent Limitation Guidelines is the basis for that. What it says is that for every industry that is set up to conduct business by a water way, that there is a minimum ecological standard that must be met, and that everybody has to conduct themselves according to a minimum standard and that is to ensure that there is a level ground. One of the things the Clean Water Act tries to avoid is what they call pollution havens, allowing certain states that they had more pollution to give, to induce industry to come and set up there because you’d have to do less in way of pollution control then you would have to do somewhere else. So that’s the idea that there is a technology floor that is set for discharging into the nations water ways. The Effluent Guidelines Apply to all industry but what they did was to take all industry and diced it up into sectors, and the reason for that is that the guidelines vary according to technology and the technology varies according to the job you are doing, the job you are doing varies by the industry that you occupy. So in the case of Transportation Equipment Cleaning, that was a very small slice of the nation’s industrial spectrum and was subject to its own Effluent Limitation Guidelines. The people we were trying to regulate here, were the cleaners of transportation equipment, sometimes those were separate companies that were set up – you bring your rail car here and you send it back, like dry cleaning. Other cases it was the rail companies, the transport companies that had their own captive plants, meaning that the plant was on the premises of the transportation company, to clean its own vehicles.  All of those types of facilities would have been subject to the rule. So the groups included were trucks and rail carrying chemicals and petroleum, what are called hoppers, and trucks and rail carrying food stuffs. 

There are three classes of regulations, not are a lot of regulations that don’t affect small business at all, for those that do the Regulatory Flexibility Act provides some coverage. The basic requirement of the Reg-Flex Act is that if the EPA is considering a rule that if promulgated would cause a “significant economic impact” on a “substantial number of small business” we must conduct outreach to small entities that will be subject to the rule, prepare alternatives to the basic regulatory proposal that will minimize the burden on small entities and conduct an analysis to show what we do to accommodate small entities. We also have to conduct an inter-agency review panel that includes oversight not only from the EPA small business staff but also oversight from the Small Business Administration – there is an advocacy unit within SBA, and also the President’s Office of Management and Budget, in the Executive office and there is an organization there called OIRA – Office of Information for Regulator Affairs, that’s the arm of OMB that’s charged with executive review, that’s charged with executive review of federal regulations. Typically OIRA doesn’t see a regulation for review until it’s ready to go to the federal registry. What different about these amendments to the Reg-Flex Act, those are known as SBRFA – Small Business Regulator Enforcement Fairness Act, what it does is brings the food critics into the kitchen while the soup is still on the stove. While the agency is still gathering information, still weighing regulatory options, still trying to decide what the environmental risk is and what the most efficient way is to reduce that risk, we’ve got OMB and SBA on your neck say “do this” and “don’t do that” and it complicates the rule making process and adds to the time it takes to prepare a rule, it adds to the administrative cost and all this must be done when a rule might cause a significant amount of impact on a substantial number. The way the rule actually reads is that all of those requirements apply to every federal regulation, unless the agency certifies that the rule, if promulgated, will not impose a significant amount of impact on a substantial number of small business. So when a rule is going to have small entities among the effected the EPA has to make a prior decision, if it is not likely to be a significant impact they can go ahead and certify that rule, and are under no legal obligation to do an awful lot of work for small businesses. If they chose not to certify that rule, then we have to go through all the out reach, all of the analysis, all of the pursuit of accommodation, and have a panel. Most rules we can certify, because first of all “significant impact” means what it says, the impact should be significant, we say if it’s more than 3% of revenue in a given year lets not quibble about that we’re going to call that significant, in terms of a substantial number that’s a lot harder, given that if it’s a very small industry then more than 20 percent we would consider a substantial number, so ultimately it is a policy judgement. So far I think we’ve made good judgments. Everybody wants a panel, but most rules don’t get panels so far we’ve done 26 panels since 1996. What that means is most rules don’t require SBREFA. You’ve got to be very selective, you’ve got to limit this extremely great investment of analytic resources, and time and presidential staff. Because if they get tied up reviewing a rule that only has a small impact on a few business that’s going to take away from emissions, and emissions is the biggest rule to come out of EPA in 15 years. At the same time you have the small businesses screaming they want a panel, so that’s the pressure. 

So they send out a list of industry sectors that are going to be subject to Effluent Guidelines, they get sued and that gives them a deadline, they start to work by creating a survey and try to identify the firms both large and small that are effected, so they send out surveys, while they are waiting to get the results they get sued and then there is another deadline set. We get sued for lunch, we get sued on the way to the men’s room. One of the reasons it can be frustrating sometimes is that, citizen’s suit is one of the most powerful force for good in the environmental movement, it is also an equally powerful force for mischief. They ask the question qui bono – for whom falls the good, if you are an environmental interest group you are dependent on membership, to have individuals identify with their cause and send contributions. The best way to do that is to get their name in the paper, to show hey we are fighting for you. And suing for action, and to get the government to agree to regulate industries that are in need of regulation is a very good way of doing it. And in theory that’s just fine, but the problem is that lots of times these industries are listed and no one really knows if they are actually a problem.  I don’t want to sound like I have an axe to grind, but what I’m saying is that the way the law has operated has created some perverse incentives and if I were to take you through the process you would say how does anybody get any work done because, you’ve got environmental groups suing to get sectors regulated based on assertions about the environmental risks, you’ve got the agency under pressure to agree to certain schedules and then all of the sudden you are operating under this deadline, the only way you can write the rule is if you’ve got information, the only way to get the information is if you do surveys to say hey “what do you do, how do you do it, what are your profit margins” people don’t like to part with that kind of information, you’ve got the Paperwork Reduction Act that creates barriers, and you’ve got OIRA short staffed.  

Prior Activity on the Issue 
None mentioned.

Advocacy Activities Undertaken
When pulled together a panel to review this rule with respect to small business we had folds from the National Tank Truck Carriers, the Railway Progress Institute, the Shortline Railroad Association, the National Shipyard Association, a group called the Association of Container and Conditioners. So what we did was, when the EPA writes a regulation they write it for all parties who are conducting a certain type of business, the agency does its best to identify who is conducting that business but there is a long tradition of sort of hiding in the weeds. There are a lot of business that are very much afraid of the government, don’t want anything to do with the government, they are very hard to identify if they don’t identify themselves. And a lot of times they don’t identify themselves. We often times reviewed the census and Standard and Poor and other things to try to get a pretty good estimate of how businesses were actually conducting the work the regulators were looking at. In attempting to identify what interests need to be represented and to advise us about the practicality of the rule we often have to go to trade groups. And trade groups are just like everybody else, you know – they’re trying to get members, and if they had every company out there in the country signed up they’d be in business but they have only 20 or maybe 30 percent as dues paying members. We often just go to the trade associations and ask them to please identify what businesses can help us, get us on the shop floor to see what the impact is. That’s what we did in this case. 
The panel was for the Effluent Limitation Guidelines specifically for Transportation Equipment Cleaning. A the time that we formed the panel we did not know how it was going to turn out, the way the statue reads you have to certify, you can’t say probably not, you can’t say less likely than not, you’ve got to certify. And at the time we were on a dead line and the president’s staff was still trying to gather information, they still hadn’t made policy decisions and we couldn’t reliably predict that a certification would be appropriate. So we wound up doing a lot of work before hand that would have come once we were not going to certify it. By the statute you are supposed to set the effluent guideline at the best attainable technology that is economically achievable. And economically achievable means that it has to be some appropriate ratio between the benefits and the costs. And if it turns out you are going to be putting people out of business then the statute does allow the agency to establish exclusions. In the case here as we reviewed what the data showed, in toxic loadings from tanks and containers, the agency had to revise its thinking on how far this rule need to extend in order to give environmental benefit. By the time we were done with it they had a fairly easy certification oh their hands. And that’s how it worked. 

So information was coming in and being analyzed as we were conducting this panel and what they found out was that in the case of the hoppers section of the industry there was hardly anything there, I think it was chemical sector they found out that some of the wildest extrapolations of toxicity were based on bad data, somebody had taken a bath and they characterized it as a rinse, and a bath is basically when you take a metal and put it in pure solvent and a rinse is when you put it in water – with just a small amount of solvent in it, but if you say that a rinse is characterized by a bath and then you take that and extrapolate it and say here’s how much toxic characteristic there is in the waste water you are going to have an exaggeration of a 100 fold in your estimate. So with out the deadline nothing would get done, with the deadline a lot of sloppy stuff gets done. 

Future Advocacy Activities Planned
None mentioned.

Key Congressional Contact(s)/Champions
Not applicable.

Targets of Direct Lobbying
Not applicable.

Targets of Grassroots Lobbying
Not applicable.

Coalition Partners: Names/Participants
[Worked with the participants on the panel, see below]

Other Participants in the Issue Debate
When pulled together a panel to review this rule with respect to small business we had folds from the National Tank Truck Carriers, the Railway Progress Institute, the Shortline Railroad Association, the National Shipyard Association, a group called the Association of Container and Conditioners.

Ubiquitous Argument(s) and Evidence
[of the small businesses]
Mainly risk and cost, a lot of technical arguments that the EPA was using bad data, and there was a lot of competitive analysis going on. One of the participants on the panel was a professional engineer and he represented a coalition of companies that were going to be effected by this rule, but his job was to analyze toxic characteristics of wastewater, he was a professional critic of Effluent Limitation Guidelines, and he contributed a tremendous amount of insight and counter analysis pointing out to EPA where he thought there were errors. And was very influential. Would this have happened eventually – yeah, the people at the Office of Science and Technology are very good at their jobs but they have tremendous pressure and they are constantly working on deadline. A lot of time the agency is just trying to get a proposal out on the street because public comment is a tremendous corrective on errors. The constraint against that is that early in the agency’s history the proposal wasn’t just a rough draft and it became very difficult to overturn, in the past fifteen years the proposal is no longer the blueprint for the final rule. 

Small business is a sacred thing in Washington, just like the environment, in surveys if you ask people do you support government involvement in the environment, do you support EPA – 80 percent say yes. You don’t attack environmental protection if you want to win with the voters. So that’s the sort of sacred cow the environment is, small business is too. You can get great rhetorical points if you are running for re-election if you align yourself with your Aunt Tilly, or your grandfather, trying to make it down the street in a hardware store and if you have government nazis coming out for inspection on Uncle Bengie, where’s the public sympathy going to lie – it’s going to lie with Uncle Bengie. There is a lot of political benefit to be had by supporting small business and the belief is broad that small businesses generally get left out of the conversation when they are about to be regulated. And there are two adversaries to small business. One is big business and they are by and large against small business that work entrepreneurially. In industries, like petroleum, where the big businesses can charge what they want in underserved parts of the country, and the only reason they have to keep their prices low is because you’ve got these wildcat small local operations that keep the price down. Nothing would make the big companies happier then getting rid of those small companies. And it’s a time honored business strategy to cooperate with government regulators if you are big business that has access to a lot of capitol and a lot of technical sophistication to tell the government hey, we can meet this standard we can meet this requirement because they know what’s going to drive the little guy out of the market. Like low sulfur gasoline, that turned out to be a success, we gave the small refiners a lot of time to comply and we also gave them access to another market. And subsequently on their own, they went out and got tax relief, I think like 75% of their capital investment to convert to low sulfur technology - they have to do hydro-carbon cracking and that sort of thing– that’s all expenses, so the combination of those two things, somebody just came in here the other day representing those people and he said, “we’re  in fine shape now” that’s the way that rule was written. So that worked, because those big refiners could have said you name the number and we can meet it and it would have put the little guy out of business. And so we had to find a number that everybody could meet and that there was a mechanism that allowed the small ones to meet it.  The Second one, is the government regulators themselves, because we are very busy people, and the shortest distance between two points is a straight line and if we can get our work done by talking to the people that seem to know the most about it that’s a fine way to do. And often times you have small businesses that lack the sophistication or motivation, they don’t understand how Washington works, and they don’t understand the degree to which they could get screwed – there is too much of a tendency to lie low in the weeds they fear that they are going to get inspected or written up so they don’t want to present themselves to the government at all. If you don’t say hey if you write that rule you’re going to put me out of business, then they’re not going to have to pay a fine – they’re not even going to be there. So I think a lot of good things have come out of the SBREFA and because of EPA’s outreach to try to find accommodations for small business that is subject to any of our rules. I think that the impact of the statue has been profound, it’s not just the analytical requirements or the OMB and SMA are looking over our shoulders, it’s not just that there is the threat of judicial review – but there is a cultural change that having had the experience of going through the panel, and seeing how much they can learn about how the world actually operates, going home at night being able to tell the kids, you know, I avoided a big mistake today, we fixed a rule that won’t put Uncle Bengie out of business, that’s a good feeling, people like that experience and it’s not that they didn’t want to do it before, it’s just that they didn’t know enough to solve the problem. That is where I see the great benefit of this statue, it’s sort of like an awakening to staff. 

Secondary Argument(s) and Evidence
None mentioned.

Targeted Arguments, Targets, and Evidence
None mentioned.

Nature of the Opposition
The environmentalists sued that the Transportation Equipment Cleaning industry be regulated but they never got involved after the original suite.

Ubiquitous Argument(s) and Evidence Articulated by the Opposition 
They make the case that the EPA has a responsibility under the statue to issue Effluent Guidelines for this sector based on this list, the EPA missed that deadline, all of the sudden now the AIDC or Nature’s Defense or the Sierra Club is not equal at the table because instead of the EPA being an administrator of the government’s business they are now a part of a dispute being mediated by a judge and it is the judge that is making the decision as to which sectors need to be regulated and by what time, and the judge says she doesn’t know, but the EPA’s authority is now compromised, that’s the way the system works.  

Secondary Argument(s) and Evidence Articulated by the Opposition
None mentioned.

Targeted Argument(s) and Evidence Articulated by the Opposition (and Targets)
None mentioned.

Described as a Partisan Issue
No.

Venue(s) of Activity
EPA

Action Pending or Taken by Relevant Decision Makers

Policy Objective(s) and Support for/Opposition to the Status Quo
[Working to produce Effluent Limitation Guidelines for Transportation Equipment Cleaning that do not have a significant negative economic impact on a substantial amount of small businesses in the Transportation Equipment Cleaning industry.]

Advocate’s Experience: Tenure in Current Job/Previous Experience
[Kelly worked with the EPA since 1978 and in this SBREFA office since 1996. He works solo but uses administrative staff from other EPA offices. ]

Reliance on Research: In-House/External (Code for Organizational Advocates Only)

Number of Individuals Involved in Advocacy (Code for Organizational Advocates Only)

Units in Organization Involved in Public Affairs/Policy (Code for Organizational Advocates Only)

Advocate’s Outstanding Skills/Assets (Code for Organizational Advocates Only)

Type of Membership: None, Institutions, Individuals, Both (Code for Organizational Advocates Only)

Membership Size (Code for Organizational Advocates Only)

Organizational Age (Code for Organizational Advocates Only)

Miscellaneous