The Regulatory Flexibility Act + The Office of Advocacy = Small Business’s Voice in Federal Rulemaking

The federal rulemaking process can be long and involved. The Office of Advocacy plays a small but important role in this process which is spelled out in the Regulatory Flexibility Act and several executive orders. The Environmental Protection Agency’s formaldehyde rulemaking is a current example of how the office makes sure small business is represented throughout a prolonged, complex process. (Table 1 contains a brief timeline.)

The topic of regulating formaldehyde in home building materials dates to 2005, when the trailers housing the residents displaced by Hurricane Katrina were found to have high levels of formaldehyde gas. The push for regulations was launched in 2008. In March of that year, 25 organizations and 5,000 individuals petitioned EPA to adopt the California Air Resource Board’s (CARB) airborne toxic control measures for formaldehyde in composite wood products nationally. In June, EPA announced a decision to grant some parts of the petition, and the agency issued an advance notice of proposed rulemaking in December.

Advocacy became involved in fall of 2010 when EPA convened a Small Business Regulatory Enforcement Fairness Act (SBREFA) panel. SBREFA requires that EPA seek input from affected small businesses before proposed rules are published. At this early stage, small businesses can help shape the regulatory approach, which is much more effective than asking for substantive changes after a rule has been proposed.

The formaldehyde panel consisted of representatives of the administrator of EPA, the chief counsel for advocacy, and the administrator of the Office of Management and Budget’s Office of Information and Regulatory Affairs (OMB/OIRA). The panel met with 17 small entity representatives from across the country. They commented on EPA’s analysis of the rule’s small business impact and recommended alternative regulatory approaches in many areas. The final panel report was submitted to the EPA administrator in April 2011.

Following the completion of the panel, Advocacy staff attorneys and economists continued to work with EPA on how best to use small business analysis and recommendations.

On June 10, the five-year process resulted in EPA’s publication of two proposed rules. Advocacy renewed its outreach to small entities to prepare official public comments on the proposed rule. Advocacy invited EPA to speak to its July environmental roundtable. Afterward, EPA offered an open-door policy to small businesses, inviting them to EPA to meet with agency staff. Advocacy helped EPA follow up with roundtable participants who voiced concerns. On July 24 and 25, Advocacy staff met with small businesses at their factories in Rutland, Vermont, and McConnellsville, New York. Advocacy also observed CARB’s day-long event, “Discussion Session Regarding ARB’s Airborne Toxic Control Measure to Reduce Formaldehyde Emissions from Composite Wood Products and Proposed U.S. EPA Regulations,” on August 1.

This extensive outreach and information exchange informed Advocacy’s public comment letter to EPA submitted on August 21. The letter outlines the most significant small business concerns highlighted in meetings and conversations. (Table 2 summarizes two key points from the letter.)

Advocacy will continue to promote small business concerns as EPA develops its final rules. Advocacy hopes this extensive stakeholder outreach and engagement with EPA will have a significant and measurable effect on the final rules and will lead to a reduction in the burdens small businesses face once the rules are made final.

—Sarah Bresolin Silver, Assistant Chief Counsel

Note that this article appeared in the September 2013 issue of The Small Business Advocate.