Small Business Issue Paper

Date: May 28, 1997

Contact:	Ben Cooper, representing the Printing Industries of America

703/519-8115, FAX 703/548-3227

This paper addresses the overall effect of the implementation of the revised ozone and particulate matter standard on small business sources. Issues addressed in this paper may apply to Phase I or Phase II implementation. Issues covered by this paper may address the particulate matter or ozone standard.

Background:

The primary focus of the Clean Air Act Amendments of 1990 on small business sources is section 507 of the Act. This section was intended to address unique concerns of such sources and to provide a framework to assist states in assisting small sources with information and compliance needs.

What is a small business source under the Clean Air Act?

For the purposes of Section 507 of the Clean Air Act (the Small Business Stationary Source Technical and Environmental Compliance Assistance Program), a small business stationary source is defined as a company which meets the following:

1. Employs 100 or fewer persons,

2. Is a small business concern as defined by the Small Business Act,

3. Is not a major stationary source under Titles I and III of the 1990 Amendments,

4. Does not emit more than 50 tons or more per year of any regulated pollutant, and

5. Emits less than 75 tons per year of all regulated pollutants.

What are the states required to do to comply with the small business provisions of the Act?

In passing the Clean Air Act, Congress expressed concern about those companies which may face compliance or information hurdles under state implementation plans, but would lack the financial or technical resources to properly respond to the demands of the SIP. Consistent with other regulatory concerns, Congress established a program under section 507 which would assure that the states were in a position to provide education to such businesses. In fact, establishment of the program is required as part of a state's implementation plan under the 1990 Amendments. The primary elements of a small business assistance programs SIP revision must include: 1) establishment of a small business assistance program, 2) designation of a State office to serve as a small business ombudsman; and 3) appointment of a seven member compliance advisory panel to determine the effectiveness of the program.

Why is a special small business program needed?

Most small businesses do not have environmental staff or an individual whose primary responsibility is environmental management. Due to lack of resources, this responsibility, more often than not, falls to the owner of the company. While small businesses which are members of trade associations or chambers of commerce may have access to information about environmental issues or environmental management, the overwhelming number of small businesses are not members of such organizations. Consequently, the information received by small companies about environmental regulations is often provided through local media or through suppliers. While the information provided may be accurate, it may not be specific to the company seeking the information and may not meet state requirements.

There is a more significant environmental regulatory reason for a special small business component to the implementation strategy. The new standards will inevitably bring thousands of small companies into Clean Air Act coverage for the first time. If the South Coast Air Quality Management district is any indication of the future, companies with as few as 15 employees in the printing industry will become permitted sources in many parts of the country. In the printing industry alone, there are approximately 20,000 such sources nationwide. The large number of sources could strain the resources of state agencies. Programs which can effectively communicate with such a large number of companies are critical to efficiency at the state level. In addition, there are possible significant gains to be made in air emission reductions from an effective, cooperative program.

In September 1996, EPA reported to Congress the following: "Generally, small businesses want to comply with environmental regulations; however, they may be afraid to ask for help. When a non-threatening assistance program, such as the Small Business Technical Assistance Program, is available, small businesses are eager to take advantage of the services, as this help increases chances of survival and profitability."

What federal permit requirements apply to small businesses?

Relatively few small business sources are covered by specific federal environmental permit requirements. However, many are covered by state regulations. Consequently, a common question raised by small business owners centers on whether or not they are covered by an environmental regulation and whether those regulations are state or federal. A line of communication specific for small business provides the comfort to inquire about the issue with some assurance that they will get an answer that is non-technical. The programs established under section 507 communicate to small business as advocates and assistance providers rather than regulators.

Small business is often given special treatment. Why shouldn't these companies meet the same compliance burdens as other sources?

There is nothing in the Clean Air Act or the 1990 amendments which exempts a small company from compliance if they are within the emissions levels covered by the Act. The purpose of the small business programs therefore, is not to exempt but to provide a more effective mechanism to bring companies into compliance. Additionally, to provide mechanisms that encourage companies which are below the reporting levels to participate in emission reduction and pollution prevention programs.

How effective has the small business assistance program created under the 1990 Amendments been?

In the first year of monitoring the Small Business Assistance programs, more than 75,000 small businesses have been directly reached, and over 2,000 on-site consultations have been conducted. In 1995, over 105 specific industry sectors received assistance.

The proposed revisions to the National Ambient Air Quality Standards has understandably raised concerns in the small business community. There are specific industry concerns in the small business community which are similar to the problems faced by larger companies. However, there are unique concerns for small companies which need to be discussed and incorporated into the implementation strategy. The following represents an attempt to highlight some of these concerns.

ðChanges in the designation of attainment and non-attainment to Areas of Influence and Areas of Violation could be particularly complicated for smaller companies. Simplicity in regulations has been a guiding principle in federal legislation for several years. Changes in the designations of areas may result in a level of confusion in the small business community which may result in delayed compliance. These concerns would be more acute for small businesses located in overlapping areas of influence.

ðEmission data for many small sources is not readily available. Since many small businesses have not been covered by federal permits, site specific emission data often is not available.

ðOne of the characteristics of small source/area source regulation has been to apply emission reduction requirements for a large class of area sources without understanding the unique characteristics of the individual companies within that area. Further, lack of resources often do not permit EPA to evaluate technical differences between large and small sources within an industry. The result in some cases has been to inappropriately apply control guidance suitable for one industry segment to an entirely different segment. While EPA was required to issue guidance for a number of industries under the Clean Air Act Amendments, budget limitations have often pushed these efforts to a lower priority. In such cases, states rely on old, or in some cases, flawed information. In many cases, the requirements for small companies are the same as those for large companies. While the concept of blanket requirements for small sources may be appropriate for an industry which has identical production processes from site to site, such requirements are inappropriate for many other industries.

ðPermit applications, modifications and potential to emit calculations are more dramatic for small sources than large sources. In the printing industry, a single contract with a customer or the purchase of a single press can significantly change the emissions potential of a company. Likewise, small companies undergoing expansion could double their potential emissions in a relatively short period of time although the total amount of emission increase might be relatively small. In small manufacturing operations, potential emissions can seem quite high. Therefore, PTE calculations which more closely approximate actual emissions are essential to permit programs.

Recommendations

The small business program in the Clean Air Act has been a success as indicated in EPA's Report to Congress because of the cooperative nature of the program. The subcommittee should consider the opportunity in the current implementation strategy discussions to expand such cooperative programs. EPA has devoted considerable energy to program to build consensus, simplicity, and cooperation. CSI, ECOS, DfE and many other activities have attempted to find such solutions. EPA's Small Business Assistance program offers the best potential to apply these concepts. Specifically, the Subcommittee should consider the following:

1. Recommend that states receive specific emission reduction credits for successful educational and technical assistance programs. Since these emission reductions are difficult to calculate, EPA should consider the development of tools to evaluate the success of educational and technical assistance programs.

2. Encourage and promote innovative state programs which incorporate multi-media pollution prevention programs into the revised SIPs.

3. Promote adequate of funding for technical and educational assistance, development of guidance documents and development of evaluation tools for educational programs. Such funding should not threaten other state or federal programs.

4. An aggressive effort to publish additional control techniques guidance documents is strongly recommended to assist states in working with small business sources.

The Subcommittee has an unprecedented opportunity to recommend expanded education and technical assistance as viable options to command and control. Creative solutions which have produced results are available for evaluation. States such as Texas, Massachusetts, Illinois, Minnesota, and Wisconsin are exploring numerous options to achieve real environmental results with minimal regulation. However, in order for these programs to continue, states must receive tangible recognition from EPA.