Clean Water Act: Proposed Revisions to EPA Regulations to Clean Up
Polluted Waters (Correspondence, 06/21/2000, GAO/RCED-00-206R).
Pursuant to a congressional request, GAO reviewed the economic and
compliance issues associated with two proposed Environmental Protection
Agency (EPA) regulations to clean up polluted waters, focusing on: (1)
the reasonableness of EPA's economic analyses for the two proposed
regulations; and (2) whether EPA's determinations under the Unfunded
Mandated Reform Act of 1995 and the Regulatory Flexibility Act were
adequately supported.
GAO noted that: (1) there were limitations with EPA's economic analyses
of the proposed regulations for the total maximum daily load (TMDL) and
the National Pollutant Discharge Elimination System (NPDES) programs
that raise questions about their reasonableness and about the
determinations that EPA has based on them; (2) the outcomes of the
analyses were heavily influenced by a number of key assumptions; (3) in
the case of the TMDL program, for example, EPA assumed that states are
essentially in full compliance with current regulations, or will be as a
result of existing statutory and regulatory requirements; (4) EPA
estimated only the costs that would result from the new requirements in
the proposed regulations; (5) however, compliance with existing TMDL
regulations has been problematic, and future compliance in the absence
of the proposed regulation is uncertain; (6) GAO found similar
uncertainties with key "baseline" assumptions that affect the cost
estimates associated with the proposed NPDES regulation; (7) the key
water quality data available to EPA to identify the number of waters not
meeting standards and the number of TMDLs that will be needed are
incomplete, inconsistently collected by states, and sometimes based on
outdated and unconfirmed sources; (8) as a result of these limitations,
EPA's cost estimates are subject to substantial uncertainty; (9) EPA
provided little information on the benefits associated with the proposed
regulations; (10) without information on both costs and benefits, it is
difficult to confirm that the regulation is economically justified; (11)
given the uncertainties surrounding EPA's cost estimates, GAO disagrees
with EPA that EPA's analyses adequately supported its determination
under the Unfunded Mandates Reform Act of 1995 that more detailed
analyses of costs, benefits, and alternatives were not needed for either
of the proposed regulations; (12) however, in the case of requirements
for additional analyses under the Regulatory Flexibility Act, case law
supports EPA's determination that because its proposed revisions to both
regulations do not directly regulate small entities, additional analyses
were not required; (13) several court decisions have ruled in analogous
situations that agencies' regulations were not subject to the
Flexibility Act's requirements for additional analysis; and (14) courts
have held that where a proposed regulation does not impose any
regulatory requirements at all on any entities, but instead expands
agency authority to take future discretionary action, no initial
regulatory flexibility analysis is required.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: RCED-00-206R
TITLE: Clean Water Act: Proposed Revisions to EPA Regulations to
Clean Up Polluted Waters
DATE: 06/21/2000
SUBJECT: Water quality
Water pollution control
Environmental policies
Proposed legislation
Agency proceedings
Economic analysis
Noncompliance
Wildlife conservation
Environmental legislation
IDENTIFIER: EPA Total Maximum Daily Loads Program
EPA National Pollutant Discharge Elimination System
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GAO/RCED-00-206R
GAO/ RCED- 00- 206R TMDL Regulations United States General Accounting Office
Washington, DC 20548 Resources, Community, and
Economic Development Division
B- 285593 June 21, 2000 The Honorable Bud Shuster Chairman, Committee on
Transportation
and Infrastructure House of Representatives
Subject: Clean Water Act: Proposed Revisions to EPA Regulations to Clean Up
Polluted Waters
Dear Mr. Chairman: This report responds to your request that we assess
economic and compliance issues associated with two recently proposed
rulemakings by the Environmental Protection Agency (EPA). The first proposed
rule would revise the total maximum daily load (TMDL) program, which is
authorized by the Clean Water Act. The TMDL program is intended to ensure
that the nation's waters are of sufficient quality for the protection and
propagation of fish, shellfish, and wildlife, and for recreation in and on
U. S. waters. TMDLs are used to restore water quality by identifying how
much pollution a body of water can receive and still meet its standards. The
amount of pollution entering the water is then reduced to that level. The
proposed revisions add requirements to clarify and strengthen how TMDLs are
established, and to provide added assurance that plans for cleaning up
waters are implemented.
The second proposed rule would revise EPA's National Pollutant Discharge
Elimination System (NPDES) program that controls the discharge of pollutants
from “point” sources of pollution (i. e., entities such as
industrial facilities and municipal wastewater treatment plants that
discharge pollutants through a discrete point such as a pipe). The revisions
would expand EPA's authority to issue permits in certain circumstances and
would require new large or expanding dischargers to obtain from other
dischargers a certain level of reductions in pollutants being released to a
polluted water before they begin discharging to that water. In addition, the
revisions would allow, under certain circumstances, the use of point source
discharge permits to control pollution from a number of agricultural and
silvicultural activities that have generally been treated as
“nonpoint” sources. These revisions are intended to help states
and EPA in developing and implementing TMDLs, and hence were issued at the
same time as the proposed TMDL regulation. States are primarily responsible
for
B- 285593 2 GAO/ RCED- 00- 206R TMDL Regulations
implementing the TMDL, NPDES, and other Clean Water Act programs. EPA issues
policy and guidance for these programs and implements them when a state
fails to do so or is not delegated program authority.
TMDLs were first required by the Clean Water Act in 1972 but were the
subject of little attention by EPA and the states in subsequent years. For
its part, EPA first issued regulations governing states' development of
TMDLs in 1985 but did little to enforce them. In recent years, lawsuits
alleging inaction by EPA and the states have spurred increased attention to
the development of TMDLs by imposing judicial deadlines on some states. As
stated in EPA's proposed regulations, the revisions to the TMDL and NDPES
regulations “revise, clarify, and strengthen” current regulatory
requirements for these programs.
Certain statutes governing federal rulemaking activities generally require
EPA to evaluate the economic impacts of proposed regulations. If a
preliminary economic analysis indicates that certain thresholds of costs
have been met, additional detailed economic analyses are required. The
Office of Management and Budget (OMB) has issued a “Best
Practices” document, and EPA has guidance for conducting such economic
analyses. The Regulatory Flexibility Act requires an agency to prepare an
“initial regulatory flexibility analysis” if it determines that
a proposed regulation will have “a significant economic impact on a
substantial number of small entities .” 1 In addition, if on the basis
of a preliminary analysis, an agency determines that a proposed regulation
includes a federal mandate that may result in expenditure of $100 million or
more by state, local, and tribal governments in the aggregate, or by the
private sector, in any one year, the Unfunded Mandates Reform Act of 1995
requires more detailed analyses of costs, benefits, and alternatives. A
similar directive is imposed on agencies by Executive Order 12866.
On the basis of its economic analyses, EPA concluded that neither proposed
regulation would result in expenditures by governments and the private
sector in excess of $100 million in any one year and, therefore, did not
conduct more detailed analyses under the Unfunded Mandates Reform Act. With
respect to the Regulatory Flexibility Act, EPA determined that because
neither proposed regulation directly regulates small entities, neither would
have a significant economic impact on a substantial number of small
entities.
As requested, this report assesses (1) the reasonableness of EPA's economic
analyses for the two proposed regulations and (2) whether EPA's
determinations under the Unfunded Mandates Reform Act of 1995 and the
Regulatory Flexibility Act were adequately supported. The report summarizes
the information provided to your staff during our briefing on June 21, 2000,
and formally transmits the charts (which provide more detail) presented
during that briefing (see enc. I).
To prepare the information in this report, we reviewed EPA's proposed
regulations on Water Quality Planning and Management and the National
Pollutant Discharge
1 Small entities generally include small businesses, small nonprofit
enterprises, and small governmental jurisdictions.
B- 285593 3 GAO/ RCED- 00- 206R TMDL Regulations
Elimination System and Antidegradation Policy and associated economic
analyses. We used standard economic principles as criteria to assess the
reasonableness of the methodology and key economic assumptions that EPA used
in its economic analyses. We also reviewed the extent to which the
methodology and key assumptions were consistent with OMB's “Best
Practices” and EPA's guidance on conducting economic analyses. In
addition, we reviewed public and industry comments on the proposed
regulations and EPA's economic analyses. To assess the agency's compliance
with the Unfunded Mandates Reform Act of 1995 and the Regulatory Flexibility
Act, we reviewed the statutes and their legislative history and case law. We
interviewed officials responsible for the analyses in EPA, agency attorneys,
and officials involved in EPA's final cost analyses. We also interviewed
officials with OMB's Office of Information and Regulatory Affairs, cognizant
officials at the U. S. Department of Agriculture, and other interested
parties.
In summary, we found limitations with EPA's economic analyses of the
proposed regulations for the TMDL and NPDES programs that raise questions
about their reasonableness and about the determinations that EPA has based
on them. Of particular consequence, the outcomes of the analyses were
heavily influenced by a number of key assumptions. In the case of the TMDL
program, for example, the agency assumed that states are essentially in full
compliance with current regulations, or will be as a result of existing
statutory and regulatory requirements. Therefore, EPA estimated only the
costs that would result from the new requirements in the proposed
regulations. However, compliance with existing TMDL regulations has been
problematic, and future compliance in the absence of the proposed regulation
is uncertain. We found similar uncertainties with key “baseline”
assumptions that affect the cost estimates associated with the proposed
NPDES regulation. For example, EPA assumed that 30 states have, or will
have, adequate enforceable authorities over silviculture, and that these
states would therefore incur no costs as a result of the regulation.
However, EPA's proposed regulation did not specify the types of controls
that would be adequate to control silvicultural sources of pollution.
Without such information, state foresters and forestry experts expressed
concern to us that costs could be incurred as a result of additional control
requirements. In addition, the key water quality data available to EPA to
identify the number of waters not meeting standards and the number of TMDLs
that will be needed are incomplete, inconsistently collected by states, and
sometimes based on outdated and unconfirmed sources. 2 As a result of these
limitations, EPA's cost estimates are subject to substantial uncertainty.
Under these circumstances, it would have been appropriate for EPA to assess
the effect of different assumptions on the agency's cost estimates. Finally,
EPA provided little information on the benefits associated with the proposed
regulations. While EPA's proposed regulation may well have benefits, without
information on both costs and benefits, it is difficult to confirm that the
regulation is economically justified.
2 For example, in 1996 (the most recent national data available), states
assessed only 6 percent of ocean shoreline; 19 percent of rivers and
streams; 40 percent of lakes, ponds, and reservoirs; and 72 percent of
estuaries.
B- 285593 4 GAO/ RCED- 00- 206R TMDL Regulations
Given the uncertainties surrounding EPA's cost estimates, we disagree with
EPA that the agency's analyses adequately supported its determinations under
the Unfunded Mandates Reform Act of 1995 that more detailed analyses of
costs, benefits, and alternatives were not needed for either of the proposed
regulations. However, in the case of the requirements for additional
analyses under the Regulatory Flexibility Act, case law supports EPA's
determination that because its proposed revisions to both regulations do not
directlyregulate small entities, additional analyses were not required.
Specifically, several court decisions have ruled in analogous situations
that agencies' regulations were not subject to the Regulatory Flexibility
Act's requirements for additional analysis. For example, one case addressed
regulations under the Clean Air Act dealing with national ambient air
quality standards. The court ruled that EPA's action establishing the
standards did not directly regulate small entities; instead the costs to
small entities would be imposed in the future by discretionary state actions
implementing the standards. The principle set forth in this and other cases
is applicable to the TMDL proposed regulation because the TMDL proposed
regulation does not itself regulate small entities and any costs incurred by
small entities in the future will be imposed by future discretionary state
action implementing the regulations. Similarly, courts have held that where
a proposed regulation does not impose any regulatory requirements at all on
any entities, but instead expands agency authority to take future
discretionary action, no initial regulatory flexibility analysis is
required. Such is the case with the NPDES proposed regulation.
Agency Comments
We provided a draft of this report to EPA and OMB for their review and
comment. The Branch Chief for Natural Resources in OMB's Office of
Information and Regulatory Affairs provided oral comments, and characterized
them as minor and editorial in nature. These comments have been incorporated
throughout the report as appropriate. EPA's June 16, 2000, letter agreed
with our conclusions about the agency's compliance with the requirements of
the Regulatory Flexibility Act, but expressed a number of concerns with
other matters discussed in the draft report.
Among its key points, EPA said we inappropriately faulted the assumptions
used by the agency in preparing its analysis, particularly as it relates to
EPA's key “baseline” assumption that states are essentially in
full compliance with current regulations, or will be as a result of existing
statutory and regulatory requirements. EPA maintains that its assumption of
full compliance was appropriate and consistent with OMB and EPA guidance.
Our disagreement with EPA is not whether the agency was permitted under
guidance to assume full compliance but rather that this key assumption was
not accompanied by alternative-- and potentially more realistic--
assumptions about future compliance. Both EPA's guidance and OMB's 1996
“Best Practices” recognize that full compliance is often not a
reality and that the degree of compliance with existing regulations can
significantly affect the results of a cost analysis. We continue to believe
that analyses of alternative compliance rates were needed and that such
analyses would likely have indicated a range of possible costs exceeding
those estimated by EPA. We also continue to believe that in the absence of
such analyses, EPA cannot conclude with reasonable assurance that the annual
costs of
B- 285593 5 GAO/ RCED- 00- 206R TMDL Regulations
each proposed regulation would not exceed the $100 million threshold set
forth in the Unfunded Mandates Reform Act.
As a related matter, EPA also said that in addressing uncertainties about
information central to its analyses, particularly water quality data, it
complied with OMB's “Best Practices” that under such
circumstances, “. . . each agency shall base its decisions on the best
reasonably obtainable information.” However, we believe that EPA used
a narrow set of assumptions that do not sufficiently take into account the
extent of these uncertainties and their potential effect on the outcome of
its analyses. An appropriate course of action would have been to assess
alternative assumptions about these factors. Such an approach would have
presented a more realistic picture of the range of potential costs.
EPA's comments and our point- by- point responses are provided in enclosure
II. ----
As requested, this report will not be distributed until 7 days after its
issuance date unless you publicly announce its contents earlier. At that
time, we will send copies of this report to the Honorable Carol M. Browner,
EPA Administrator; the Honorable Jacob J. Lew, OMB Director; and other
interested parties. We will make copies available to others on request.
Please contact me at (202) 512- 6111 if you or your staff have any
questions. Key contributors to this report were Chuck Bausell, Hal Brumm,
Steve Elstein, Tim Guinane, Karen Keegan, and Trish McClure.
Sincerely yours, Peter F. Guerrero Director, Environmental Protection Issues
Enclosures - 3
Enclosure I 6 GAO/ RCED- 00- 206R TMDL Regulations
Briefing to the House Transportation and Infrastructure Committee
Review of Two EPA Proposed Regulations Regarding Water Quality Management
June 21, 2000 Review Objectives
Assess the reasonableness of EPA's economic analyses of its proposed
revisions to regulations on Water Quality Planning and Management (the
“TMDL regulation”) and the National Pollutant Discharge
Elimination System Program and Federal Antidegradation Policy (the
“NPDES regulation”).
Assess whether EPA's determinations that it was not required to conduct
further analyses under the Regulatory Flexibility Act (Reg. Flex.) and the
Unfunded Mandates Reform Act of 1995 (UMRA) are adequately supported.
Enclosure I 7 GAO/ RCED- 00- 206R TMDL Regulations
Scope and Methodology
To meet our review objectives, we reviewed documents supporting EPA's
economic analyses
for the two proposed revisions, and public and industry comments on the
rules and EPA's analyses;
applied standard economic principles and Office of Management and Budget
(OMB) Best Practices and EPA guidance on how to prepare economic analyses;
analyzed statutory language, legislative history, and case law regarding
Reg. Flex. and UMRA; and
interviewed officials from EPA, OMB, the U. S. Department of Agriculture,
and other interested parties.
Background: Water Quality Management
The Clean Water Act includes provisions for addressing both point and
nonpoint sources of pollution.
The control of point sources is done through a regulatory program known as
NPDES that requires issuing permits to entities that discharge pollutants
directly to surface waters to control the amount and toxicity of pollutants
entering the waters.
The act does not provide for a federal regulatory program for the control of
nonpoint sources. Instead, states are to control them through management
programs, such as requiring certain activities to apply practices that
minimize or reduce the amount of pollutants reaching waters. (These are
referred to as “best management practices.”)
Enclosure I 8 GAO/ RCED- 00- 206R TMDL Regulations
Background: The TMDL Program
Section 303 of the Clean Water Act contains provisions to address waters
that do not meet water quality standards.
First, states must identify waters that do not meet standards on what is
referred to as a “303d list.”
Next, states develop total maximum daily loads (TMDL) for those waters to
reduce the amount of pollutants entering the water so that water quality
standards can be attained.
EPA is required to develop a list and TMDLs if states fail to do so.
EPA must approve state- developed lists and TMDLs. TMDLs were required by
the 1972 act. EPA first issued
regulations for the program in 1985 and guidance in 1991.
Background: The TMDL Program
As of 1999, about 20,000 waters were identified as not meeting standards on
states' 303d lists, and EPA estimates these waters could require up to
40,000 TMDLs.
There is widespread recognition that implementation of the TMDL program has
only recently begun. At the time of proposal, not all states had submitted
303d lists, and EPA did not vigorously enforce the requirement to submit
TMDLs until recently.
According to EPA, currently all states have submitted 303d lists and the
process to establish TMDLs is underway. In addition, EPA officials told GAO
that in 17 lawsuits alleging state and EPA inaction, courts have established
judicially enforceable deadlines for states to develop TMDLs.
Enclosure I 9 GAO/ RCED- 00- 206R TMDL Regulations
In 1996, EPA established an advisory committee to make recommendations for
improvements and possible regulatory changes to the TMDL program; its
recommendations included that
an implementation plan should be required with each TMDL; TMDL development
should occur within 15 years of a water
being listed; and EPA should strengthen its technical guidance and support
to
improve states' capacity in developing TMDLs.
Background: The TMDL Program Background: Reg. Flex. and UMRA
Agencies must comply with a number of statutory requirements when proposing
regulations, including:
The Regulatory Flexibility Act (5 U. S. C. 601- 612) requires an initial
regulatory flexibility analysis unless the agency determines that a proposed
regulation will not have a significant economic impact on a substantial
number of small entities.
Title II of the Unfunded Mandates Reform Act of 1995 (2 U. S. C. 1531- 1537)
generally requires an analysis of costs, benefits, and alternatives for
proposed regulations that include a federal mandate that may result in
expenditures of $100 million or more by state, local, and tribal governments
in the aggregate, or by the private sector, in any one year.
Enclosure I 10 GAO/ RCED- 00- 206R TMDL Regulations
Executive Order 12866 also sets forth principles of regulation and directs
agencies to conduct certain analyses in rulemaking:
Agencies should assess the potential costs and benefits of available
regulatory alternatives when deciding whether and how to regulate.
Agencies should select those approaches that maximize net benefits, among
other factors like environmental quality, and base their decisions on the
best obtainable information concerning the need for, and consequences of,
the intended regulation.
Similar to UMRA, agencies must conduct benefit- cost analyses for
regulations expected to result in a $100 million annual effect on the
economy or that are otherwise economically significant.
Background: Executive Order 12866 Background: Information on Conducting
Economic Analyses
OMB Best Practices OMB has used its January 1996 “Best
Practices”
document as general criteria for reviewing economic analyses, including the
analyses of the two proposed EPA regulations.
EPA Guidance EPA has a number of draft guidance documents that its
offices use at their own discretion. EPA used a April 1998 draft for their
analyses of these
proposed regulations.
Enclosure I 11 GAO/ RCED- 00- 206R TMDL Regulations
EPA's Proposed Revisions to Regulations on Water Quality Management Programs
On August 23, 1999, EPA proposed revisions to regulations on the TMDL and
NPDES programs with the intent:
(for the TMDL program) to clarify and strengthen how TMDLs are established
so they can more effectively contribute to improving the nation's water
quality, and to achieve “reasonable assurance” that an
established TMDL will be implemented and that water quality standards will
be attained.
(for the NPDES program) to achieve reasonable further progress toward
attaining water quality standards in impaired waters (i. e., waters that do
not meet standards) prior to EPA approval or establishment of a TMDL.
EPA's Proposed Revisions Affecting the TMDL Program
The primary changes to the TMDL program include requiring the states to
establish a more comprehensive format for lists identifying waters that do
not meet standards,
consider specific factors when prioritizing their listed waters, establish a
15- year schedule in which to develop TMDLs for
waters once listed, include 10 specific elements in a TMDL, and develop
implementation plans that include 8 elements such
as demonstrating “reasonable assurance” that a TMDL will be
implemented.
EPA's Proposed Revisions to Regulations on Water Quality Management Programs
Enclosure I 12 GAO/ RCED- 00- 206R TMDL Regulations
The reasonable assurance requirement is intended to help ensure that
pollutant reduction allocations in a TMDL will be implemented such that
water quality standards will be attained and maintained. This means that
for point sources, states will issue enforceable NPDES permits and
for nonpoint sources (like farms), states must demonstrate that controls are
likely to be implemented, such as through state regulations.
EPA's Proposed Revisions to Regulations on Water Quality Management Programs
Summary of EPA's Analysis of Proposed TMDL Rule
EPA estimated the annual cost that states would incur in implementing the
proposed TMDL revisions to be between $10.3 million and $24. 4 million per
year (in 1999 dollars) from 1999 through 2015; EPA did not quantify or
monetize benefits; it briefly mentioned potential benefits in the proposed
rule.
The areas in which EPA estimated costs included developing implementation
plans ($ 5.3 million to $14.3
million per year), administrative costs to the states resulting from public
participation requirements ($ 4.8 million to $9. 5 million per year), and
administrative costs to EPA such as for reviewing implementation plans
(about $18, 000 annually).
Enclosure I 13 GAO/ RCED- 00- 206R TMDL Regulations
According to EPA, these are the costs that states would incur as a result of
the proposed regulations. The amounts do not include costs to meet current
regulations, consent decrees, and state commitments.
Much of the TMDL process is already required in current regulations.
As of the date of EPA's economic analysis (December, 1998), consent decrees
in about 12 states set courtordered schedules for developing TMDLs.
Most other states have submitted schedules to EPA for developing TMDLs for
currently listed waters, within a specified timeframe.
No costs to the private sector were estimated because the proposed rule only
changes requirements applicable to states and tribes.
Summary of EPA's Analysis of Proposed TMDL Rule
In estimating the costs of the proposed regulation, EPA made several key
assumptions:
All states are either in full compliance, or will be, with current TMDL
program requirements (i. e., TMDLs for currently listed waters will be
developed) because (1) states are committed to developing TMDLs under either
a consent decree or through commitments made to EPA, or (2) because of the
threat of a lawsuit for inaction.
In the future, there will be no increase in the current listing of about 20,
000 water bodies.
The private sector will incur no additional costs as a result of the
proposed revisions.
Summary of EPA's Analysis of Proposed TMDL Rule
Enclosure I 14 GAO/ RCED- 00- 206R TMDL Regulations
Limitations in EPA's Analysis Raise Concerns About Usefulness of Cost
Estimates
Limitations in EPA's economic analysis raise concerns about its usefulness
for decision- making. Our concerns relate to EPA's
assumption of full compliance with existing regulations, use of key water
quality and cost data that are of limited
quality, and exclusion of
costs to other federal agencies, private sector costs, an analysis of a
lower discount rate, and analysis of benefits.
EPA's analysis does not include costs that states will incur to comply with
current TMDL requirements because EPA states that those costs are the result
of existing statutory and regulatory requirements and not the result of this
proposed rule.
EPA's April 1998 guidance for conducting economic analyses states that such
an assumption of full compliance is reasonable in many cases. In particular,
it states that unless noncompliance is known and can be reasonably
estimated, the analysis should assume full compliance with an existing
regulation in the baseline.
EPA Assumed Full Compliance Despite Uncertainty
Enclosure I 15 GAO/ RCED- 00- 206R TMDL Regulations
EPA Assumed Full Compliance Despite Uncertainty
Nonetheless, EPA's guidance does allow discretion as to whether full
compliance with existing regulations should be assumed in the analysis. For
example, the guidance also states that:
“If it is known that there is noncompliance with an existing
regulation that is being tightened (i. e, replaced with a more stringent
regulation), then the analysis should be performed in two stages, if
possible. First, the incremental benefits and costs associated with
attaining full compliance with the existing regulation should be estimated.
The analysis should then estimate the costs and benefits of moving from full
compliance with the existing regulation to full compliance with the tighter
regulation.”
Furthermore, both EPA's guidance and OMB's January 1996 “Best
Practices” for conducting economic analyses recognize that full
compliance is often not a reality and that the degree of compliance with
existing regulations can significantly affect the results of the analysis.
EPA Assumed Full Compliance Despite Uncertainty
Although EPA assumed full compliance, we believe there is substantial
uncertainty about whether the states are, or will be, in full compliance
with requirements to develop TMDLs for impaired waters, given that
only about 1,300 of the up to 40, 000 needed TMDLs had been received and
approved by EPA through FY1999,
certain state commitments regarding schedules to complete TMDLs are
nonbinding and may be dependent on availability of state funding,
states could be further burdened by additional possible listings of impaired
waters and required TMDLs (and implementation plans), and
funding for the TMDL program was not a priority until FY 1998 and competes
with many other priority activities such as NPDES permitting and
enforcement.
Enclosure I 16 GAO/ RCED- 00- 206R TMDL Regulations
OMB's Best Practices further states that when uncertainty exists about the
baseline (or the way the world would look absent the regulation),
sensitivity analyses may be warranted.
In addition, OMB officials told us that in this particular case, where
substantial uncertainty exists about the level of implementation of current
regulations, ideally it may have been appropriate to do sensitivity analyses
of alternative compliance rates.
Given the uncertainty associated with the rate of compliance, we believe
that sensitivity analyses to assess the effect of alternative compliance
rates on the cost estimate would have been appropriate.
Such analyses would likely have indicated a range of possible costs
exceeding those estimated by EPA.
EPA Assumed Full Compliance Despite Uncertainty
EPA Assumed Full Compliance Despite Uncertainty
In addition, there is reason to believe that the proposed regulations would
accelerate compliance with existing regulations. EPA officials told GAO that
the proposed rule will make the TMDL program more effective and will reduce
the uncertainty associated with achievement of water quality goals.
If so, both the benefits and costs associated with achieving such compliance
more quickly should be attributed to the proposed regulations, rather than
existing regulations. These costs are not included in EPA's cost estimate.
Finally, USDA officials told GAO that in assessing the costs of the proposed
rule, they would assume that states are not in compliance with existing TMDL
regulations.
Enclosure I 17 GAO/ RCED- 00- 206R TMDL Regulations
Cost Estimates Are Based on Incomplete Water Quality Data
There are several questions regarding the quality of the data EPA used in
its analysis.
The data EPA used to estimate the number of impaired waters and required
TMDLs are, in some respects, incomplete and unreliable.
GAO recently reported that states' assessments of water quality are
generally based on a small percentage of monitored waters, may rely on
outdated or unconfirmed data, and are conducted inconsistently across
states.
EPA's own cost analysis acknowledges that additional monitoring in future
years will “undoubtedly” identify additional impaired waters.
Cost Estimates Are Based on Incomplete Water Quality Data
These limitations add to the uncertainty surrounding EPA's cost estimate
because the estimate
does not account for the potential future listings of additional waters
needing TMDLs and implementation plans.
is based on data that are in some cases unreliable. Given these limitations,
a sensitivity analysis to assess the
effect of data uncertainty on the cost estimate would have been appropriate.
Enclosure I 18 GAO/ RCED- 00- 206R TMDL Regulations
EPA did not include the costs that other federal agencies might incur as a
result of the proposed rule.
USDA officials told GAO that their workload may increase in several areas as
a result of the proposed regulation, including providing technical support
to EPA, states, and farmers (e. g., developing water quality management
plans).
The estimate for the cost states would incur to do an implementation plan
for a TMDL was based on data from a single state official.
EPA did not verify whether these data were representative of all states.
As a result, EPA's estimate of the cost to do an implementation plan may not
be representative of costs incurred by other states.
Certain Costs Not Included or Not Verified EPA Did Not Consider Private
Sector
Costs Likely to be Incurred
EPA did not include the costs that certain private sector entities will
likely incur as a result of the proposed regulations because, according to
EPA officials, these costs would be incurred anyway under existing
regulations and/ or entities will voluntarily implement controls.
However, major changes from the proposed regulations include the emphasis on
TMDL implementation through the implementation plan, and the reasonable
assurance provision. These provisions are intended to provide added
assurance that water quality standards will be met.
As a result of states' implementation of reasonable assurance, nonpoint
sources such as farms will likely incur costs to control discharges to water
bodies.
USDA officials told GAO that they believe the private sector will incur
additional costs as a result of the proposed rule.
Enclosure I 19 GAO/ RCED- 00- 206R TMDL Regulations
EPA Did Not Assess the Effect of a Lower Discount Rate
EPA did not assess the effect of a lower discount rate on estimated costs.
EPA used a 7- percent (real) discount rate-- the rate OMB recommends-- to
discount future costs to the present.
However, OMB's Circular A- 94 (economic guidance) also recommends that
agencies use alternative discount rates to assess the effect of discounting
on the present value of benefits and costs.
According to OMB officials, EPA analysts usually conduct sensitivity
analyses of the discount rate using a lower rate.
Because many costs (and benefits) associated with implementing TMDLs will
occur well into the future, a sensitivity analysis using a lower rate would
be appropriate.
EPA Did Not Estimate Benefits
Executive Order 12866 states that agencies shall assess both the benefits
and costs for significant regulatory actions, regardless of whether the
regulation is economically significant or not-- EPA's rule was deemed
significant by the agency because it addressed “novel legal or policy
issues”.
EPA did not quantify (and monetize) the proposed rule's benefits and, as a
result, its analysis does not indicate whether the expected benefits of the
rule outweigh expected costs.
EPA officials stated that because the proposed rule was not economically
significant (i. e., would not have an annual effect on the economy of $100
million or more) they did not believe they were required to quantify the
benefits of the proposed rule. Instead, the benefits were briefly mentioned
in the proposal for the rule.
Enclosure I 20 GAO/ RCED- 00- 206R TMDL Regulations
OMB officials told us that ideally federal agencies should assess both
benefits and costs of proposed regulations to compare the net benefits of
alternative regulatory actions.
Although EPA's proposed regulation may have benefits, without a monetary
estimate of both the benefits and costs, we cannot confirm that the rule is
economically justified (i. e., that it would have positive net benefits).
EPA officials told GAO that under OMB's Best Practices, the agency is not
required to quantify benefits.
Nonetheless, we believe it is good economic practice to express both
benefits and costs in comparable dollar terms in order to identify net
benefits.
In any case EPA's qualitative discussion of the proposed regulation's
potential benefits was very limited.
EPA Did Not Estimate Benefits Summary of Proposed Revisions
to the NPDES Program EPA's Proposed Revisions Affecting the NPDES Program
The primary changes to the NPDES program include requiring new large or
significantly expanding dischargers
to obtain an “offset” (or pollutant reduction) of 1.5 times
their proposed discharge before discharging to an impaired water,
giving states and EPA, under certain circumstances, discretionary authority
to require discharges of stormwater from forestry activities to have a NPDES
permit,
giving EPA authority to designate certain sources, including some animal
feeding operations and aquatic animal production facilities, as needing
NDPES permits in cases where EPA develops a TMDL, and
Enclosure I 21 GAO/ RCED- 00- 206R TMDL Regulations
(changes to NPDES continued) providing EPA authority to object to, and
ultimately reissue,
expired and state- issued permits that have been administratively- continued
for discharges to impaired waters in NPDES- authorized states where there is
no TMDL or the permit contains limits that are inconsistent with a TMDL.
Summary of Proposed Revisions to the NPDES Program
Summary of EPA's Analysis of Proposed Revisions to NPDES Program
EPA estimated the annual costs to private entities and federal and state
governments in implementing the proposed NPDES regulation to be between $17.
2 million and $65.2 million per year (1999 dollars) from 1999 to 2015; EPA
did not quantify/ monetize benefits; it briefly discussed them.
The major areas in which EPA estimated costs were the construction industry/
other storm water dischargers for
obtaining offsets ($ 11. 33 to $41. 76 million per year), the silvicultural
industry to implement pollutant controls
($ 3.45 million to $12. 93 million per year), animal feeding operations and
aquatic animal production
facilities to implement pollutant controls ($ 1.92 million to $9. 58 million
per year), and
federal and state governments' administrative costs ($ 0.515 million to $ 0.
964 million per year).
Enclosure I 22 GAO/ RCED- 00- 206R TMDL Regulations
Summary of EPA's Analysis of Proposed Revisions to NPDES Program
To estimate the costs of the proposed regulation, EPA made several key
assumptions:
The silvicultural industry will incur additional control costs in just 20
states because 30 states already have, or will have, comprehensive and
enforceable state laws and/ or programs that would be used instead of NPDES
to control pollutants from silvicultural operations.
Existing federal and state authority is sufficient to control discharges
from silvicultural operations on public lands.
Firms required to obtain offsets would essentially incur no delay in finding
an offset to reduce discharges.
EPA would invoke its authority to issue permits to animal feeding operations
and aquatic animal production facilities in only limited instances.
Limitations in EPA's Analysis Raise Concerns About Usefulness of Estimates
Limitations in EPA's analysis raise concerns about its usefulness for
decision- making. Our concerns relate to EPA's
assumption that federal agencies and most states have or will have (and use)
enforceable authorities to control discharges from silvicultural operations,
exclusion of costs to control activities such as regenerating harvested
sites, and controlling pests/ fire,
assumption that firms would incur no delay in obtaining offsets,
use of key water quality data that are of limited quality, and
exclusion of analyses of a lower discount rate and benefits.
Enclosure I 23 GAO/ RCED- 00- 206R TMDL Regulations
EPA Assumed Majority of States Have Adequate Controls for Silviculture
Based on an Environmental Law Institute study, EPA assumed that 30 states
would incur no costs for silvicultural controls because 20 have enforceable
authorities and 10 will develop such authorities by 2008.
This assumption is subject to substantial uncertainty: EPA's proposed rule
does not specify the criteria by
which states' forest regulatory programs will be deemed sufficiently
comprehensive and adequate.
Forestry experts and several state foresters in states with comprehensive
authorities told GAO that states could incur additional costs if EPA
requires states to adopt more stringent regulatory standards.
In addition, there is uncertainty about whether current state programs are
adequate and effective at controlling discharges from silvicultural sources.
EPA Assumed Majority of States Have Adequate Controls for Silviculture
Some of the states with existing authorities have waters currently listed as
impaired by silviculture; it is unclear whether these impairments are result
of ineffective controls, lack of enforcement, or poor practices before
authority was established.
An official from the Environmental Law Institute told GAO that there are
essentially no national data on the effectiveness of current state
silvicultural best management controls.
EPA's estimate of 10 states developing authorities was based on the rate of
program development in the 1990's, with no clear evidence that such a rate
is likely to continue.
Given this uncertainty, sensitivity analysis on the rate of program
development would have been appropriate.
Enclosure I 24 GAO/ RCED- 00- 206R TMDL Regulations
EPA assumed that federal and state agencies have adequate authority to
control discharges from silviculture on federal and state lands.
However, according to an EPA official, the proposed regulation does not
preclude EPA from permitting silvicultural sources on federal lands (i. e.,
after developing a TMDL for impaired waters).
In addition, it is not clear that existing federal or state authorities are
always implemented. For example, a USDA official told GAO that it is
optimistic to assume that federal agencies will implement BMPs in all cases.
As a result, EPA's cost estimate does not account for the possibility that
permits might be required to reduce discharges on public forest lands.
EPA Assumed Public Landowners Have Adequate Authority for Silviculture
EPA's Control Cost Estimate Focuses Primarily on Timber Harvesting
EPA's estimate of the cost of applying best management practices for
silviculture is primarily based on the volume and acres of timber harvested
in counties with impaired waters. The cost of applying best management
practices for certain other activities are not reflected in this cost
estimate. Other possible activities are:
post- harvest site preparation and artificial regeneration of trees. EPA's
proposed regulation states that site preparation activities may cause
significant adverse impacts on water quality; and
pest and fire control.
Enclosure I 25 GAO/ RCED- 00- 206R TMDL Regulations
EPA's Analysis of Costs of Obtaining Offsets Does Not Include Potential
Delay Costs
In estimating the cost of offsets, EPA's cost estimate does not account for
the potential cost of delay that a firm may incur due to an inability to
obtain the needed pollutant reductions (such as from other firms discharging
to the same impaired water).
Although EPA's analysis recognized that delay is possible, it assumed these
firms would be able to purchase an offset by the time the facility
construction or expansion project is approved (about three years).
However, the market for nonpoint source offsets is not well defined and
there has been minimal trading to date.
Thus, there is some uncertainty as to whether firms will be able to purchase
offsets-- any delay in time required to purchase offsets could impose
additional costs on the firm.
EPA Cost Estimate Does Not Account for More Aggressive Application of State
Controls
According to EPA, states will avail themselves of all existing authorities
before using burdensome and costly NPDES permits.
If this is true, this would create an added incentive for the states to
implement their existing authorities more aggressively.
Accordingly, more aggressive implementation would impose control costs on
silvicultural and animal feeding and aquatic production facilities that
would be a result of the proposed regulation.
These costs are not included in EPA's cost estimate.
Enclosure I 26 GAO/ RCED- 00- 206R TMDL Regulations
There are several questions regarding the quality of the data EPA used in
its analysis.
The data EPA used to estimate the number of impaired waters and need for
NPDES permits are, in some respects, incomplete and unreliable.
GAO recently reported that states' assessments of water quality are
generally based on a small percentage of monitored waters, may rely on
outdated or unconfirmed data, and are conducted inconsistently across
states.
EPA's own TMDL cost analysis acknowledges that additional monitoring in
future years will “undoubtedly” identify additional impaired
waters.
Cost Estimates Are Based on Incomplete Water Quality Data
Cost Estimates Are Based on Incomplete Water Quality Data
These limitations add to the uncertainty surrounding EPA's cost estimate
because the estimate
does not account for the potential future listings of additional impaired
waters needing TMDLs, implementation plans, and NPDES permits.
is based on data that are in some cases unreliable. Given these limitations,
a sensitivity analysis to assess the
effect of data uncertainty on the cost estimate would have been appropriate.
Enclosure I 27 GAO/ RCED- 00- 206R TMDL Regulations
EPA Did Not Assess the Effect of a Lower Discount Rate
EPA did not assess the effect of a lower discount rate. EPA used a 7-
percent (real) discount rate-- the rate OMB
recommends-- to discount future costs to the present. However, OMB's
Circular A- 94 (OMB's guidance on
discount rates) also recommends that agencies conduct sensitivity analyses
to assess the effect of discounting on the present value of benefits and
costs.
According to OMB officials, EPA analysts usually conduct sensitivity
analyses using a lower rate.
Because many costs (and benefits) associated with permitting point sources
will occur well into the future, a sensitivity analysis using a lower rate
would be appropriate.
EPA Did Not Estimate Benefits
Executive Order 12866 states that agencies shall assess both the benefits
and costs for significant regulatory actions, regardless of whether the
regulation is economically significant or not-- EPA's rule was deemed
significant by the agency because it addressed “novel legal or policy
issues”.
EPA did not quantify (and monetize) the proposed rule's benefits and, as a
result, its analysis does not indicate whether the expected benefits of the
rule outweigh expected costs.
EPA officials stated that because the proposed rule was not economically
significant (i. e., would not have an annual effect on the economy of $100
million or more) they did not believe they were required to quantify the
benefits of the proposed rule. Instead, the benefits were briefly mentioned
in the proposal for the rule.
Enclosure I 28 GAO/ RCED- 00- 206R TMDL Regulations
EPA Did Not Estimate Benefits
OMB officials told us that ideally federal agencies should assess both
benefits and costs of proposed regulations to compare the net benefits of
alternative regulatory actions.
Although EPA's proposed regulation may have benefits, without a monetary
estimate of both the benefits and costs, we cannot confirm that the rule is
economically justified (i. e., that it would have positive net benefits).
EPA officials told GAO that under OMB's Best Practices, the agency is not
required to quantify or monetize benefits.
Nonetheless, we believe it is good economic practice to express both
benefits and costs in comparable dollar terms in order to estimate net
benefits.
In any case, EPA's qualitative discussion of the proposed regulation's
potential benefits was very limited.
Assessment of EPA's Compliance With the Regulatory Flexibility Act
Regulatory Flexibility Act EPA's determination that it was not required to
conduct
further analyses under the Regulatory Flexibility Act for either proposed
regulation is adequately supported by case law. (See enclosure III for
detailed legal analysis.)
While the proposed rules do not themselves directly regulate small entities
and while EPA fully complied with the Regulatory Flexibility Act, this does
not mean that future actions taken by EPA and the states pursuant to these
regulations will not have economic impacts on small entities.
Enclosure I 29 GAO/ RCED- 00- 206R TMDL Regulations
Unfunded Mandates Reform Act Nothing in UMRA's language, legislative
history, or case law
definitively addresses how agencies are to perform preliminary economic
assessments or to select the appropriate baseline in order to determine
whether UMRA's $100 million threshold has been met.
UMRA's legislative history does indicate that the spirit and intent of Title
II of UMRA are meant to be entirely consistent with the relevant portions of
Executive Order 12866.
OMB's Best Practices states that it was designed to help agencies meet the
analytical requirements of the Executive Order and of UMRA.
Assessment of EPA's Compliance With the Unfunded Mandates Reform Act
Unfunded Mandates Reform Act EPA officials told us they used OMB's Best
Practices and
EPA's April 1998 draft guidance for performing the economic analyses on the
TMDL and NPDES proposed rules.
GAO therefore used these two documents in assessing EPA's compliance with
UMRA.
Limitations concerning EPA's economic analysis call into question the
agency's estimates of the potential costs of both proposed regulations.
Therefore, we disagree with EPA that the agency adequately supported its
determination that the annual costs will not exceed $100 million, and that
additional analyses required by Title II of UMRA were not needed.
Assessment of EPA's Compliance With the Unfunded Mandates Reform Act
Enclosure II 30 GAO/ RCED- 00- 206R TMDL Regulations
Enclosure II 31 GAO/ RCED- 00- 206R TMDL Regulations
Enclosure II 32 GAO/ RCED- 00- 206R TMDL Regulations
Enclosure II 33 GAO/ RCED- 00- 206R TMDL Regulations
Enclosure II 34 GAO/ RCED- 00- 206R TMDL Regulations
The following are GAO's comments on the Environmental Protection Agency's
letter dated June 16, 2000.
GAO's Comments
1. EPA states that GAO incorrectly assessed the reasonableness of the
assumptions used in estimating the costs of the TMDL and NPDES proposed
regulations. However, as our report indicates, there is substantial
uncertainty about several of the key assumptions and data used by EPA, which
could affect the cost estimates derived. Among the most important of these
is EPA's assumption that all states are or will be in compliance with
existing TMDL regulations. It is clear there is current noncompliance and we
believe there is uncertainty as to when states will be in compliance. For
example, while EPA has told us that existing consent decrees and future
lawsuits will be the primary driver for states to get into compliance,
litigation in some states were dismissed and a few consent decrees address
only a subset of waters in a state. In addition, as our report notes, only
about 1,300 of the needed 20,000 to 40,000 TMDLs had been developed through
fiscal year 1999; state commitments made to EPA regarding schedules for TMDL
development are nonbinding; and additional efforts will be needed by states
to develop TMDLs for newly identified polluted waters. Furthermore, funding
for TMDL activities has just recently become a funding priority and must
compete with other priority activities.
In cases of such uncertainty about compliance, both OMB's Best Practices and
EPA's economic guidance suggest the consideration of alternative compliance
rates in assessing the economic effect of proposed regulations. Indeed, in
cases such as this one, where it is known that there is noncompliance with a
regulation that is being tightened, EPA's guidance states that the analysis
should estimate costs associated with attaining full compliance with the
existing regulation and then estimate the costs of moving to full compliance
with the tighter regulation.
2. EPA notes that both the agency and the states are actively developing
TMDLs, and that this justifies its baseline assumption that “the
states and EPA are working over time to comply with the current law and its
implementing regulation.” This statement acknowledges that there is
current noncompliance with existing regulations. However, EPA's cost
estimates do not account for this noncompliance. As discussed above in
response to comment 1, both OMB's Best Practices and EPA's economic guidance
suggest that noncompliance with existing regulations be considered when
assessing the costs of proposed regulations.
3. EPA states that OMB has not interpreted UMRA as requiring an assessment
of the costs of existing regulations. While we have not reviewed OMB's
record in this regard, OMB's Best Practices and EPA's economic guidance
speak directly to this point. OMB's Best Practices document, which was
issued to assist agencies in conducting economic analyses under Executive
Order 12866 and UMRA, and EPA's economic guidance both state that an
agency's economic analysis should consider the way the world would look
absent the proposed regulation (referred to as the “baseline”)
and that many factors may influence this scenario- including the degree
Enclosure II 35 GAO/ RCED- 00- 206R TMDL Regulations
of compliance with existing regulations. EPA's own guidance for conducting
economic analyses states that, “If it is well known that there is
noncompliance with an existing regulation that is being tightened (i. e.,
replaced with a more stringent regulation), then the analysis should be
performed in two stages, if possible.” The guidance goes on to state
that the two stages should include estimates of the costs of attaining full
compliance with the existing regulations and the costs of moving to full
compliance with the tighter regulations. Therefore, we believe it would have
been appropriate for EPA to consider alternative baselines with regard to
compliance with existingregulations. We discussed our interpretation of
OMB's Best Practices with
OMB officials and they agreed that it was correct. 4. EPA agrees with our
statement that there is nothing in UMRA's language, legislative
history, or case law that definitively addresses how agencies are to perform
economic analyses. The agency also appears to agree that OMB's Best
Practices and EPA's economic guidance help instruct how these economic
analyses are to be performed. Given EPA's assertions of certainty with its
key assumptions in its economic analyses, EPA believes that it did follow
its own guidance. However, as discussed in our response to comments 1 and 2
above, we believe there are substantial uncertainties as to when states will
be in full compliance, and as to the number of waters needing TMDLs in the
future. Given these uncertainties, we believe it would have been appropriate
to conduct sensitivity analyses, in accordance with OMB's Best Practices and
EPA guidance, to assess uncertainty in its assumptions and with key data
used.
5. EPA states that we misunderstood OMB's Best Practices and EPA's guidance
concerning estimates of baseline costs under existing regulations. EPA then
states, without page citations, that “where a proposed regulation does
not change the environmental or public health standard of an existing
regulation, OMB and EPA guidance indicate that an assumption of full
compliance with the regulation is appropriate.” There is no such
statement in either document. Indeed, as we point out in comments 1 and 3,
EPA's guidance specifically provides that if it is known that there is
noncompliance with an existing regulation that is being tightened (i. e.,
replaced with a more stringent regulation), both the costs of attaining full
compliance with the existing regulation and the costs of moving to full
compliance with the new regulation should be estimated. In this case, the
proposed regulation states that it “strengthens” the current
TMDL regulatory requirements so that TMDLs “can more effectively
contribute to improving the nation's water quality.” In particular,
the proposed regulation will require states to develop TMDLs within 15 years
of listing impaired waters, and to provide reasonable assurance that
controls will be implemented so that water quality standards will be
attained and maintained. Because the TMDL regulation is clearly being
tightened, we believe the provision of EPA's guidance recommending
estimation of the costs of attaining full compliance with existing
regulations is applicable here.
6. EPA cites OMB's Best Practices as stating that when faced with
uncertainty, agencies should base “[ their] decisions on the best
reasonably obtainable” information concerning the intended regulation.
We recognize that available information is often
Enclosure II 36 GAO/ RCED- 00- 206R TMDL Regulations
imperfect, and that it is appropriate under such circumstances to rely on
the “best reasonably obtainable” information. However, there is
substantial uncertainty about EPA's key assumptions and data, and EPA did
not assess the effect of these uncertainties on its cost estimates. We
believe that the appropriate course of action would have been to use
sensitivity analyses to assess the effect of alternative assumptions on the
cost estimates. Such an approach would have presented a more realistic
picture of the range of potential costs.
7. EPA states that GAO “wrongly implies that the uncertainty about
water quality data caused EPA to seriously underestimate the extent of
pollution problems.” We continue to believe that the uncertainty over
the completeness and reliability of water quality data substantially adds to
the uncertainty surrounding EPA's cost estimate because it directly affects
the number of water bodies EPA assumes are impaired and will therefore
require TMDLs. EPA's TMDL cost analysis in fact acknowledges that there is
considerable uncertainty in future listings of impaired waters. However, it
does not account for potential future additional listings in its cost
estimate. EPA also cites a recent GAO report in which state officials told
us that they are confident that they have identified most of their serious
water quality problems. In doing so, the agency appears to imply that few
additional waters will require TMDLs. However, the same GAO report also
states that state officials acknowledged that “more comprehensive
monitoring would reveal additional problems.” In fact, in official
agency comments on a draft of that report, EPA drew the same conclusion,
stating that “ it is likely that some states, perhaps most, do not
have enough data to identify all of the impaired waters because they have
not achieved comprehensive assessment of all state waters.”
8. EPA states that our report incorrectly suggests that the agency did not
analyze the benefits of the proposed regulations. It notes that per OMB's
Best Practices, it was required in this case only to provide a qualitative
assessment of benefits, and described these benefits in the preamble to the
proposed regulation. We have revised our report to state that EPA did
briefly mention the benefits in the proposed regulations qualitatively. That
said, the discussion of benefits in the preamble alluded to by EPA is so
limited that it provides little evidence of a meaningful
“assessment” of benefits, as called for by Executive Order
12866. For example, on page 46015 of the TMDL proposal, EPA states that it
is revising the definition of a TMDL because “Current regulatory
requirements have engendered different interpretations” and that
states need “greater certainty in establishing TMDLs and submitting
them to EPA for approval.” EPA also states that it needs a more
precise definition “to promote consistency in reviewing and approving
TMDLs nationally.” For the NPDES proposal, EPA states that it will
“achieve reasonable further progress toward attaining water quality
standards.....” EPA describes one way in which the proposal will
accomplish this is by addressing the lengthy administrative continuance of
permits that authorize discharges into impaired waters. It states that
“[ b] y not reissuing these permits, there is a delay in the
implementation of needed water quality- based effluent limitations.”
Enclosure II 37 GAO/ RCED- 00- 206R TMDL Regulations
9. EPA notes that while we may have thought it desirable for the agency to
provide different or supplemental economic analysis of the proposed
regulation, and that “while additional analysis is always
possible,” time and cost considerations must also be weighed against
delaying the issuance of a rule with significant benefits. We believe that
in light of the high degree of uncertainty concerning the future costs of
these regulations, the consideration of alternative assumptions was more
than “desirable.” Further, statements in one of the economic
analyses for the proposed regulations and by EPA staff do indeed indicate
that time was a constraint in conducting a more thorough analysis, but it is
important to note that these time constraints were the result of the
schedule that EPA, itself, set for the issuance of its regulations.
Enclosure III 38 GAO/ RCED- 00- 206R TMDL Regulations
Assessment of EPA's Determinations That No Further Analyses Were Required
Under the Regulatory Flexibility Act for the TMDL or NPDES
Proposed Rules
The Environmental Protection Agency (EPA) certified that its proposed rules,
Proposed Revisions to the Water Quality Planning and Management Regulation
(“ the TMDL proposed rule”), 3 and Proposed Revisions to the
National Pollutant Discharge Elimination System Program and Federal
Antidegradation Policy in Support of Revisions to the Water Quality Planning
and Management Regulation (“ the NPDES proposed rule”) 4 will
not have a significant economic impact on a substantial number of small
entities under section 605( b) of the Regulatory Flexibility Act (RFA). 5
You have asked us to assess these certifications. We believe EPA properly
certified the proposed rules under the RFA.
The Regulatory Flexibility Act requires an agency, when proposing a rule for
notice and comment, to “prepare and make available for public comment
an initial regulatory flexibility analysis[ that] describe[ s] the impact of
the proposed rule on small entities, 6 including small businesses, small
non- profit enterprises, and small governmental jurisdictions. 7 In
addition, when promulgating a final rule, an agency must “prepare a
final regulatory flexibility analysis” that describes, among other
things, “a summary of significant issues raised by the public comments
in response to the initial regulatory flexibility analysis, a summary of the
assessment of the agency of such issues,” and “the steps the
agency has taken to minimize the significant economic impact on small
entities.” 8
However, these analyses are not required if the agency “certifies that
the rule will not, if promulgated, have a significant economic impact on a
substantial number of small entities.” 9 EPA certified that neither
the TMDL proposed rule nor the NPDES proposed rule will have a significant
economic impact on a substantial number of small entities within the meaning
of the Regulatory Flexibility Act. 10 Therefore, EPA did not prepare an
initial regulatory flexibility analysis for either proposed rule.
3 64 Fed. Reg. 46012 (1999) (to be codified at 40 C. F. R. pt. 130)
(proposed Aug. 23, 1999). “TMDL” refers to “Total Maximum
Daily Load.” 4 64 Fed. Reg. 46057 (1999) (to be codified at 40 C. F.
R. pt. 122 et al.) (proposed
Aug. 23, 1999). “NPDES” refers to “National Pollutant
Discharge Elimination System.” 5 5 U. S. C. sect.sect. 601- 612 (1994 & Supp.
IV 1998).
6 Id. sect. 603( a). 7 Id. sect. 601. 8 Id. sect. 604( a). 9 Id. sect. 605( b). 10 64 Fed.
Reg. at 46041, 46082.
Enclosure III 39 GAO/ RCED- 00- 206R TMDL Regulations
THE TMDL PROPOSED RULE EPA's Certification In support of its determination
that no further analyses were required under the Regulatory Flexibility Act
for the TMDL proposed rule, EPA states that the RFA requires analysis of the
impacts of a rule on the small entities subject to the rule's requirements,
citing United States Distribution Cos. v. FERC, 88 F. 3d 1105, 1170 (D. C
.Cir. 1996); Mid- Tex Elec. Coop., Inc. v. FERC, 773 F. 2d 327 (D. C. Cir.
1985); and Motor & Equip. Mfrs. Ass'n v. Nichols, 142 F. 3d 449 (D. C. Cir.
1998). According to EPA, the proposed TMDL rule establishes no requirements
applicable to small entities.
EPA explains that under section 303( d) of the Clean Water Act, 11 states,
territories and Indian tribes authorized to do so by EPA must list impaired
waterbodies and establish Total Maximum Daily Loads (“ TMDLs”),
or amounts of various pollutants that a body of water may receive and still
allow the water to attain and maintain water quality standards. If EPA
disapproves the efforts of these entities, it must prepare the lists and
TMDLs itself. According to EPA, what the proposed rule does is set forth
requirements for EPA, states, territories, and authorized tribes to follow
when listing impaired waterbodies and establishing TMDLs. Listing and TMDL
requirements are imposed only on these categories of entities and not on any
small entities.
EPA further states that any economic impact on small entities of any lists
or TMDLs established pursuant to the proposed regulation will be indirect
and is highly speculative. First, EPA states, no impact flows directly from
this proposed regulation. Instead, any impact on small entities that
discharge pollution into waterbodies would result from future action by
states, territories, authorized tribes, or EPA in listing impaired
waterbodies, establishing TMDLs, and then implementing them. This future
economic impact on small entities may flow from the TMDLs because the TMDLs
are to allocate to individual pollution sources or categories of sources
(which may be small entities) amounts of pollution that may not be exceeded,
and the TMDLs are to have implementation plans that assure that such sources
do not exceed the amounts of pollution allocated to them.
However, EPA notes that states, territories, Indian tribes, and EPA have
considerable discretion under the Clean Water Act and the proposed
regulation concerning which waterbodies to list, how to prioritize such
waterbodies, how to schedule the waterbodies for TMDL development, and how
to calculate and apportion TMDLs among pollution sources. Thus, it is
impossible to predict the eventual impact (if any) of this proposed rule on
any individual sources. This uncertainty is compounded, according to EPA, by
the fact that EPA itself has no authority to enforce TMDLs for so- called
“nonpoint” sources of pollution like
11 33 U. S. C. sect. 1313( d) (1994).
Enclosure III 40 GAO/ RCED- 00- 206R TMDL Regulations
agricultural operations, which do not discharge pollution from a discrete
pipe or other point. TMDLs for such nonpoint sources are only enforceable to
the extent that they are made so by state, territorial, or tribal laws and
regulations, which means that EPA cannot reliably predict whether or to what
extent pollution allocations will actually be implemented and therefore
eventually impact small entities.
Legal Analysis EPA's position that no further analyses were required for the
TMDL proposed rule under the Regulatory Flexibility Act is supported by the
case law interpreting the RFA. The courts have consistently held that an
agency may properly certify that no regulatory flexibility analysis is
necessary when it determines that the rule will not have a significant
economic impact on a substantial number of small entities that are subject
to the requirements of the rule. 12 Because the TMDL proposed rule would not
itself subject small entities to any requirements, but instead would impose
requirements on states, no regulatory flexibility analysis is required.
The leading case is Mid- Tex Elec. Coop., Inc. v. FERC, 773 F. 2d 327 (D. C.
Cir. 1996). In Mid- Tex, the Federal Energy Regulatory Commission (FERC) had
proposed a federal rate standard that would regulate the wholesale rates of
large electric utilities. Petitioners in the case, wholesale customers of
the utilities, argued that the Regulatory Flexibility Act required FERC to
consider whether its proposed rule would have a significant economic impact
on wholesale customers as well as on the regulated utilities. Before the
Commission, the Small Business Administration advocated that FERC should
also consider the impact on retail customers of the utilities and even the
impact on ultimate retail electric consumers, many of which were small
businesses.
The court of appeals in Mid- Tex examined the language and legislative
history of the RFA, in particular pointing to section 603 of the statute,
which specifies the contents of the initial regulatory flexibility analysis.
These initial analyses are to include “a description of and, where
feasible, an estimate of the number of small entities to which the proposed
rule will apply,” 13 and “a description of the projected
reporting, recordkeeping and other compliance requirementsof the
12 Michigan v. EPA, No. 98- 1497, 2000 U. S. App. LEXIS 3209 (D. C. Cir.
Mar. 3, 2000); American Trucking Ass'ns, Inc. v. EPA, 175 F. 3d 1027, 1045
(D. C. Cir.), reh'g granted in part, denied in part, 195 F. 3d 4 (D. C. Cir.
1999), cert. granted, 68 U. S. L. W. 3724 (U. S. May 22, 2000) (No. 99-
1257); Motor & Equip. Mfrs. Ass'n v. Nichols, 142 F. 3d 449, 467 (D. C. Cir.
1998); United Distribution Cos. v. FERC, 88 F. 3d 1105, 1171 (D. C. Cir.
1996); Mid- Tex Elec. Coop., Inc. v. FERC, 773 F. 2d 327, 342 (D. C. Cir.
1985). See also Southwestern Pennsylvania Growth Alliance v. Browner, 121 F.
3d 106, 122 (3 rd Cir. 1997); Colorado v. Resolution Trust Corp., 926 F. 2d
931 (10 th Cir. 1991) (where a rule contains no regulatory compliance
requirements at all, no regulatory flexibility analysis is required under
the RFA). 13 5 U. S. C. sect. 603( b)( 3) (emphasis added).
Enclosure III 41 GAO/ RCED- 00- 206R TMDL Regulations
proposed rule, including an estimate of the classes of small entities which
will be subjectto the requirement.” 14 The court concluded that
“Congress did not intend to require that every agency consider every
indirect effect that any regulation might have on small businesses in any
stratum of the national economy.” Id. at 343. Instead, the court held,
the problem Congress attempted to address with the RFA was the high cost to
small entities of compliance with uniform regulations, and the remedy
Congress fashioned- careful consideration of these costs in regulatory
flexibility analyses- is accordingly limited to small entities subject to
the proposed regulation. Id.
The principle articulated in Mid- Tex and its progeny has recently been
applied in the context of environmental rulemaking. Last year, in American
Trucking Ass'ns, Inc. v. EPA, EPA rules revising certain National Ambient
Air Quality Standards (“ NAAQS”) were challenged on a number of
grounds, including on the basis that EPA had improperly certified that the
revised NAAQS would not have a significant impact upon a substantial number
of small entities under the Regulatory Flexibility Act. EPA argued that the
NAAQS themselves impose no regulations upon small entities. Instead, under
the Clean Air Act, the states regulate small entities through state
implementation plans (SIPs) that provide for the attainment, maintenance,
and enforcement of the NAAQS. 15 Because the NAAQS only regulate small
entities indirectly- that is, insofar as they affect the planning decisions
of the states- EPA concluded that small entities were not subject to the
proposed regulation.
The American Trucking court of appeals found EPA's description of the
relationship between the NAAQS, SIPs, and small entities incontestable. 175
F. 3d at 1044. According to the court, states have broad discretion in
determining how they will achieve compliance with the NAAQS, and EPA has no
authority, short of imposing its own SIP on non- complying states, to impose
burdens on small entities. Id. In view of this discretion, the court held,
small entities that are regulated by SIPs and bear the burdens of revised
NAAQS are no more subject to the EPA's regulation than the wholesalers in
Mid- Tex were subject to regulation by FERC. Id. at 1045.
Finally, and most recently, the Court of Appeals for the D. C. Circuit
rejected another Regulatory Flexibility Act challenge in another Clean Air
Act decision, Michigan v. EPA, No. 98- 1497, 2000 U. S. APP. LEXIS 3209 (D.
C. Cir. Mar. 3, 2000). The case involved an EPA rule mandating that 22
states and the District of Columbia revise their state implementation plans
to mitigate the interstate transport of ozone. The rule was issued under a
provision of the Clean Air Act requiring SIPs to contain adequate provisions
prohibiting sources of air pollution from emitting air pollutants in amounts
that contribute significantly to other states' nonattainment of National
Ambient Air Quality Standards or interfere with
14 Id. sect. 603( b)( 4) (emphasis added). 15 See Clean Air Act sect. 110, 42 U. S.
C. sect. 7410 (1994).
Enclosure III 42 GAO/ RCED- 00- 206R TMDL Regulations
other states' maintenance of those standards. 16 Under the rule, states were
required to revise their SIPs to include controls on sources of nitrogen
oxide, an ozone precursor.
The court in Michigan v. EPA stated that under the applicable case law, the
issue in evaluating whether EPA had properly certified that the rule would
not have a significant impact on a substantial number of small entities
under the RFA was whether the rule “regulates” small entities.
The court agreed with EPA that the rule did not directly regulate individual
sources of emissions. Instead, the court stated, the rule would require
states to develop, adopt, and submit SIP revisions that would achieve the
necessary nitrogen oxide reductions and leave to the states the task of
determining how to obtain those reductions, including which entities to
regulate. Thus, the court concluded, the case was analogous to American
Trucking, in that the rule at issue regulated small entities only
indirectly.
The principle articulated in Mid- Tex and its progeny applies with equal
force to the TMDL proposed rule. The Clean Water Act, like the Clean Air
Act, contemplates a partnership between EPA and the states, 17 in which EPA
is often required to set standards or regulatory requirements which states
then implement by regulating individual pollution sources. Thus, as EPA
points out, the TMDL proposed rule would not itself regulate any small
entities. Indeed, as in the Michigan and American Trucking cases, the TMDL
proposed rule would not itself regulate anyindividual sources of pollution,
small or otherwise.
Instead, as in both those cases, the TMDL proposed rule would establish
requirements for states( and territories, Indian tribes, and the EPA) to
follow in listing impaired waters and establishing TMDLs. Also as in both
those cases, states (and territories, tribes and the EPA) will have
discretion over many variables, including which waterbodies to list, how to
prioritize such waterbodies, how to schedule the waterbodies for TMDL
development, and how to calculate and apportion the TMDLs to individual
sources of pollution. Therefore, EPA's proposed TMDL rule no more regulates
small entities that might eventually be subject to TMDLs than EPA regulated
small entities that might eventually be subject to state implementation
plans in the American Trucking decision. As the court stated in the Mid- Tex
opinion, in enacting the Regulatory Flexibility Act, “Congress did not
intend to require that every agency consider every indirect effect that any
regulation might have on small businesses in any stratum of the national
economy.” 773 F. 2d at 343.
16 See id. 17 Arkansas v. Oklahoma, 503 U. S. 91, 101 (1992)(“ Clean
Water Act anticipates a
partnership between the States and the Federal Government”); Virginia
v. EPA, 108 F. 3d 1397, 1408 (D. C. Cir.), modified on other grounds, 116 F.
3d 499 (D. C. Cir. 1997) (“ Clean Air Act creates a partnership
between the states and the federal government” (quoting Bethlehem
Steel Corp. v. Gorsuch, 742 F. 2d 1028, 1036- 37 (7 th Cir. 1984))).
Enclosure III 43 GAO/ RCED- 00- 206R TMDL Regulations
Accordingly, we conclude that the case law interpreting the Regulatory
Flexibility Act adequately supports EPA's certification that the TMDL
proposed rule will not have a significant economic impact on a substantial
number of small entities under section 605( b) of the RFA and its resulting
determination that it was not required to conduct an initial regulatory
flexibility analysis under section 603( a) of that statute.
THE NPDES PROPOSED RULE EPA's Certification EPA certified under section 605(
b) of the RFA that none of the several new provisions of the NPDES proposed
rule would have a significant impact on a substantial number of small
entities. EPA's certification is based on: (1) its analyses of the potential
costs of the new provisions, and (2) the caselaw it cited in connection with
its certification of the NPDES proposed rule. We address EPA's economic
analysis in the attached briefing slides.
The Offset Provision One of the provisions of the NPDES 18 proposed rule
would require that states ensure that new and significantly expanding
dischargers that are large entities on impaired waterbodies offset their
discharges by obtaining and maintaining reductions in pollution discharges
of more than 1.5: 1 from existing dischargers on the same waterbody (“
the offset provision”). Because this provision would require offsets
only of large entities, EPA concluded that it would not impact small
entities under the RFA.
The Permit Reissuance Provision Another proposed provision would authorize
EPA to object to and to reissue expired state- issued NPDES permits that
have not been reissued following the expiration of their 5- year term, where
the permit authorizes discharges into impaired waters or where the permit
does not contain limits consistent with the applicable TMDL. 19 EPA
characterizes this provision as a proposal to authorize future discretionary
action by EPA.
18 The Clean Water Act generally prohibits the discharge of pollutants from
discrete pipes or "point” sources except pursuant to a permit issued
under the National Pollutant Discharge Elimination System (NPDES). See Clean
Water Act, sect.sect. 301- 302, 502 (12), (14); 33 U. S. C. sect.sect. 1311- 1312, 1362
(12), (14) (1994). 19 Under the Clean Water Act, states with EPA- approved
programs may issue
NPDES permits to sources of water pollution that discharge pollutants from
discrete pipes or “point” sources. See Clean Water Act sect.sect. 402(
b); 33 U. S. C. sect.sect. 1342( b)( 1994).
Enclosure III 44 GAO/ RCED- 00- 206R TMDL Regulations
The Designation Provisions A final set of proposed provisions would extend
EPA's current authority under the National Pollutant Discharge Elimination
System to designate and require NPDES permits for certain presently
unpermitted sources. The proposal would authorize EPA under certain
conditions to require permits for animal feeding operations, aquatic animal
production facilities, and silvicultural activities.
With respect to animal feeding operations and aquatic animal production
facilities, the current regulations provide that where EPA is the permitting
authority, EPA may designate such facilities as point sources requiring
NPDES permits if EPA determines they are significant contributors of
pollution to waters of the United States. The proposed rule would extend
this discretionary designation authority to authorize EPA action in states
with approved NPDES programs, but only where the EPA has established the
TMDL and designation is necessary to provide reasonable assurance that the
TMDL will be implemented.
EPA states that promulgation of the designation provisions involving animal
feeding and aquatic animal facilities is only one step in a series of
actions that must occur before any costs are imposed on any particular small
entity. First, the proposal would authorize EPA action in only a limited set
of circumstances: (1) where a state has either failed to submit a TMDL or
has submitted a deficient TMDL; (2) where EPA has established a TMDL for the
water body; and (3) where EPA determines that the animal feeding or aquatic
animal facility is a significant contributor of pollution and that
designation (and permitting) of the source are needed to ensure that the
TMDL is implemented. Moreover, EPA explains that when and how often it might
exercise the proposed authority is unpredictable. Because EPA does not know
for which water bodies in which states it will need to establish TMDLs, it
cannot predict what animal or aquatic facilities it may need to consider for
designation under the proposed authority.
With respect to silvicultural activities, the proposed rule would eliminate
the current categorical exemption from NPDES regulation that most
silvicultural stormwater sources have. Under the proposal, these sources
would continue to be exempt unless and until EPA or a state with an approved
NPDES program designated them as subject to NPDES regulation. The currently
unregulated silvicultural sources would only be required to obtain NPDES
permits (1) on a case- by- case designation by EPA or a state with authority
to issue permits and (2) for the purposes of EPA designation, only for
sources that discharge to waters for which EPA establishes a TMDL, in order
to provide assurance that the TMDL will be implemented.
Concerning the designation provisions involving silviculture, EPA states
that while the provisions may at some point in the future impose costs on
dischargers, including small entities, promulgation of the provisions giving
EPA authority to subject these sources to NPDES permitting requirements does
not impose additional costs on dischargers now. Moreover, because the
proposed authority is
Enclosure III 45 GAO/ RCED- 00- 206R TMDL Regulations
discretionary, it is not possible to identify which nonpoint source
dischargers, if any, would be designated as point sources and required to
obtain a permit. No sources would be automatically so designated. Only in
the event EPA or a state acted to designate a particular discharger would
there be any costs to the discharger.
Legal Analysis EPA's position that no further analyses were required for the
NPDES proposed rule under the Regulatory Flexibility Act is supported by the
case law interpreting the RFA. As previously discussed, the pertinent
inquiry in determining whether a proposed rule has been properly certified
is whether the rule would regulate small entities. See, e. g., Michigan v.
EPA, No. 98- 1497, 2000 U. S. APP. LEXIS 3209 (D. C. Cir. Mar. 3, 2000).
None of the provisions in the proposed NPDES rule would themselves regulate
small entities. In fact, except for the offset provision, which only applies
to large entities, none of the provisions would impose requirements on any
entities at all. Instead, both the designation provisions and the permit
reissuance provision would expand EPA's regulatory authority to allow future
discretionary action by EPA. In such circumstances, the case law holds that
certification is proper.
The designation provision and the permit reissuance provision of the NPDES
proposed rule are analogous to RFA rule certifications upheld in two federal
appellate decisions not cited by EPA. In Colorado v. Resolution Trust Corp.,
926 F. 2d 931 (10 th Cir. 1991), plaintiffs had challenged a Resolution
Trust Corporation (RTC) regulation formalizing the RTC's interpretation of
its authorizing statute as allowing the RTC to override state branch banking
laws preventing banks that acquired failed or failing thrifts in emergency
acquisitions from retaining and operating the thrifts' offices as bank
branches.
In certifying that the rule would not have a significant impact on a
substantial number of small entities under the RFA, the RTC stated that
“the rule will not impose compliance requirements on depository
institutions of any size.” Moreover, the certification stated, the
rule “imposes no performance standards, no fees, no reporting or
recordkeeping criteria, nor any other type of restriction or requirement
with which depository institutions must comply. Thus, it does not have the
type of economic impact addressed by the RFA.” Id. at 948.
The court agreed. Id. Quoting Mid- Tex. Elec. Co- op., Inc. v. FERC, 773 F.
2d 327, 342 (D. C. Cir. 1985), the court pointed out that the RFA is meant
to address “the high cost to small entities of compliance with uniform
regulations,” and “the relevant ‘economic impact' is the
impact of compliance.” The RTC rule imposed no regulatory compliance
requirements at all. Therefore, according to the court, the certification
was proper. Id. at 948.
Recently, the Court of Appeals for the Third Circuit determined that the RTC
holding was directly applicable to a rule promulgated by EPA denying
Enclosure III 46 GAO/ RCED- 00- 206R TMDL Regulations
Pennsylvania's request that the EPA redesignate a certain
“nonattainment” area in the state as an “attainment”
area under the Clean Air Act. Southwestern Pennsylvania Growth Alliance v.
Browner, 121 F. 3d 106 (3 rd Cir. 1997). Like the RTC rule, the particular
rulemaking at issue in Southwestern Pennsylvania Growth Alliance did not
“affect any existing requirements applicable to small entities”
nor did it “impose new requirements.” Id. at 123.
The court rejected an intervenor's contention that the EPA's denial of
redesignation would impact small entities. The intervenor had argued that
EPA's disapproval of Pennsylvania's redesignation request would soon result
in a “bump up” of the area's nonattainment classification from
“moderate” to “severe.” This would happen, according
to the intervenor, because under the Clean Air Act, areas that failed to
attain air quality standards by the applicable date, as this one would, were
classified by operation of law to the next higher classification, and that
classification would mean stricter pollution control requirements for small
entities in the area. Id. at 123- 24.
The court disagreed. According to the court, the more stringent controls
impacting small entities would result from the rulemaking process that would
accompany the reclassification to the higher nonattainment status, not from
the rulemaking process before the court in which the EPA denied
Pennsylvania's redesignation request. Id. at 124. Therefore, the court
concluded, the EPA properly certified that the particular rulemaking at
issue in this case would not affect small entities under the RFA.
The RTC and the Southwestern Pennsylvania Growth Alliance cases stand for
the proposition that where a rule contains no regulatory compliance
requirements at all, no regulatory flexibility analysis is required under
the RFA. That proposition applies here. As in both those cases, the
designation provisions and the permit reissuance provisions in the NPDES
proposed rule impose no requirements on any entities. Instead, as with the
rule in the RTC case, which, as noted previously, formalized the RTC's
interpretation of its statutory authorization, the proposed designation
provisions and the permit reissuance provisions expand EPA's regulatory
authority. Moreover, as in the Southwestern Pennsylvania Growth Alliance
case, the permit reissuance provisions and the designation provisions can be
fairly characterized as proposals to authorize future discretionary action
by EPA, and not the current imposition of new requirements.
Accordingly, we conclude that the case law interpreting the Regulatory
Flexibility Act adequately supports EPA's certification that the NPDES
proposed rule will not have a significant impact on a substantial number of
small entities under section 605 (b) of the RFA and its resulting
determination that it was not required to conduct an initial regulatory
flexibility analysis under section 603( a) of that statute.
(160520)
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